Nigeria's letter of credit (L/C) payments plunged by 63 per cent in the first quarter of 2024 compared with the same period in the previous year, according to Central Bank of Nigeria (CBN) international payments data.

Total L/C payments made via official channels in the first quarter of 2024 amounted to US$204.47 million, a shortfall of US$344.75 million compared with the US$549.22 million reported in the same quarter in 2023.

This substantial decrease underscores the significant challenges the country is encountering in its international trade and financial transactions.

Monthly breakdown

In January 2023, payments totalled US$107.78 million, increasing to US$171.95 million in the next month and reaching the highest payment for the quarter in March when payments amounted to US$269.49 million.

In stark contrast, the first quarter of this year saw markedly lower payments of just US$58.33 million in January. In February payments increased slightly to US$102.6 million but remained far below the 2023 level. In March, payments dropped further to US$43.54 million.

Ongoing difficulties

This trend highlights the ongoing difficulties Nigeria faces in maintaining robust international trade and financial transactions.

The sharp decline in L/C payments could signal reduced import activity, potentially due to foreign exchange shortages, stricter import regulations, or other economic constraints.

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