Business

Naira Slides Further As Dollar Shortage Hits Banks

Published

2 years ago

August 14, 2023

The widening gap between the demand and supply of dollars in the banks and at the parallel market has continued to worsen the value of the naira, findings by The PUNCH have revealed.

In less than three weeks, the naira lost N100 after sliding from 860/$ to 960/$ at the parallel market as of Friday.

Before the Central Bank of Nigeria enabled the free float of the naira against other global currencies in June, the naira had traded at 471/$ at the Investor & Exporter window.

However, on June 13, a day after the regulator floated the local currency, the naira rose to 664/$ the next day.

However, the naira which traded in a close margin at both the official I&E window and parallel market soon began to witness serious volatility in the black market.

After crossing the N900/dollar ceiling at the parallel market last week, the local currency tumbled to 925/dollar in Lagos.

On Friday, the naira reached a high of 799/$ before closing at 740.60/$ at the I&E forex window. However, at the parallel market, the naira closed at 930/dollar in Lagos and 960/$ in Abuja at the parallel market.

The development came as dollar shortage hits banks with several lenders complaining of not having enough greenback to meet customers’ demand.

At the parallel market, currency dealers also complained of dollar shortage.

Bank officials said the CBN removal of cash deposit limits on domiciliary accounts in June had led to the repatriation of funds through the banks.

As a result, he said the demand for the dollar had outweighed the supply significantly.

“Some of the dollars are being repatriated through the banks but the demand is still higher than supply because everyone is still sourcing for dollar for imports, PTA, BTA, others,” an official of a lender, who chose to speak on condition of anonymity because he was not authorised to speak on the matter, said.

“Nigerians are still hoarding dollar, customers are still hoarding FX because they don’t trust the policy. Banks are not getting forex supply from the CBN regularly like before,” he added.

Also, an official of tier-1 bank, who pleaded anonymity, said, “Before, the banks used to get dollar from the CBN every week but now, it has reduced drastically; we have not been getting again. Banks are sourcing for forex everywhere. The banks don’t have enough. We have not been getting supply from the CBN for weeks now.”

The President, Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, in a chat with our correspondent, said liquidity squeeze in the FX market had continued to put the naira under heavy attack from speculators.

He said, “The dwindling supplies in the I&E window shifted the demand to the parallel market where volatility and spikes is most pervasive. The entire forex market is plagued by liquidity shortages.

“The banks, as a result of the supply shortages, are limiting their available position for the financing of visible letters of credit and abandoning the invisible request like PTA, school fees, medicals of their clients and inadvertently adding more pressure in the parallel market.”

He added, “As it is, most licensed BDCs due to their demand for KYC requirement have lost their clients to the parallel and undocumented space with no regulation and standardisation. It is indeed a difficult time for most of our members as we are excluded from the harmonised market.”

Proffering solutions, Gwadabe said Nigerians should aspire to have a stable exchange rate devoid of illegal economic behaviour like arbitrages, hoarding and panic buying.

“ABCON is desirous to partner the apex bank and the Federal Government for an elaborate dialogue and engagement to champion paths to naira recovery,” he said.

He added that the financial architecture should be reviewed to include BDCs in the harmonised markets.

The monetary and fiscal authorities should create enabling environment and friendly policies, he said.
VANGUARD

Business

Naira Records Highest Depreciation Against US Dollar

Published

5 hours ago

January 10, 2026

Editor

The Naira recorded the highest depreciation against the United States dollar at the official foreign exchange on Friday to end the week on a negative note.

Central Bank of Nigeria data showed that the Naira extended its dip on Friday to N1,423.17 against the dollar, down from N1,419.72 traded on Thursday.

This represents a N3.45 depreciation against the dollar on a day-to-day basis, the highest in the week under review and in 2026 so far.

Meanwhile, at the black market, the naira remained at N1,490 per dollar on Friday, the same rate recorded on Thursday.

In the other week, the Naira recorded three gains and two losses against the US dollar and other currencies.

The development comes amid the continued rise in the country’s external reserves, which hit $45.67 billion as of January 8, 2026.

Business

KPMG Flags Five Major ‘Errors’ In Nigerian Tax Laws

Published

22 hours ago

January 9, 2026

Editor

Fresh apprehension has surfaced over Nigeria’s newly implemented tax framework after KPMG Nigeria highlighted what it described as “errors, inconsistencies, gaps, and omissions” in the new tax laws that took effect on January 1, 2026. The professional services firm in a recent statement cautioned that failure to address these issues could weaken the overall objectives of the tax reforms.

Nigeria’s tax overhaul is built around four major legislations: the Nigeinpieces of legislation:ria Tax Act (NTA), the Nigeria Tax Administration Act (NTAA), the Nigeria Revenue Service (NRS) Establishment Act, and the Joint Revenue Board (JRB) Establishment Act. The laws were signed by President Bola Ahmed Tinubu in June 2025 and formally commenced in 2026. However, the reforms have continued to attract controversy since they were first introduced in October 2024.

Despite the concerns, government officials have consistently described the reforms as essential to improving Nigeria’s low tax-to-GDP ratio and modernisingpieces of legislation:modernizing the country’s tax system in line with evolving economic conditions.

In a detailed review, KPMG outlined several areas of concern.

