Posted: 12 March 2020
The coronavirus outbreak and tumbling oil prices are triggering a dollar shortage in Nigeria
Assynt’s expert Africa Analyst speaks to Bloomberg on Borno state governor’s demand for troops to quell the insurgency.
Nigeria has recorded only two confirmed cases of Covid-19 but the global pandemic’s growing impact on its economy is far more significant.
As oil prices tank while global demand drops drastically in the wake of the outbreak, Nigeria’s economy is being caught in the cross-hairs. Essentially, with oil being Nigeria’s biggest export, the government relies heavily on the resource for dollar earnings to fund its national budget. And with this year’s $37 billion budget passed with a benchmark oil price of $57 per barrel—nearly double its current price of around $31 to $33, Africa’s largest economy cannot currently fund its budget.
One unfolding real-time effect is a US dollar shortage that’s already…
…Mathias Hindar, Sub-Saharan Africa analyst at Assynt, says sustained low oil prices will “see the government’s ability to protect the naira diminish.” For its part, Aza, an African currency broker, is advising clients to “reduce exposure” to the naira as it expects “further weakening” in the coming days.