From the WSJ,
U.S. dollars have become increasingly scarce over the past 18 months as global oil prices crashed, depriving Nigeria of most of its export revenue. So the central bank has toughened rules governing how easily businesses can purchase them.
That helped the central bank freeze its reserves at about $28 billion, down around 20% from a year ago. But commerce is paying the price.
Unplugged from the global economy, factories and retailers can’t get the foreign currency to pay suppliers abroad. KFC and other restaurants have yanked French fries from menus in recent days here because they can’t get enough dollars to import potatoes.
“So we offer rice,” said Aditya Chellaram of Chellarams PLC, Nigeria’s KFC franchisee. Mr. Chellaram has trained cashiers to explain foreign-exchange restrictions to irate customers. Nigeria doesn’t have enough commercial potato farmers or processing plants to make up the difference. “It will take years,” he said.
Some companies are resorting to hauling sacks of naira notes to tin-roofed money-changing stalls near the international airport here, where Muslim businessmen with cash stacks tucked into their ankle-length robes sell a dollar for as much as 385 naira, a 94% markup.
Now even those shacks are running out of dollars. “If I sell one naira, I thank God,” said Dicko Ibrahim, a local currency trader who normally keeps about $30,000 on hand. One recent morning, he was down to a single $100 bill.
The central bank says its policies are meant to spur local production, and create factory jobs in a country where most people aren’t formally employed. The short-term pain is an acceptable trade-off to help industrialize the country, central bank Governor Godwin Emefiele has said. In time, that could free Nigeria from its dependence on oil.
- Do read the whole article, if you’re not a subscriber, Google search to read it.