Nigeria’s commercial capital, Lagos, is proving to be a magnet for travelers every year during the festive period known as ‘Detty December’, with new data revealing how the city’s annual celebration contributed to the country’s economy, according to Forbes Africa.

Independent research by advisory firm MO Africa Company Limited shows that between November 19 and December 26 last year, Lagos’ Murtala Muhammed International Airport (MMIA) handled around 550,000 inbound passengers. Nearly 90% of these arrivals were Nigerians living abroad, flying in primarily for leisure and tourism.

Kayode Omosebi, CEO of MO Africa Company Limited, says his team surveyed hotels, airports, short-let agents, and nightclubs to compile the data.

The top five countries of origin were the United States, Canada, Italy, South Africa, and the United Kingdom, with most visitors heading to Lagos, Edo, Delta, Ondo, and Ogun states in Nigeria. Lagos alone attracted an estimated 1.2 million tourists. Of those, 60% were domestic travelers, driven by insecurity in southeastern Nigeria.

The influx of visitors brought a surge in hotel bookings and short-let apartment rentals. December hotel revenue in Lagos hit N54 billion ($36 million) from 15,000 bookings.

Short-term apartment rentals contributed another N21 billion ($13 million), with nearly 6,000 bookings made at an average nightly rate of N120,000 ($74.7).

Lagos’ nightlife was a major winner, with the top 15 lounges and nightclubs generating N4.32 billion ($2.7 million). On average, clubs raked in N360 million ($224,000) per day, with some tables fetching as much as N1.2 million per night ($746.7).

Beaches and resorts accounted for 70% of the N4.5 billion ($2.8 million) generated from recreational activities.

Lagos’ event centers hosted 1,175 bookings, earning a combined N1.2 billion ($804,000).

Luxury car rentals also saw a boom, with N1.5 billion ($937,500) spent on 750 bookings. Daily rates ranged from N200,000 ($124.4) to N2 million ($1,244) for high-end vehicles.

Omosebi notes that Lagos’ hospitality sector is increasingly reliant on cryptocurrency platforms.

“Eighty five percent of conversion to Naira and payments were done through this exchange platform. A number of bookings were done through agents rather than through booking platforms, which speaks to trust concerns and the power-play of agents in the industry,” Omosebi says to FORBES AFRICA.

He adds that ‘Detty December’ could bring in up to $2 billion in foreign exchange by 2026, provided the government addresses infrastructure, security, and supply chain challenges.

“The industry is evolving and we would start seeing niche focused hospitality and tourism experiences… There’s massive opportunity in bespoke event centers for concerts and shows,” Omosebi says.

Forbes Africa

The exchange rate between the naira and dollar slid back to around N1,745/$1 on the parallel market a sharp reversal from the sub N1,600 levels recorded at the end of last week.

An earlier article by Nairametrics quoted the exchange rate at around N1,685/$1, however, quotes quickly depreciated as business activities resumed fully.

Checks by Nairametrics as of 10 am Wednesday, December 11 show several rates above the N1,700/$1 mark suggesting that the gains seen last week may have been a “dead cat bounce” a market terminology for temporary gains.

Some P2P exchanges quoted N1,715/$1 while some IMTOs checked by Nairametrics quoted N1,745. Stock trading apps like Bamboo and Trove are quoted for N1,730/$1 and N1,736/$1 respectively.

Meanwhile, the exchange rate between the naira and dollar in the official market closed at around N1,525/$1 on Tuesday the strongest close since the EFEM was introduced.

Thus, the disparity between the official and black market rate has now widened to about N200 creating fear of a disconnect between the central bank-managed official market and the parallel market where most retail trades occur.

Meanwhile, as of the close of trading on December 11, 2024, the exchange rate in the official market weakened marginally to N1,545/$1 from N1,525 a day earlier. However, parallel market rates continued to trade for between N1730-N1740/$1.

What you should know
Some BDC operators who spoke to Nairametrics suggest the weakening is likely the handiwork of speculators who are holding strong despite the introduction of a more robust trading platform by the CBN.

