Recent data from the Central Bank of Nigeria reveals a significant decline of 57.04% in Letter of Credit (LC) payments in the first seven months of 2024, totaling $391.91m compared to $912.35m in the same period in 2023.
Factors such as the instability in the foreign exchange market, increased customs duties, and the departure of multinational companies have been attributed to this decline in LC payments. Despite this, there is hope for improvement with recent tax waivers on essential food imports and the potential for stability in the FX market.
Experts suggest that the decrease in LC payments could lead to a shift towards local production and a reduced reliance on imports, ultimately benefiting Nigeria’s economy in the long run. However, challenges such as fluctuating FX availability and high import costs may continue to impact the economy in the short term.
With the expectation of increased dollar liquidity and improved access to LCs in the future, there is optimism for a recovery in Nigeria’s foreign trade sector. It remains to be seen how these developments will shape the country’s economic landscape moving forward.
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