The foreign exchange crisis in Nigeria has led the Central Bank of Nigeria (CBN) to make significant changes to timelines for letters of credit (L/Cs).

Meanwhile, exporters to Nigeria are reportedly increasingly reluctant to accept L/Cs for Nigerian business.

Foreign exchange scarcity

As a response to the country's ongoing struggle with foreign exchange scarcity, the CBN has extended the issuance timeline for L/Cs from 24 hours to five working days.

In the central bank's 2020 service charter, the timeline for the issuance of L/Cs was set at 24 hours.  

Challenging economic situation

The reluctance of exporters to accept L/Cs for Nigerian business is likely influenced by the challenging economic situation in Nigeria, reflected in the Nigerian naira's recent depreciation.

At the end of last year, the naira reached a new low, closing at 1,044 naira per dollar in the official market on 28 December.

This represents a noteworthy depreciation of 16.35 per cent compared to its previous closing rate, indicating a concerning trend as the new year begins.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.