President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, had warned that forex speculators will resist the rapid appreciation of the naira to cover their losses.

Gwadebe had urged the CBN to keep the momentum, discourage the illegal act of speculation and currency substitution as well as engage the BDC operators where volatility is pervasive.

The comments by Gwadebe followed the significant strengthening of the naira at both the official and parallel markets after days of appreciation since the apex bank introduced the EFEMS platform.

Nigerian economists are optimistic that the Naira’s appreciation against the dollar, if sustained, may lead to a drastic reduction in the prices of imported goods, by extension the country’s headline inflation, which stood at 33.88 percent in October, 2024.

The Chief Executive Officer of SD & D Capital Management, Gbolade Idakolo, and Prof. Godwin Oyedokun, a don at Lead City University in Ibadan, disclosed this in separate interviews with DAILY POST on Monday.

Idakolo and Oyedokun spoke as the Naira settled at N1,538.50 per dollar on Monday, December 9, 2024, from N1,740 exchanged on November 9, the same year.

On a month-on-month basis, the Naira gained N201.5 and N110 at official and black markets when compared to the N1,740 exchange rate on November 9, 2024.

This is the case despite the Naira depreciating slightly by N3.5 and N30 against the dollar to begin the week on Monday at both FX markets.

This followed the Central Bank of Nigeria’s recent launch of the Electronic Foreign Exchange Matching System (EFEMS) to eliminate distortion and bring transparency to the FX market.

Meanwhile, this is not the first time the Naira has appreciated upon CBN’s policy interventions.

However, the Naira gain has always been short-lived and temporary.

DAILY POST reports that the development had impacted the FX rate used for import duties and cargo clearance, which was at N1645 per dollar Tuesday last week.

Reacting, Idakolo noted that with proper monitoring by CBN, the EFEMS platform is a game changer to the country’s FX market.

According to him, EFEMS had created fear in the parallel market ecosystem, which had reduced unnecessary speculations negatively impacting the strength of the Naira.

He noted that with Naira appreciation, the exchange rate for import duties is bound to reduce, which will in turn impact the prices of imported goods.

“The newly introduced EFEMS platform by CBN for centralised bidding for forex is a game changer because of its transparency and the convergence of all previous bidding options into one platform.

“There is no room for manipulations so far, and all the quotes are shown on the platform for both bidders and sellers.

“This has created fear even in the unofficial forex market (black market) and reduced unnecessary speculations, which has negatively impacted the strength of the Naira.

“The CBN must continue to monitor the market and fulfil its regulatory obligations to all stakeholders.

“The BDCs must align to CBN’s reporting standards, and the banks must not fail to inflict heavy sanctions on erring players.

“The recent drop in the exchange rate for import duties is a step in the right direction, as clearing costs are bound to reduce, which will in turn impact the prices of imported goods.

“Clearing charges is a major component in costing imported goods, and with reduced charges, the prices will also be adjusted accordingly,” he told DAILY POST.

On his part, Oyedokun attributed the recent appreciation to CBN interventions, increased FX inflows, and reduced demand for dollars.

Like Idakolo, Oyedokun said that the strengthening of the Naira against the dollar could indirectly affect the prices of imported goods in Nigeria.

“While the recent drop in the import duties exchange rate may not directly impact the Naira’s exchange rate, it could indirectly affect the prices of imported goods in Nigeria.

“If importers can procure goods at a lower exchange rate, they may pass on these savings to consumers, leading to lower prices for imported goods,” he stated.

He, however, noted that several factors could mitigate this impact of the exchange rate drop on the prices of imported goods.

“Global Supply Chain Disruptions: Ongoing global supply chain issues may offset any benefits from the lower exchange rate.

“Domestic Economic Conditions: Domestic factors such as inflation, interest rates, and government policies can also influence the prices of imported goods.

“Importer Behaviour: Importers may not necessarily pass on the savings to consumers, opting to increase their profit margins instead”, he further told DAILY POST.

