Nairametrics| The Central Bank of Nigeria on Tuesday, issued a rash of new forex polices aimed at reducing dollar scarcity at the retail end of the market. We’ve analysed the effects severally on this blog and hope, with our fingers crossed, that it will work. However, as we look forward to the full implementation of the plan, we can’t help but look at the sharp drop in forex inflows into Nigeria in 2016 and what may have caused it.
The chart above depicts just how bad things have been since the decline in oil prices and since the CBN started implementing its forex policies. As you can see from above, forex inflows started to dip just before the first set of devaluations in November 2014. It went downhill from there on. From about $146.6 billion, Nigeria’s forex inflows dipped to as low as $62.7 billion. That’s about $80 billion wiped out in two years. Oil inflows and non-oil inflows (autonomous inflows) all dropped massively, Autonomous inflows includes remittances, amount in domiciliary accounts, capital importation etc.
Another look at the chart also reveal something interesting. The interactive chart above shows dollar inflows every month since 2013. From above, you can see that the drop was faster around August and September when the effects of the 41 banned items kicked in and when JP Morgan yanked Nigeria off its index. It’s been downhill since then and we never seem to have recovered till now. Whilst the drop in oil prices is a major reason for the sharp drop in supply, could CBN policies have contributed significantly?