The Central Bank of Nigeria, CBN, has directed licensed bureau de change operators to sell dollars to customers at a rate not higher than N386 to the dollar.
This came as the Federal Government, said despite the N2.3 trillion Economic Stimulus Plan put in place to contain impact of the Coronavirus pandemic on the economy, there is the possibility that the third quarter, 2020 (Q3’20) Gross Domestic Product, GDP, growth rate will be negative, while the economy will relapse into a recession.
The apex bank in a circular signed by the Director, Trade and Exchange Department, O.S. Nnaji, said the directive would take effect on Monday.
“As part of efforts to enhance accessibility to foreign exchange, particularly to travellers, following the announcement of the limited resumption of international flights by the Minister of Aviation, commencing with Abuja and Lagos, the CBN hereby wishes to inform the general public that gradual sales of foreign exchange to licensed BDC operators will commence with effect from August 31, 2020.
“Please be advised that the application exchange rate for the disbursement of proceeds of IMTOs for the period, Monday, August 31 to Friday September 4, 2020 as follows: 1: IMTOs to banks N382/1USD; Banks to CBN N383/1USD; CBN to BDCs N384/1USD; BDCs to end users, not more than N386/1USD; Volume of sale for each market is USD 10,000 per BDC. On the recession, the Government, however, said it would be a short-lived recession.
“The government’s position is now in line with private sector projections for the economy against the backdrop of the second quarter 2020, Q2’20 GDP figures released by the National Bureau of Statistics, NBS, on Monday which put the GDP at -6.1 per cent, the worst performance in three decades.”
Earlier in the week, many economy observers have indicated that Nigerian economy would certainly sink into a second recession in four years with effect from the third quarter 2020, Q3’20.
Technically, an economy enters recession when it records two consecutive quarters of negative growth.
Reflecting on this, the Director General of the Lagos Chamber of Commerce and Industry, LCCI, Muda Yusuf, had stated: “Given the protraction of the COVID-19 pandemic and lack of a vaccine, there is high possibility that the economy would contract, though marginally, in the third quarter and this would mark the second recession under the watch of the current administration.”
Though optimistic on the future GDP performance especially in the remaining two quarters of this year, analysts at Cardinal Stone Finance, a Lagos based investment house, projected that full year 2020 GDP would be around -4.6 percent.
Also, Uche Uwaleke, a Professor of Finance and Capital Market of Nasarawa State University, Keffi, and former Commissioner of Finance of Imo State, said the negative growth would continue into a recession in Q3’20.
He stated: “A negative real GDP growth is also most likely to be recorded in Q3’20 but the size will be smaller as the economy gets restarted and crude oil price gradually picks up.”
He added that though the current GDP downturn is the worst, the economy has not yet entered into recession until end of third quarter when another negative growth is most likely.”
The Federal Government’s projection came at yesterday’s meeting of the National Council of State, NCS, which also ratified the presidential post-humorous pardon extended to former governor of defunct Bendel State, late Prof. Ambrose Alli.