Nigeria’s Letter of Credit Payments Plummet by 57% in First Seven Months of 2024

The Central Bank of Nigeria (CBN) has released statistics showing a significant decline in the country’s Letter of Credit (LC) payments. According to the data, LC payments dropped by 57% in the first seven months of 2024, with the country’s total LC payments amounting to $391.91 million.

Compared to the same period in 2023, LC payments dropped by approximately $520.44 million. The highest LC payments this year were recorded in February, at $102.59 million, followed by July, at $79.65 million, and January, at $58.33 million.

The CBN’s sale of foreign exchange (FX) to authorized dealers also played a significant role in the drop in LC payments. In a bid to promote stability and reduce market volatility in the foreign exchange market, the CBN sold $122.67 million to 46 authorized dealers in July. The bank’s Director in charge of Financial Markets, Dr. Omolara Duke, announced that $67.5 million was sold to 27 dealers, while the sum of $2.5 million was bought from one authorized dealer on July 10.

The development is a reflection of the ongoing challenges facing Nigeria’s economy, including a declining oil price and a sharp devaluation of the naira. The country’s foreign exchange reserves have also been under pressure, with the CBN struggling to maintain a stable exchange rate.

The sale of FX to authorized dealers has become a crucial measure to manage the country’s foreign exchange market. The CBN has been actively intervening in the market to stabilize the exchange rate and maintain liquidity.