Capital gains, inflation modernizing inflation and market response

KPMG flagged Sections 39 and 40 of the Nigeria Tax Act, which require capital gains to be calculated as the difference between sale proceeds and the tax-written-down value of assets, without adjusting for inflation. According to the firm, this approach is problematic given Nigeria’s prolonged high-inflation environment.

Data from the National Bureau of Statistics shows that headline inflation has remained in double digits for eight consecutive years, averaging over 18 percent between 2022 and 2025. Over the same period, asset prices have been significantly influenced by currency depreciation and general price increases.

Market data also reflects investor sensitivity to tax policy changes. Although the NGX All-Share Index gained more than 50 percent over the year and market capitalisation inflation,capitalization approached N99.4 trillion, equities experienced sharp sell-offs in late 2025. In November alone, market value reportedly declined by about N6.5 trillion amid uncertainty surrounding the new capital gains tax regime.

KPMG warned that taxing nominal gains in such an environment could result in investors paying tax on inflation-driven increases rather than real economic gains. The firm recommended introducing a cost indexation mechanism to adjust asset values for inflation, noting that this would reduce distortions while still enabling the government to earn revenue from genuine capital appreciation.

Indirect transfers and foreign investment concerns

Attention was also drawn to Section 47 of the Nigeria Tax Act, which subjects gains from indirect transfers by non-residents to Nigerian tax where the transactions affect ownership of Nigerian companies or assets.

This provision comes at a time of subdued foreign investment. Figures from the United Nations Conference on Trade and Development indicate that foreign direct investment inflows into Nigeria remain below pre-2019 levels, reflecting ongoing investor caution.

While similar rules exist in other countries, KPMG noted that they are often supported by detailed guidance and clear thresholds. The firm advised Nigerian tax authorities to issue comprehensive administrative guidelines to clarify scope, thresholds,capitalizationthresholds, and reporting obligations inorder to reduce disputes and limit potential negative effects on foreign investment.

Foreign exchange deductions and business impact

Another issue identified relates to Section 24 of the Act, which restricts businesses from deducting foreign-currencyforeign currency expenses beyond their naira equivalent at the official Central Bank of Nigeria exchange rate.

In reality, limited access to official foreign exchange forces many companies to source FX at higher parallel market rates. Under the current rule, the additional cost becomes non-deductible, effectively increasing taxable profits and overall tax liabilities.

KPMG observed that although the provision aims to discourage FX speculation, it does not adequately reflect supply constraints. The firm recommended allowing deductions based on actual costs incurred, provided transactions are properly documented, to avoid penalisingforeign currencypenalizing businesses for factors outside their control.

VAT-related expense disallowances

Section 21(p) of the Nigeria Tax Act also came under scrutiny for disallowing deductions on expenses where VAT was not charged, even if the costs were entirely business-related.

Given Nigeria’s large informal sector and persistent VAT compliance gaps, analysts argue that the rule unfairly shifts part of the VAT enforcement burden onto compliant taxpayers. KPMG advised that the provision be removed or significantly amended, stressing that expense deductibility should be based on whether costs were wholly and necessarily incurred for business, while VAT compliance should be enforced directly on defaulting suppliers.

Non-resident taxation uncertainties

KPMG further highlighted ambiguities around the compliance obligations of non-resident companies. While the Nigeria Tax Act recognizespenalizingrecognizes withholding tax as the finalthe final tax for certain nonresident payments in the absence of a permanent establishment or significant economic presence, the Nigeria Tax Administration Act does not clearly exempt such entities from registration and filing requirements.

Nigeria’s network of double taxation treaties, including agreements with the UK, South Africa, Canada, and France, generally supports the principle that final withholding tax extinguishes further obligations. Experts warn that inconsistencies between the laws could create uncertainty and discourage foreign participation.

KPMG recommended harmonizing the relevant provisions of the NTA and NTAA, with explicit exemptions for non-resident companies whose tax obligations have been fully settled through withholding tax. The firm noted that such alignment would ease compliance and enhance Nigeria’s appeal for cross-border transactions.

As Nigeria undertakes its most extensive tax reform in decades, KPMG concluded that the success of the overhaul will depend on clarity, consistency, and alignment with international best practices. Without timely amendments, businesses may face higher costs, foreign investors could remain cautious, and capital markets may continue to experience volatility.

Recall that KPMG concerns come after a lawmaker, Abdulsamman Dasuki, raised alarm over alleged alterations to the gazetted tax laws.
(DAILY POST)

Business

Naira Records First Depreciation Against US Dollar In 2026

Published

22 hours ago

January 9, 2026

Editor

The Naira recorded its first depreciation against the United States dollar in the official foreign exchange market on Thursday, the first time in 2026 so far.

The Central Bank of Nigeria’s data showed that it weakened on Thursday after days of gains to N 1,419.72 per dollar, down from N 1,418.26 on Wednesday.

This means that for the first time this year, the Naira dipped by N1.46 against the dollar on a day-to-day basis.

Similarly, the Naira also depreciated by N10 at the black market to N1,490 on Thursday, down from the N1,480 recorded the previous day.

This comes despite the continued rise in the country’s foreign reserves to $45.64 billion as of Wednesday, 7th January 2026.

DAILY POST reports that the Naira recorded a seven-day bullish run at the official foreign exchange before Thursday’s decline.