Business Economy Investments News Opinion

Currency slump sees surge in demand for dollars assets in West Africa despite greenback’s ongoing strength (By Abiodun Adebimpe)

The Russian-Ukraine war and the lingering impact of the COVID-19 pandemic have severely weakened West African economies and currencies – but businesses and investors are looking to dollar assets to mitigate the damage.

 

As most West African economies are commodity-driven, any development within the global economy that affects the supply and/or demand of commodities imports and exports portends significant currency weakening effects on the economies.

 

Recent and ongoing global events have created massive demand destruction in crude oil, agricultural products and precious metals such as gold. Supply chains are also still to recover.

 

As a result, most West African currencies such as the Nigerian Naira (NGN) and the Ghanaian Cedis (GHC) have significantly weakened.

 

It is a major source of concern – and an ongoing challenge- for most Nigerian businesses and those in other West African countries.

 

Fiscal and monetary imbalances compound the problem.

 

The import-dependent nature of most West African markets implies huge demand for foreign exchange to pay import bills. Due to declining external reserves, the Central Banks are not able to promptly and adequately meet these demands.

There is also massive fiscal debt overhang in most West African markets. One of the effects is the need to borrow from bilateral and multilateral global lenders who demand deliberate local currency weakening by the local authorities by adjusting their official exchange rates accordingly to fight the demand for foreign currencies. Weaker local currencies makes it more expensive, and less attractive to convert to hard currencies.

 

These factors together have conspired to weaken West African currencies, and the outlook remains negative in the short to medium term. The loss of confidence in the local currencies means that they are no longer considered a stable store of value.

The import-dependent nature of most West African markets implies huge demand for foreign exchange to pay import bills

 

But businesses and investors have responded to hedge themselves and protect the value of their earnings and holdings in fast depreciating local currencies.

 

Investments in dollar denominated securities such as Eurobonds, dollar and other hard currency equities, debt instruments in the form of government and corporate bonds, as well as interest bearing US treasury instruments have become the preferred holdings for investors. And demand is expected to grow.

 

But not holding local currencies has implications for the local economies.

 

It further increases the demand for foreign currencies and continues to create the arbitrage gap between official and unofficial forex markets which create further arbitrage pressure on the local currencies. This places further exchange rate pressure until the governments implement the right monetary and fiscal policies which enable the local currencies to better reflect economic fundamentals.

 

Most West African governments have started taking the right steps in this direction by adjusting their official exchange rates and in some cases borrowing in United States Dollars to shore up their external reserves though it may take some time to materialise.

 

The Nigerian naira in particular has remained under intense pressure since the closely watched election last month.

 

There is a risk the naira will continue to depreciate in the next few months because of the major difficulties in turning around through economic reforms in an economy of its size. The expectation of weaker crude oil and natural gas prices will likely continue to pressure the currency.

 

There is also the challenge of remittances flow to Nigeria: many companies are no longer supporting these transactions. Most importantly, tech investments which represented a significant increase in foreign direct investments (FDI) have all but reduced drastically.

 

As a result of turbulent economic conditions, businesses are increasingly turning to advisors with extensive global know-how for expert advice.

Since the launch of RMB’s direct custody services in Nigeria and Ghana in 2019 and 2021 respectively, we have been advising local and foreign fund managers, pension funds, broker-dealers and banks.

 

RMB is the leading provider for West African investors seeking to invest in foreign markets through our insightful global custody solutions. We also support inbound investors seeking selective portfolio investment opportunities in emerging and frontier markets across the continent of Africa.

Leave a Comment

Your email address will not be published.

You may also like

Business Culture

Sea Horse Lubricants Renews MC Ezegetive Brand Deal for 3rd Year, Welcomes Unku SP as New Brand Ambassador

post-image

By Chukwuemeka Iwuchukwu

In a bold move that reinforces its commitment to impactful partnerships and youth-driven marketing, Sea Horse Lubricants, one of Nigeria’s leading automotive lubricant brands, has announced the renewal of its brand ambassadorial deal with popular comedian MC Ezegetive (real name Onyekachi Christian Nweke) for the third consecutive year. Simultaneously, the company is unveiling the addition of fast-rising digital content creator Unku SP (Obinwanne Valentine Nonso) as its newest brand ambassador.

This dual announcement marks a strategic step in Sea Horse Lubricants’ marketing and branding journey, as the company continues to align itself with influential voices who embody the spirit of authenticity, innovation, and mass appeal.

Over the past three years, MC Ezegetive has become a familiar and beloved face associated with the Sea…

Read More
Business Economy News Opinion

PRINCE JOE OKOJIE: THE SILENT ACHIEVER RISING TO NATIONAL RECKONING

post-image

 

— As Edo Central Senatorial District Gears Up for 2025 Bye-Election

 

 

In the quiet yet politically vibrant community of Uromi, Esan North-East Local Government Area, a new chapter in leadership is unfolding — and at the centre of it is Prince Joseph Okojie, fondly called *Joe* by admirers and constituents alike.

Once a Commissioner for Agriculture under Governor Godwin Obaseki’s administration, Prince Joe Okojie is being called upon by his people to step into a higher role — that of a national representative in the Senate, under the platform of the People’s Democratic Party (PDP). The growing clamor from the grassroots is a testament not just to his popularity, but to the transformative legacy he has quietly built over the years.

