Nigeria’s foreign-exchange controls are creating a trade barrier for U.S. companies trying to do business in Africa’s largest economy, U.S. Commerce Secretary Penny Pritzker said Monday during an interview in Lagos, MGAfrica reported.
The U.S. is Nigeria’s largest foreign investor, according to the U.S. State Department. Bilateral trade in 2012 was $18.2 billion.
Pritzker is leading an 11 person U.S. delegation to Nigeria including representatives of U.S. government, business and investment. They’re on a fact-finding mission to strengthen commercial engagement between the U.S. and Africa for mutual benefit, Naija247News reports. What they learn could influence U.S. foreign policy for Africa.
The Tony Elumelu Foundation and United Bank for Africa co-hosted a panel and round-table discussion between members of the U.S. Presidential Council on Doing Business in Africa and a diverse community of African entrepreneurs.
“Too often, well-meaning foreign policy makers develop strategies to help Africans without actually engaging us,” Elumelu said, according to Naija247News. “In order to effectively help or support people, we should ask them what kind of help they want. So, I thank you for doing that with African businesses.”
Some of the entrepreneurs attending the roundtable included small-and-medium-sized business owners selected for the Tony Elumelu Entrepreneurship Programme – a 10-year, $100 million commitment to empower the next generation of African entrepreneurs with businesses that have the potential to generate income and jobs for their countries.
SMEs, many operating below optimal capacity, contribute close to 50 percent of Nigeria’s productivity, according to analysts, Brainerd Odiete and Obinna Igwebuike with Lagos research company Sawubona Advisory Services. “A significant boost in their productivity will have material positive impact on GDP growth,” they said, according to a report in Footprint2Africa.
Nigeria’s policies aren’t just hurting the U.S. — they’re also hampering Nigerian manufacturers who import about 52 percent of their inputs and need dollars to pay for those, said Pritzker, who plans to raise the issue Tuesday with Nigerian President Muhammadu Buhari, according to MGAfrica.
Oil provides Nigeria with most of its export earnings. As oil prices sank from $110 a barrel less than two years ago to $30 and falling, Nigeria’s central bank has tried stop the naira from weakening by restricting foreign exchange trading and imports.
The Nigerian regulator has effectively pegged the naira at 197-to-199 since March while the black market rate fell to a record 305 this month. Foreign investors have sold naira stocks and bonds to avoid a devaluation but that’s seen as inevitable, MGAfrica reported. The currency may weaken 20 percent to 249.5 per dollar in three months.
“It sounds like you’re starting to see factory layoffs,” Pritzker said, according to MGAfrica. “That’s not good for Nigeria. And, of course, President Buhari is focused on inclusive growth. So, pointing out some of the contradictions between objectives and policies is part of the conversation we’ll have.”
Lagos-based analysts said buying Nigerian-made products will not only help SMEs thrive but also enable them employ more people, reduce forex exposure and stimulate the growth of the local economy, according to Footprint2Africa.