As the difficulties with FX liquidity increase, the Nigerian Exchange Ltd. is suggesting dollar bonds for companies that work in the free trade zones and those that make money in foreign currency. Nigeria hopes this will help companies with their money problems.
Lots of big companies in Nigeria are struggling. They can’t get enough dollars to buy things they need. The value of the naira going down also means they make less money. One company called Guinness Nigeria lost over 18 billion naira last year!
Now the stock exchange wants companies in free trade zones and those that earn foreign cash to issue dollar bonds. Bonds are like loans from investors where companies borrow money. With dollar bonds, companies get dollars directly instead of waiting to change naira to dollars. This should give them dollars to operate. The stock exchange thinks this could provide more dollars in the market.
However, experts say this only fixes the short term dollar problem. Nigeria’s real money issues are deeper. The country doesn’t make enough dollars itself. To solve it permanently, Nigeria must make and export more goods, make business easier, and trade more with other nations.
Even after changing exchange rates, the Central Bank of Nigeria still controls who gets dollars. However, experts say this control is the real problem as it stops exchange rates from being equal. The World Bank also says Nigeria should remove these controls. It remains to be seen if the central bank will change this policy.
Dollar bonds may help companies in need of dollars to run their business. But bigger changes are still needed to truly solve Nigeria’s foreign exchange difficulties.
