Foreign suppliers are no longer rejecting letters of credit from Nigerian businesses, in a boost for manufacturers who had struggled to import critical inputs and ran the risk of shutting down.

The improved dollar supply in Africa’s most populous nation is behind the acceptance of the letters of credit that had been rejected following an acute dollar shortage that saw the Central Bank of Nigeria (CBN) default on forward contract obligations.

“The improved dollar supply has led to the easy access of LCs since last month,” Femi Egbesola, national president of the Association of Small Business Owners of Nigeria, said.

“Manufacturers will now be able to project their plans now that they can access LCs. It will also help stabilise the naira more,” Egbesola said.

He said he expected the prices of goods to begin to cool in the short term in line with the new exchange rate that is about N1,250-N1,300/$.

A letter of credit is a mode of payment used for the importation of visible goods.

It is a written undertaking given by a bank at the request of its customer, in which the bank obligates itself to pay the exporter up to a stated amount within a prescribed time frame upon presentation of stipulated documents in exchange for goods.

An official at Manufacturers Association of Nigeria (MAN), who spoke on condition of anonymity, also confirmed the acceptance of LCs, saying that the situation has improved.

“The government was able to settle some of the forex forward payments that the Central Bank of Nigeria had and that was a game-changer,” he said.

Nigeria’s cocoa farmers are racing to plant more high-yielding seedlings to replace old trees while expanding their growing areas after a six-fold jump in prices this year.

This, according to the Cocoa Farmers Association of Nigeria, will help boost the country’s cocoa output in three years when they start fruiting.
Production may climb by 500,000 to 800,000 metric tons by 2026, Adeola Adegoke, national president of the Cocoa Farmers Association of Nigeria, said in an interview Wednesday. That would suggest a 132 percent rise from Nigeria’s 2022-2023 production estimates by the International Cocoa Association (ICCO).

“There are lots of investments going in the sector as we speak by farmers because of the record prices,” Adegoke said.

“Cocoa farmers are planting more seedlings and taking care of their old plantations so they can have better yields. Even those not growing cocoa have become emergency cocoa farmers,” he explained.

Currently, a metric ton of the commodity sells for an average of N11.2 million at the Matori warehouse in Oshodi, Lagos.

That’s a six-fold jump compared to the N1.8 million a metric ton of cocoa beans sold for in January 2024.

Nigerian cocoa growers are making more money than their counterparts in Ghana and Ivory Coast thanks to a steep naira devaluation that has resulted in a sharp increase in the naira income from the export of the beans.

The international price of cocoa beans has almost tripled since the start of the year owing to bad weather that battered harvest in top West African growers – Ivory Coast and Ghana, causing a shortfall and cutting 50 percent of global supply.

Tempting though it may be to bank the windfall cash, farmers in Africa’s most populous country see an opportunity to invest to produce more. Many are now buying high-yielding seedlings, expanding their growing areas and planting more cocoa instead of less profitable crops.

“With the current price of cocoa, many of us are geared towards engaging in producing more cocoa instead of growing less profitable crops,” Musa Sanda, a cocoa farmer in Kurmi Local Government Area in Taraba, told BusinessDay.

“I just placed an order for 1,000 seedlings to replace my coffee trees as coffee does not bring the kind of money cocoa is giving me now,” Sanda said.

Lawrence Afere, founder and CEO of Springboard Farmers’ Co-operative of Nigeria, said the price rally is not just driving more investments from farmers but also attracting new entrants of farmers into the sector.

“We have a cocoa nursery where we raise seedlings and saplings and lots of farmers not only from Ondo but as far as Abia are coming to buy,” Afere said.

“A man from Abia just placed an order for 60,000 seedlings for four hectares of land he just opened up to grow cocoa,” he noted.

According to him, the push to grow more cocoa owing to the recent price surge is causing encroachment into forest-reserved areas by some farmers as they seek lands to plant more of the beans.

An estimated 1.4 million people in Nigeria depend on cocoa production for their livelihood, according to the U.S. Agency for International Development, and growing more of the profitable commodity would translate to increased income for them.

Cocoa was a major revenue and foreign exchange earner for the country and provided millions of jobs for the people, especially those in the southwest region.

Several years down the line, after the discovery of oil in commercial quantity, the once major cocoa producer now lags behind Ivory Coast, Ghana, and Indonesia in cocoa production, according to the latest data from International Cocoa Organisation (ICCO) 2022-2023 season.

Sayina Rima, former president of the Cocoa Association of Nigeria, said with the current investment drive by farmers and full implementation of the 10-year cocoa plan, Nigeria will triple its production and boost its non-oil export while reclaiming its position in the comity of cocoa growing countries.

