The former Acting Governor of the Central Bank of Nigeria, Adebisi Shonubi, promised to clear the foreign exchange backlogs within ‘one or two weeks.’

However, two weeks later, the situation remains dire, with forex shortages wreaking havoc on the Nigerian economy.

At the time of Shonubi’s promise, forex backlogs, primarily comprising unmet demands from investors and exporters, amounted to a staggering $10 billion. The most affected were manufacturers and importers relying on foreign currency to purchase finished goods and raw materials from abroad.

Startling data from the National Bureau of Statistics (NBS) revealed that in the first half of 2023, Nigeria spent approximately $6.7 billion on the importation of manufactured goods. Meanwhile, exports of manufactured goods accounted for a mere $285 million during the same period, highlighting the alarming trade imbalance.

In the second quarter, the value of manufactured goods traded reached N3.2 trillion, but only 93% of total trade was exports, amounting to N212 billion. Imports, on the other hand, stood at N3 trillion, translating to $3.8 billion spent on manufactured imports versus just $461 million earned through exports.

This data underscores the nation’s failure to achieve backward integration and promote locally made products.

It also reveals that the forex scarcity plaguing Nigeria is partly self-inflicted due to low productivity and a lack of infrastructure.

The Manufacturers Association of Nigeria reported a concerning decline in capacity utilization, falling from 59% in 2021 to 54.9% in 2023. The report cited difficulties in sourcing forex, which pushed manufacturers to seek local raw materials, albeit at a higher cost.

Unsold inventories also surged, reflecting declining purchasing power, rising inflation, and government policies such as the Naira Redesign.

The situation has been exacerbated by unfavorable macroeconomic conditions, including a cash crunch, high energy costs, and soaring transportation expenses.