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Nigeria to halt foreign currency for sugar, wheat imports, says central bank

Street scene in Nigeria

Nigeria will no longer provide foreign currency for importers of sugar and wheat, the central bank said on Twitter on Friday, as the country tries to conserve national dollar reserves.

Africa’s most populous country, and its biggest economy, relies on imports to feed its 200 million people. The central bank restricted access in 2015 to foreign exchange for 41 items it says can be produced locally, and has added to the list since then.

“Sugar and wheat to go into our FX restriction list. We must work together to produce these items in Nigeria rather than import them,” the central bank said in a tweet.

Currency restrictions aimed at easing pressure on the local currency amid a shortage of dollars have contributed to galloping inflation and further weakened the naira in recent years, analysts say.

The Nigerian currency hit a record intra-day low of 437.62 to the dollar on Friday after the central bank sold hard currency at a weaker level in the forward market to foreign investors.

Annual inflation hit a more than four-year high in March, driven largely by food price inflation, which rose 1.16 percentage points from a month before, to 22.95%.

The World Trade Organization has voiced concerns about Nigeria’s foreign exchange management and the way the country has used it to support manufacturing, imports and exports.

In August 2019, the central bank told lenders to stop offering credit to importers of milk after saying it would ban access to foreign exchange for dairy purchases to spur local production. It later lifted forex restrictions for milk imports for six firms following an outcry from businesses.

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