Rima noted that the current price surge is causing more young people to rush into growing cocoa in Ikom Local Government Area of Cross River state.

“In Ikom, the price surge is causing more youths to rush into the production of cocoa,” he said from his Ikom farm. “With all this momentum, our production will increase but we need the government to stop paying lip service to cocoa,” he noted.

“Government must fully support the production of cocoa as it remains our main export cash crop,” he added.

Nigeria is currently the world’s fourth largest producer of cocoa, with 280,000 metric tonnes in the 2022–2023 season, according to the International Cocoa Organisation’s latest data on global production and the third largest exporter, after Ivory Coast and Ghana.

Nigeria exported a total of N356.16 billion worth of cocoa beans in 2023, an 18.44 percent increase when compared to 2022 N300.71 billion.

The export of the commodity accounts for 28.72 percent of total agricultural exports (1.24 trillion) in 2023 and 5.6 percent of non-oil exports for the same period.

Airtel Africa Plc recorded a loss after tax of $89 million for its full year ended March 2024 because of a $549 million foreign exchange loss caused by the devaluations of the naira in June 2024 and the Malawian kwacha in November 2023.

“Loss aftertax of $89m during the year ended 31 March 2024 was primarily impacted by the $549m net of tax impact of the exceptional derivative and foreign exchange losses,” it highlighted.

In its full year report released on Thursday, the telco said its reported Revenue declined by 5.3 percent to $4.98 billion primarily due to the naira’s devaluation.

It, however, noted that its revenue in constant currency grew by 20.9 percent with growth accelerating to 23.1 percent in its fourth quarter.

“Nigerian constant currency revenue growth accelerated to 34.2 percent in Q4’24 despite the challenging backdrop,” it said.

There are indications that Microsoft African Development Centre (ADC) may shut down its West Africa operation, located in Lagos, Nigeria.

Industry sources in the know revealed this to The Guardian on Tuesday, though no official statement from Microsoft yet.

It was gathered that the management of Microsoft had on Monday informed the staff of the sudden development.

Affected staff, according to information gathered, might be paid their salaries till June and their HMOs.

A source within Microsoft Lagos office neither confirmed nor denied the development when reached out to yesterday.

“I cannot say anything on that for now. Thank you,” the source stated.

While the immediate cause of the shutting down of the ADC remains sketchy, industry sources claimed it might be due to the current economic situation in the country.

The industry source, however, said that ADC in East Africa, situated in Nairobi, Kenya is not affected, “only that of Nigeria.”

The ADC was launched in Nigeria in 2022 after it was set up in 2019. It formed part of Microsoft’s $100 million investment for two development centres in Africa, with the other located in Nairobi. Since its launch, ADC was reported to have hired 120 engineers and more than 200 total employees in Nigeria.

At the launch in 2022, Managing Director, Microsoft ADC, West Africa, Gafar Lawal, said, “We intended to recruit 500 full-time engineers by the end of the year or by 2023. However, currently, we have exceeded 500. This is to tell you about the abundance of talents we have in Africa.”

The ADC was commissioned by former Minister of Communications and Digital Economy, Prof. Isah Pantami and Lagos State Governor, Babajide Sanwo-Olu.

The ADC aimed to facilitate the creation of tech solutions that will solve both African and global problems.

“We desire to recruit exceptional engineering talent across the continent that will build innovative solutions for global impact. This also creates opportunities for engineers to do meaningful work from their home countries and be plugged into a global engineering and development organisation,” Microsoft had said in a statement.

The ADC facility in Lagos also housed the Microsoft Garage, an entity, launched to scale innovation in the tech ecosystem. An increased Microsoft presence in Africa will empower partners and customers as they use Microsoft solutions in fields important to the continent like FinTech, AgriTech and OffGrid energy.

The CEO of Binance, a popular cryptocurrency platform, claimed that some unknown persons, claiming to be agents of Nigerian officials demanded huge payments in cryptocurrency to make their problems in the country “go away”.

Richard Teng, the firm’s chief executive officer (CEO) who took over from founder and former CEO Changpeng Zhao, made the claim in a blog post released Tuesday, May 7, on Binance’s website.

He added that the request was made through a local firm it hired.

Speaking on Binance’s issues with the Nigerian government, Teng detailed how the world’s largest cryptocurrency exchange tried to engage with the Nigerian authorities, including a meeting on January 8 in Abuja, where it was confronted with criminal allegations.

Teng said despite multiple requests, Binance had still not received details of the allegations, “and our employees, therefore, inquired if there was an opportunity to submit our responses in writing and in the absence of a public hearing”.

