Food and personal products giant Unilever Nigeria Plc has revealed it is being forced to buy dollars above the official market rate in the country.
This is attributed to currency rationing by the Central Bank of Nigeria (CBN) due to the greenback’s shortage since the Covid-19 pandemic caused the lockdown and collapse in global oil prices, which has had a negative impact on the country’s external reserves.
According to Bloomberg, the disclosure was made by Unilever Nigeria Plc CFO Adesola Sotande-Peters during a conference call with investors in Lagos.
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Sotande-Peters said the company bought the currencies from currency traders and banks at an average of between N440 / $ 1 and N450 / $ 1 during the first half of 2021, up from N410.80 / $ 1. that it closed Friday at the counter of investors and exporters, representing more than 9.5% of overpayment.
She said the multinational company had not seen an increase in the supply of dollars since the CBN’s last policy in which the umbrella bank halted sales of foreign exchange to Bureau de Change (BDC) operators.
Sotaande-Peters said, “ We are still waiting to see how the banks will be liquid to meet the demand of many customers, ” adding that Unilever needs foreign currency to import petrochemicals, a raw material for many of its products.
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Speaking on the conference call, Unilever Nigeria Managing Director Carl Cruz said that in order to alleviate the impact of the dollar shortage on operations, the company is increasing local sourcing of raw materials. to enable it to be currency neutral in the near future.
What you should know
Recall that in July, the governor of the CBN, Godwin Emefiele, at the end of the monetary policy meeting (MPC), announced the end of sales of dollars to BDC operators accusing them of facilitating corruption and money laundering in addition to engaging in illegal activities and exhibiting corrupt tendencies.
The umbrella bank said it would now channel weekly dollar sales allocations to commercial banks to meet legitimate demands for foreign exchange.
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The scarcity of dollars and the pressure of demand for forex have refused to ease since the outbreak of the coronavirus pandemic and the subsequent collapse in the prices of oil, which is Nigeria’s largest source of foreign exchange.
This has seen many Nigerian companies and manufacturers complain about the difficulty in obtaining foreign exchange to meet import requirements, just as foreign investors have difficulty accessing foreign currency to repatriate their funds.