Nigeria’s central bank has suspended foreign exchange sales to retail currency traders, a senior bureau de change (BDC) official said, to help protect the naira after a devaluation following the coronavirus outbreak and a fall in oil prices. The central bank last week moved the currency rate for BDC to ₦380 to the U.S. dollar from the previous ₦360. It subsequently adjusted the naira’s official rate to ₦360, weaker than its previous peg of ₦306, implying a 15% devaluation. Since the currency adjustment, the naira has weakened further. It fell to a new low of ₦361 to the dollar on the official market and hit ₦383.25 on the over-the-counter spot market on Thursday. Nigeria, which is Africa’s biggest economy and its largest oil exporter, has confirmed 46 coronavirus cases, with one death. It has banned entry to arrivals from countries that have reported more than 1,000 coronavirus cases. “Until borders are opened, there is no way anyone can provide genuine travel documents we can rely on,” the BDC official said on Thursday, adding that some of the countries visited by Nigerians were in lockdown. “The implication is that the currency could weaken on the black market. If you stop the official source then the black market would thrive.” The naira came under pressure after oil prices fell following a disagreement between Russia and Saudi Arabia over a deeper production cut. The coronavirus outbreak has also hit global demand for oil.
The Nigerian government has announced that it had cut its privatisation revenue target by 50 percent. According to the finance minister, Zainab Ahmed, the FG has also reduced the revenue expected from the Nigeria Customs Service from ₦1.5 trillion to ₦943 billion due to the anticipated reduction in trade volumes. The announcement was made at the meeting between the Executive and the leadership of the National Assembly in Abuja to review the 2020 budget and Medium Term Expenditure Framework against the background of the impact of the coronavirus pandemic on the global economy. The finance minister confirmed a review of the budget oil benchmark from $57 to $30 per barrel in the government’s effort to prepare for the worst-case scenario and insulate the Nigerian economy against any form of unexpected crisis. The FG’s new target is ₦252.08 billion from privatisation proceeds in the 2020 fiscal period, an increase of ₦42.08 billion over the ₦210 billion which was approved in the 2019 fiscal period. Ahmed added that the FG had undertaken cuts to revenue-related expenditures for the Nigerian National Petroleum Corporation for several projects included in the 2020 Appropriation Act passed by the National Assembly in December 2019.
The Nigerian National Petroleum Corporation spent a total of ₦218.18 billion in 2019 on all of the country’s dilapidated refineries; Kaduna Refining and Petrochemical Company, Port Harcourt Refining Company and Warri Refining and Petrochemical Company. The refineries, which have a combined installed capacity of 445,000 barrels per day have continued to operate far below the installed capacity. They all recorded a cumulative loss of ₦149.23 billion last year. The country has been relying largely on importation for refined petroleum products as its refineries have remained in a state of disrepair for many years despite several reported repairs. Data from the NNPC showed that the refineries recorded a cumulative revenue of ₦68.96 billion but jointly incurred a total expense of ₦218.18 billion during the year under review. The state oil firm had projected total revenue of ₦309.14 billion and an expense of ₦377.35 billion for the facilities in 2019. Kaduna posted the highest loss of ₦58.96 billion as Port Harcourt and the Warri lost ₦44.77 billion and ₦45.49 billion respectively during the 12-month period.
President Buhari has ordered the Nigeria Center for Disease and Control (NCDC) to draft its recent retirees back into service to assist in containing the outbreak. In a statement issued by Garba Shehu, his spokesman, on his behalf on Thursday night, and published on the President’s Twitter handle, Buhari said that protecting Nigerians from coronavirus is a key priority of his administration, highlighting the efforts of health agencies. Shehu added that the President has also approved and ensured the prompt release of ₦5 billion in special intervention funds requested by the NCDC to equip and expand their facilities and laboratories. Buhari also shut down all international airports and land borders for the next four weeks at the first instance, and announced an immediate grant of ₦10 billion to Lagos State, the epicentre of the Covid-19 outbreak in Nigeria. The President stopped short of shutting the entire country down, however, but this move is seen as the first step towards a nationwide lockdown should things get worse. “The President is keeping a close eye on international developments on the spread of COVID-19 and will intensify or introduce new measures if they become necessary to protect Nigerians,” the statement read.