You Are Hurting Our Business Interests, US Tells Nigeria’s Buhari

Foreign-exchange controls implemented by Nigeria’s government over the past year are hindering the ability of US companies to do business in Africa’s largest economy, according to Commerce Secretary Penny Pritzker.

Bloomberg reports that US companies have “been quite explicit it’s a barrier to trade,” Pritzker said in an interview in the Nigerian commercial capital, Lagos on Monday.

The policies also hurt Nigerian manufacturers because they import about 52% of their inputs and need dollars to pay for those, she said. Pritzker will raise the issue with Nigerian President Muhammadu Buhari and Vice President Yemi Osinbajo in Abuja, the capital, on Tuesday.

Nigeria’s central bank, with Buhari’s backing, has tried stop the currency weakening amid a rout in prices of oil, which provides Africa’s largest crude producer with almost all export earnings, by restricting imports and foreign exchange trading.

The regulator has effectively pegged the naira at 197-199 since March. Foreign investors have sold naira bonds and stocks to avoid a devaluation they see as all but inevitable. Forwards prices suggest the currency will weaken 20% to 249.5 per dollar in three months, while the black market rate fell to a record 305 this month.

“It sounds like you’re starting to see factory lay-offs,” Pritzker said. “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.”

Largest investor

The US is the largest foreign investor in Nigeria, according to the State Department. Bilateral trade was $18.2 billion in 2012, according to US trade data, in favour of Nigeria.

American foreign direct investment is concentrated largely in the petroleum/mining and wholesale trade sectors.

US exports to Nigeria include wheat, vehicles, machinery, oil, and plastic, while importing cocoa, rubber, returns, antiques, and food waste.

Nigeria is also eligible for preferential trade benefits under the African Growth and Opportunity Act (AGOA).