“There were a number of reasons for that, including the sensitivity of the information and getting the opportunity to see the allegations in full and prepare a thorough substantive response,” he said.

“The meeting ended with the Chair confirming they would consider the matter and revert through Binance’s local counsel.

“However, as our employees were leaving the venue, they were approached by unknown persons who suggested to them to make a payment in settlement of the allegations.

“Later that day, our local counsel — representing us at that time — was summoned by the Committee through someone purporting to be their agent, who relayed the Committee’s terms and instructed our local counsel to advise us.

“Counsel reported back that he had been presented with a demand for a significant payment in cryptocurrency to be paid in secret within 48 hours to make these issues go away and that our decision was expected by the morning.

“Our team grew increasingly concerned about their safety in Nigeria and immediately departed.”

Teng said the payment request was declined “via our counsel, not viewing it to be a legitimate settlement offer”.

The CEO said Binance clarified that it would engage in settlement negotiations on the conditions that the relevant petition or the details of all allegations were seen.

He wrote: “We, of course, declined the payment demand via our counsel, not viewing it to be a legitimate settlement offer, and clarified that we would engage in settlement negotiations on the following conditions:

“Binance needs to see the relevant petition and/or the details of all allegations.

“Any settlement must be official, recorded in writing, and signed by all relevant parties.

“Any settlement must encompass all relevant agencies and be in full and final settlement of all allegations, including any potential historic tax liabilities, if applicable, with guarantees.

“While the exact terms of any settlement may have to remain private, there would have to be some public acknowledgement that a resolution has been reached.”

The Binance boss also requested that the company’s “contractors and employees are not to be intimidated, harassed, or detained.”

He said the Binance counsel relayed its conditions which Nigerian authorities initially objected to before they later agreed.

In continuation of its engagement with Nigeria, two Binance officials, Nadeem Anjarwalla, a 37-year-old British-Kenyan and Binance’s regional manager for Africa; and Tigran Gambaryan, a 39-year-old US citizen and Binance’s head of financial crime compliance, arrived Nigeria to discuss further terms with the Nigerian government but they were arrested on February 28.

Anjarwalla later fled detention and left Nigeria.

On March 25, Nigeria’s government filed a criminal charge against Binance for “tax evasion”.

Teng appealed to the government to “Let Tigran go home to his family, and then Binance will work through the same process that we have done with Nigeria’s law enforcement community voluntarily more than 600 times in the past.”

He added: “We will always work to protect innocent users, and bad actors are not welcome on our platform. We will work tirelessly with public and private partners to remove them. Furthermore, we will continue engagement with Nigeria’s Federal Inland Revenue Service on resolving potential historic tax liabilities.”

The Central Bank of Nigeria has directed banks to stop charges on cash deposits until September 30, 2024.

The apex bank disclosed this in a circular dated May 6, 2024, signed by its Director of Banking Supervision, Adetona Adedeji.

Customers of some of the Deposit Money Banks raised concerns that the banks have begun collection of processing fees for cash deposits as of May 1.

Our correspondent sighted this in an email shared by one of the customers of the banks.

Based on the bank’s move, two per cent was to be charged on deposits above N500,000 for individuals, while corporate account holders were to be charged two per cent on deposits above N3m.

According to the latest circular to financial institutions and non-financial institutions, CBN said the processing fees have been suspended.

The circular read, “Please refer to our letter dated December 11, 2023, referenced BSD/DIR/PUB/LAB/016/023 on the above subject, suspending processing charges imposed on cash deposits above N500,000 for Individuals and N3,000,000 for Corporates as contained in the ‘Guide to Charges by Banks, Other Financial Institutions and Non-Bank Financial Institutions’ issued on December 20, 2019,” CBN said.

“The Central Bank of Nigeria hereby extends the suspension of the processing fees of 2% and 3% previously charged on all cash deposits above these thresholds until September 30, 2024.”

The apex bank directed financial institutions to continue to accept all cash deposits from the public without any charges till the end of the third quarter.

The Naira yesterday depreciated to N1,415 per dollar in the parallel market, from N1,410 per dollar on Monday.

Similarly, the Naira depreciated in the Nigerian Foreign Exchange Market, NAFEM, to N1,416.57 per dollar.

Data from FMDQ showed that the indicative exchange rate for NAFEM fell to N1,416.57 per dollar from N1,354.21 per dollar on Monday, indicating N62.36 depreciation for the naira.

Consequently, the margin between the parallel market and NAFEM rates narrowed to N1.57 per dollar from N55.79 per dollar on Monday.