According to the Oyedokun, to sustain the Naira appreciation, the CBN needs to continue its efforts to maintain macroeconomic stability, attract foreign investment, and address structural issues.

He added that, “to sustain the Naira’s appreciation, the CBN needs to continue its efforts to maintain macroeconomic stability, attract foreign investment, and promote exports.

“Additionally, addressing structural issues such as corruption, insecurity, and inadequate infrastructure will be crucial.”

“It is important to note that the exchange rate is influenced by various factors, and the Naira’s appreciation may be temporary.

“Continuous monitoring and strategic interventions by the CBN will be necessary to ensure the sustainability of the Naira’s strength,” he stated.

DailyPost

The naira recorded a huge gain against the US dollar at the parallel market, hitting N1640/$1, at the close of business on Wednesday, December 4, 2024.

This represents a 5.2% or N90 gain against the dollar when compared to the N1730 that was recorded the previous trading day.

The massive appreciation recorded against the dollar is coming with the kick-off of trading activities at EFEMS PLATFORM which the BDCs operators believe will bring about transparency in the forex market and enhance regulatory oversight.

According to Nairametrics, the exchange rate for dollar inflow on the parallel market is N1640/$1, while the rate for cash transactions closed at N1664/$1 at the end of the day’s trading activities.

The newly introduced Enhanced Foreign Exchange Market System (EFEMS) by the Central Bank of Nigeria (CBN) recorded a remarkable first and second day of trading as supply reportedly outstripped demand.

This new forex trading window consolidates Nigeria’s foreign exchange markets, replacing the Investors and Exporters (I&E) window in a bid to simplify and increase transparency in the forex market.

Nairametrics indicate that trading volumes surged significantly, with sources close to the market revealing that supply exceeded demand.

Sources suggest the exchange rate on the official market closed at N1,595 to the dollar. However, the CBN website displayed N1613.69/$1 on Wednesday December 4th 2024 for the NFEM Simple Average.

The exchange rate closed at N1,643.15 on the first day of the operation of the EFEMS per CBN website.

However, the exchange rate closed at N1,608/$1 on the official market up from N1,625/$1 a day earlier.

While exact data on trading volumes remains uoffical, the sentiment suggests a potentially strong start for the EFEMS, with market participants optimistic about the liquidity this system might bring.

Nairametrics also observed that the FMDQ no longer provides forex data as the Investor & Exporter Window is no longer in operation.

Despite the positive signs shown on the first two days of trading, experts suggest that sustaining this momentum will require robust policy backing and an unwavering commitment to supply-demand balance.

The success of this initiative depends largely on the CBN’s ability to maintain liquidity and curb market distortions, particularly speculative trading that has historically plagued Nigeria’s forex markets.

The Central Bank of Nigeria (CBN) released revised guidelines for the Nigeria Foreign Exchange Market (NFEM), signaling a major shake-up in the country’s FX operations.

The updates, contained in a circular dated November 29, 2024, consolidate all FX windows, redefine the roles of market participants, and introduce stricter compliance and transparency measures.

This latest move is part of the apex bank’s efforts to address long-standing inefficiencies in the FX market while creating a transparent, well-regulated system.

A major focus of the revised guidlines focus of the revised guidelines requires that all FX transactions are to be priced through the Electronic Foreign Exchange Matching System (EFEMS), a centralized platform that will also publish daily FX rates for public access.

The platform replaces the fragmented system of multiple windows, such as the Investors & Exporters (I&E) FX Window, SME Window, and Invisible Window.

Nairametrics

The Federal Government’s latest decision to introduce naira-denominated crude oil sales to Dangote and other local refineries starting on October 1, is expected to bring an end to the opaque 20-year-old Domestic Crude Allocation (DCA) scheme, a development expected to positively impact the domestic fuel supply chain and enhance transparency in the sector.

For over two decades, Africa’s biggest economy has operated an arrangement that ensures that about 445,000 barrels of crude oil per day (the nameplate capacity of Nigeria’s four government-owned refineries) are set aside from the federation’s share of oil and channelled for domestic refining.

