Food and personal products giant Unilever Nigeria revealed that it was forced to buy U.S. dollars at a price higher than the country’s official market price.
This is due to the shortage of US dollars since the blockade caused by the Covid-19 pandemic and the collapse of global oil prices. The Central Bank of Nigeria (CBN) has implemented foreign exchange rationing, which has a negative impact on the country’s external reserves.
According to Bloomberg News, this disclosure was made by Adesola Sotande-Peters, the financial director of Unilever Nigeria, during an investor conference call in Lagos.
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Sotande-Peters said that the average price of the company’s purchase of foreign exchange from currency dealers and banks in the first half of 2021 was between N440/1 and N450/1 US dollars, while Friday’s closing price was N410.80/1 US dollars. Investors and exporters have overpaid more than 9.5%.
She said that since CBN’s latest policy, the multinational company’s supply of U.S. dollars has not increased, in which top banks stop selling foreign exchange to foreign exchange bureau (BDC) operators.
Sota Ander-Peters said, “We are still watching how the bank’s liquidity can meet the needs of a large number of customers,” Added that Unilever needs foreign exchange to import petrochemical products, which are the raw materials for many of its products.
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Carl Cruz, the managing director of Unilever Nigeria, said in a conference call that in order to reduce the impact of the dollar shortage on operations, the company is increasing local procurement of raw materials to make it in the near future.
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Recall that in July, CBN President Godwin Emefiele announced after the Monetary Policy Conference (MPC) that it would stop selling U.S. dollars to BDC operators, accusing them of corruption in addition to engaging in illegal activities. And money laundering to facilitate and show corrupt tendencies.
The top bank said it will provide commercial banks with weekly sales allocations in US dollars to meet legitimate foreign exchange needs.
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Since the outbreak of the coronavirus pandemic and the subsequent plunge in oil prices, the scarcity of the U.S. dollar and the pressure on foreign exchange demand have not been alleviated, and oil prices are Nigeria’s largest source of foreign exchange income.
This has caused many Nigerian companies and manufacturers to complain about the difficulty of obtaining foreign exchange to meet import requirements, just as it is difficult for foreign investors to obtain foreign exchange to repatriate their funds.