NIGERIA’s central bank told lenders on Monday to stop processing new trade documents for maize imports with immediate effect, a week after it unified its multiple exchange rates in an attempt to ease dollar shortages and conserve its dwindling reserve.
In a circular on Monday, the bank said it wanted to support the increase in local maize production, stimulate the economy and safeguard rural livelihoods lost as a result of the COVID-19 pandemic.
It asked lenders to submit existing import documents, called Form M, opened for importation of maize by Wednesday.
Form M is a document to be completed by all importers into Nigeria. The documentation also enables lenders submit bids to the central bank for dollars to pay for imports.
Bankers estimate forex demand of around $2 billion from importers with past due obligation. Meanwhile the government is seeking to fund a balance of payment gap of around $14 billion in 2020, according to the central bank.
Dollar demand has been swelling and piling pressure on the naira. Importers with past due obligations have scrambled for hard currency while providers of foreign exchange, such as offshore investors, have exited.
The oil price crash caused by the coronavirus pandemic has exacerbated a shortage of dollars for Nigeria, whose reserve has declined 20% to $36.13 billion over the last year.
Last week the naira eased on the official market, losing 5.5% against the dollar after the central bank weakened the currency, in its second adjustment in six months.
Data from the U.S. Department of Agriculture estimate Nigeria’s maize imports at 400,000 metric tons (MT) for 2019/20 against a consumption of 10.7 MT over the forecast period. Nigeria imports maize mainly from the U.S.
The central bank in August told lenders to stop processing milk imports on a credit basis after it said it would ban access to forex for dairy to spur local production. It later lifted forex restrictions for milk imports for six firms. – Thomson Reuters Foundation.