Fast Moving Consumer Goods (FMCGs) companies have struggled with Nigeria’s controlled exchange rate system for almost a decade. They found it challenging to access dollars for imports of raw materials like durum wheat, palm oil and spare parts for equipment. Repatriating capital and profits to their parent companies abroad was also problematic.
Not only was access to foreign exchange (FX) challenging, but getting FX at the black market was expensive, no thanks to the CBN’s FX rationing at the official window and import restrictions. FMCGs eventually resorted to a blended rate, sourcing 95% of their FX needs from the black market and 5% at the official rate.
But there’s a glimmer of hope.
After just 23 days in office, President Tinubu, alongside the CBN, took a bold step towards unifying Nigeria’s multiple exchange rates. As we've recently explored, this move aims to bring cohesion to the country's currency valuation system.
How will this new FX policy affect FMCGs and consumers? This question is what today's article will answer.