The allocation would be paid for in naira, and the defunct Petroleum Products Marketing Company would recoup proceeds via the distribution and sale of the resulting refined products within Nigeria.

The rationale behind that was that such exclusive domestic allocation of crude oil would guarantee energy security, de-link refined petroleum product prices from volatility in exchange rates and international crude oil prices, and ensure adequate supplies of refined petroleum products in the country.

Although the scheme looks brilliant on paper, in reality, chronic financial and operational challenges in the domestic refineries often force a chunk of the 445,000 bpd to be allocated to a complex oil-for-product swap between NNPC and trading companies, an arrangement popularly called the Direct Sale Direct Purchase program.

Bayo Onanuga, special adviser on information and strategy to the president, said the African Export-Import Bank (Afreximbank) and other settlement banks in Nigeria will facilitate the trade between Dangote and NNPC.

“ To ensure the stability of the pump price of refined fuel and the dollar-Naira exchange rate, the Federal Executive Council today adopted a proposal by President Tinubu to sell crude to Dangote Refinery and other upcoming refineries in Naira,” Onanuga said on his X account on Monday.

He added, “The FEC has approved that the 450,000 barrels meant for domestic consumption be offered in Naira to Nigerian refineries, using the Dangote refinery as a pilot. The exchange rate will be fixed for the duration of this transaction.”

Zacch Adedeji, executive chairman of the Federal Inland Revenue Service (FIRS), said the sale of byproducts from Dangote refinery to distributors will also be conducted in naira.

“And what does it mean to our economy? One, the pressure on foreign exchange will be reduced,” Adedeji said.

FG to save $7.92bn

Adedeji further said that with the new approval, the foreign exchange spent on petrol will be reduced to a maximum of $50 million per month, rounding off to $600 million annually.

“This is a total reduction of 94 percent and saving us 7.32 billion,” Adedeji said.

“So, this is a major innovation in solving Nigeria’s problem permanently. Not only will it have more employment but we will definitely be in charge of one of the mainstays of our economy.

The Central Bank of Nigeria (CBN) has announced the provision of additional U.S. dollars to Bureau De Change (BDC) operators to boost liquidity in the foreign exchange (forex) market.

This decision was communicated through a circular issued by the Trade and Exchange Department of the CBN, titled TED/FEM/PUB/FPC/001/028, yesterday.

The circular, signed by Acting Director of the Trade and Exchange Department, Dr. W. J. Kanya, informed all BDC operators and the general public of the apex bank’s approval for the sale of $20,000 to each eligible BDC operator at an exchange rate of N1,590 per dollar.

The funds are intended to meet demand for eligible invisible transactions, such as personal travel allowances, business travel allowances, tuition fees, and medical bills, among other non-physical imports.

According to the CBN’s directive, BDC operators are required to sell forex to eligible end-users at a margin not exceeding one per cent above the purchase rate from the CBN. This measure aims to ensure that retail customers can access foreign exchange at fair rates, preventing undue price hikes and speculation in the retail market.

Eligible BDCs interested in purchasing the $20,000 from the CBN have been directed to make their Naira payments into designated CBN deposit accounts.

The payment confirmation, along with all necessary documentation, is to be submitted to CBN branches in Abuja, Awka, Kano, and Lagos for disbursement of the funds.

The CBN’s intervention in the forex market comes amid ongoing efforts to stabilize the Naira and provide adequate liquidity for legitimate transactions. By supplying the BDC segment of the market with additional dollars, the apex bank aims to address shortages and ease pressure in the retail segment, where individuals and small businesses often face challenges in accessing forex.

This announcement is part of a broader strategy by the CBN to manage the forex market and support economic activities reliant on the availability of foreign currency.

The sale of forex at a regulated margin also aligns with the bank’s commitment to maintaining a stable exchange rate while ensuring that BDCs remain a viable source of foreign currency for everyday transactions.

The move is expected to provide significant relief to Nigerians and businesses engaged in international trade or seeking foreign exchange for various permissible activities.