The Nigerian currency, Naira, has long been subject to myriad challenges in commodity trading. At a recent AFEX CEO Breakfast event in Lagos, Mezuo Nwuneli, the Managing Director of Sahel Capital, highlighted several key issues that have plagued Nigerian markets, such as an unclear foreign exchange policy, poor infrastructure, and stubborn insecurity. Hurdles in merging commodity and capital markets persist, vital for realising the World Bank’s 2013 forecast of a $1tn market.
Nigerian Commodities and Capital Markets
Nigeria’s commodities market holds vast potential, with the World Bank estimating it could reach a staggering $1tn by 2030. However, realising this potential requires addressing the numerous challenges facing the sector. Akinyinka Akintunde, CEO of AFEX Nigeria, stresses the imperative for enhanced infrastructure to optimise resource allocation in alternative asset classes. The infrastructure deficit continues to be a significant barrier to maximising the value of Nigeria’s commodities market. AFEX unveiled an updated pricing methodology for its commodities exchange business unit to tackle these issues. This new methodology, set to go live on November 1, aims to enhance price discovery and eliminate price gaps across different boards on the exchange, unifying commodity prices from various markets.
The Impact of Forex Policies
Removing the ban on sourcing forex from the official window for 43 items, including staples like rice, maise, and cement, has been a pivotal development in the Nigerian currency and commodities markets. Dr Afolabi Olowookere, MD of Analysts’ Data Services and Resources, shed light on the consequences of this change. The move is expected to substantially impact these commodities’ pricing and trading dynamics, potentially reshaping market dynamics.
The Nigerian Currency, Naira to GBP, is trading at 0.0011.
In conclusion, Nigeria’s currency and commodities markets have great potential, but multifaceted challenges include unclear foreign exchange policies, inadequate infrastructure, and persistent insecurity. The recent AFEX CEO Breakfast event highlighted AFEX’s efforts to improve price discovery and unify commodity prices across markets. Removing the forex ban on key commodities is another significant development, underscoring the interplay between the currency and commodities markets.
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