Nigeria’s Central Bank governor is warning against the use of black markets for foreign currency exchange after a coronavirus-induced oil price crash caused dollar shortages for Africa’s biggest economy, in a video seen by Reuters.

Governor Godwin Emefiele warned domestic and foreign investors against patronising the unofficial market, saying it was helping to overheat that market.

The central bank was not immediately available for comment on the video.

The naira has hit a series of lows on the black market widening the gap with the official and over-the-counter spot markets, especially after dollar sales were suspended due to a coronavirus lockdown in April and a 15% devaluation in March.

Dollar sales have since resumed following a phased easing of the lockdown but foreign investor currency demand is yet to be met, analysts say.

“Don’t go there it is not good for you,” Emefiele told investors on the call referring to the black market. The date on the computer screen is May 18 2020.

“You would lose money because you would have bought at a price that is not realistic,” he said.

Dollar demand has been swelling and piling up pressure on the naira. Importers with past due obligations have scrambled for hard currency while providers of foreign exchange, such as offshore investors, have exited.

The oil price crash has exacerbated a shortage of dollars for Nigeria, whose reserve has declined 21% to $35.5 billion over the last year.

In May, the bank weakened the naira on the derivative futures market, signalling more pain to come for the currency.

Emefiele in the video urged investors to be patient, saying that dollar demand would be met in an orderly manner.

Analysts estimate there is pent up demand between $1.5 billion and $1.8 billion from investors looking to exit Nigeria, whose economy is forecast to shrink by 3.4% this year. (Reuters)