Nigeria suffers a 31% drop in net foreign exchange inflow during the first seven months of 2021

NIGERIA suffered a 31% drop in the amount of net foreign exchange that flowed into the country during the first seven months of 2021 compared with the same period in 2020 according to a recent Central Bank of Nigeria (CBN) report.

According to the CBN, net foreign exchange inflow into the economy fell to $21.81bn in the seven months to July 2021, from $31.57bn in the corresponding period of last year. This decline was caused by a 30% fall in  foreign inflow which cancelled the benefit of a 29%  fall in foreign exchange (forex) outflow out of the economy during seven months to July 2021.

Analysis of the CBN data shows that forex inflow dropped to $49.66bn during the first seven months of 2021 from $71.03bn over the same period in 2020. Similarly, forex outflow fell to $27.85bn during the seven month period from $31.57bn during the same period in 2020.

However,  on a monthly basis, net forex inflow recorded a marginal increase of 17% to $2.77bn in July from $2.4bn in June 2021. In its Monthly Economic Report for July 2021, the CBN attributed  the improvement in net forex inflow in July to a 23% fall in forex outflow caused  by decline in its  intervention in the foreign exchange market and lower direct payments.

This sharp fall in forex outflow dampened the effect of a 7.4% decline in forex inflow recorded during the month. A CBN spokesman said: “Aggregate foreign exchange inflow into the economy declined by 7.4% and 8.7% to $6.10bn, compared with the level in June 2021 and July 2020, respectively.

“The decrease reflected, mainly, the contraction in inflow through the autonomous sources, which fell by 33.3% to $2.79bn in July 2021. However, foreign exchange inflow through the bank increased by 37.7% to $3.31bn in July 2021, as oil-related inflow increased due to the upward trajectory in oil prices.

“Foreign exchange outflow through the economy fell by 23% to $3.33bn in July 2021. This fall in outflow was due, mainly, to a decrease in the bank’s intervention in the foreign exchange market and lower direct payments.

“However, outflow through autonomous sources inched up by 12.4% to $0.67bn in July 2021, due, majorly, to the 13.2% increase in payments for invisible imports. Overall, foreign exchange flows resulted in a higher net inflow of $2.77bn in July 2021, compared with $2.27bn in June 2021. From this number, net inflows through the bank was $0.66bn, while through autonomous sources amounted to $2.11bn.”