Key Takeaways
- Managing director of top Nigerian bank reveals that local financial institutions can’t fund the acquisition of Shell
- Agbaje noted that falling oil prices had caused reduced dollar inflow in Nigeria
- Nigerian currency Naira continues to lose value to the dollar
Agbaje made this statement in a virtual conference with investors.
He noted that a deal for the oil company would gulp nearly $2 billion, and that kind of funding will be challenging to generate locally due to the current situation.
Shell has gradually been selling its assets in Nigeria.
The Oil company revealed that its current business model in the African nation was incompatible with its long term strategy.
The constant problems of environmental pollution caused by broken pipelines and constant court disputes appear to have driven the company to take this decision.
As expected, several local conglomerates and businesses have expressed interest in acquiring Shell assets valued at around $1.8 billion.
However, banks and lending institutions are hamstrung in their ability to generate huge forex funds for such purchases.
Agbaje noted in the conference that Nigeria has witnessed a reduced supply of dollar inflow due to falling crude oil prices.
Also, the economic problems caused by the Covid-19 pandemic.
In addition, the policies of the Central Bank have also not helped with banks being limited in their forex activities.
The reduced inflow of dollars has significantly strained the naira, which has gradually lost value in recent weeks.
At the time of publication, the naira is valued at 566/$, up more than 20% from its valuation a month ago.
The Central Bank has refused to turn to cryptocurrencies as a solution and instead banned crypto transactions in February.
Instead, it has developed its CBDC called the e-Naira that is set to launch by October 1 2021.
Do you think cryptocurrencies can play a major role in solving the dollar shortages in Nigeria?
