Black Market Hawkers Cash In On African Oil Producers’ Currency Woes

Black Market Hawkers Cash In On African Oil Producers’ Currency Woes

From Reuters via CBNC Africa

Few Nigerians are applauding the collapse of oil prices, which has hit the economy of Africa’s top crude producer hard and hammered its currency, the naira.

But for the currency hawkers hanging around outside Abuja’s Sheraton hotel, business has seldom been so good as wealthy Nigerians turn to the black market – sometimes changing up to $200,000 at a time – to dodge increasingly onerous FX regulations.

In other African crude producers such as Angola and South Sudan, the sharp drop in oil receipts has caused the official supply of dollars to dry up, paralysing day-to-day commerce and leaving some travellers stranded cashless at airports.

In South Sudan, one of the world’s poorest countries, the formal central bank rate is 2.95 pounds to the dollar, but traders say the bank refused to sell, forcing them to resort to the streets where the greenback is worth more than double its official rate.

“Access to dollars is a problem for me,” said Ahmed Oman, a Somalia market trader in Juba, the war-scarred and landlocked state’s dusty capital city.

In Nigeria, holding naira has become increasingly unpopular as it has lost its value.

Basic everyday goods can still be paid for in the local currency but many items are scarce and Nigerians need U.S. dollars for imports such as drugs or fabrics sold by small-time traders, to send money to relatives abroad or to purchase western clothes that are important status symbols.

Faced with a massive drop in oil revenues and declining reserves, Nigeria’s central bank devalued the naira and then imposed rules restricting access to dollars to all but importing companies to curb what it termed “speculation”.

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