As Commissioner, Okojie was instrumental in repositioning Edo State as an agricultural hub. Under his stewardship, the state recorded significant strides in food security and livelihood empowerment. He prioritized inclusivity by…

Read More
Business

NDPC, IOM Partner to Strengthen Data Protection in Nigeria’s Immigration Sector

post-image

 The National Commissioner and CEO of the Nigeria Data Protection Commission (NDPC), Dr. Vincent Olatunji, has pledged the Commission’s commitment to partnering with the International Organisation for Migration (IOM) in bolstering data protection compliance in Nigeria’s immigration operations.

This assurance was given during a working visit by a delegation from the IOM, led by Mrs. Emiola Oke, the National Coordinator on Immigration and Border Governance, to the NDPC headquarters in Abuja.

During the meeting, Mrs. Oke unveiled Project Capacity—a new initiative aimed at enhancing identity management, document verification, and policy development within Nigeria’s migration framework. She explained that the project involves extensive processing of personal data and emphasized the need for strict adherence to data protection and privacy regulations.

To this end, the IOM is seeking NDPC’s support in…

Read More
Business Health International News Opinion Travels

From Buns to Bank Halls to Bouillon Cubes – The Ever-Evolving Tale of Amaka Onyebuchi

post-image

 

Once upon a time in the vibrant campus of Federal Polytechnic Melle, a young Accounting student named Amaka Onyebuchi was juggling textbooks and trays of buns. Yes — buns! Long before she ever stepped into a boardroom, Amaka was already a master of the grind, hustling her way through school with determination and a dash of entrepreneurial flair.

After earning her degree, Amaka traded her apron for office heels and stepped confidently into the world of banking. She landed a role at Access Bank, where she quickly made a name for herself with her smarts, style, and a smile that could soften even the toughest client. It was a solid career path — respected, stable, and promising.

But Amaka had something else simmering inside her.

One day, she did the unthinkable. She left the predictable rhythm of banking and stirred up her real passion…

Read More
Business Economy Education

UTME 2025 Resit: JAMB Orders Retake for Nearly 380,000 Candidates Over Technical Glitch

post-image

 

By Anthony Emeka Nwosu

The Joint Admissions and Matriculation Board (JAMB) has ordered a resit of the 2025 Unified Tertiary Matriculation Examination (UTME) for nearly 380,000 candidates following a critical technical error that affected several Computer-Based Test (CBT) centres across the country. The rescheduled examination is set to commence on Friday, May 16, 2025.

In what is being described as one of the most extensive exam disruptions in recent years, a total of 157 CBT centres out of the 882 accredited nationwide have been identified as affected by an “unpatched error”—a term pointing to unresolved software glitches that compromised the integrity of the examination process in those centres.

According to verified data released by independent data analytics platform, Statisense, two zones were significantly impacted: Lagos Zone and Owerri Zone.

Breakdown of Affected Zones:

  • Lagos Zone:
    • 65 centres were affected.
    • A total of 206,610 candidates will be retaking the exam.
  • Owerri Zone:
    • 92 centres
Read More
Announcements Business News Security Society

AI Innovation vs. Privacy: African Regulators Chart Path at NADPA-RAPDP 2025 Conference

post-image

By Anthony Emeka Nwosu

The fourth plenary session of the 2025 Network of African Data Protection Authorities (NADPA-RAPDP) Conference and Annual General Meeting took centre stage with an engaging discourse on the theme, “Artificial Intelligence (AI) in Africa: Privacy Paradox.” The session, which drew leading minds in AI policy and data protection, was chaired by Tahir Latif, Vice President and Data Privacy and AI Governance Officer at the Dubai International Financial Centre Authority.

In a keynote address delivered on behalf of Dr ’Bosun Tijani, Nigeria’s Minister of Communications, Innovation and Digital Economy, Dr Bunmi Ajala—Senior Special Adviser on AI, Data & Research—highlighted the urgent need for African nations to strike a delicate balance between technological advancement and the protection of citizens’ privacy rights.

The session unpacked the growing tension between rapid AI adoption across the continent and the imperative to enforce data privacy regulations. Discussions revolved around practical strategies to ensure that…

Read More
Business Gadgets Government

NITDA Strengthens Collaboration with Key Government Agencies to Enhance IT Project Oversight

post-image

 

In alignment with President Bola Ahmed Tinubu’s Renewed Hope Agenda aimed at bolstering effective governance and service delivery, the National Information Technology Development Agency (NITDA) has intensified efforts to ensure transparency and efficiency in federal IT projects.

As part of its mandate to act as the clearing house for all government IT initiatives, NITDA on Thursday paid strategic visits to the Bureau of Public Procurement (BPP) and the Office of the Auditor General for the Federation (OAuGF). The visits focused on presenting the newly reviewed IT Project Clearance Guideline Document for feedback and collaboration.

The document, which is central to preventing corruption and duplication in government IT procurement, is also designed to foster accountability and value delivery in public sector technology investments.

Speaking during the engagements, NITDA Director General, Kashifu Inuwa, CCIE, highlighted the importance of inter-agency cooperation, noting that no single institution can drive digital economic transformation in isolation. “We must…

Read More
Business Gadgets International News Software Sponsored Technology Technology Trends

CyberDome and Cato Networks Collaborate to Deliver SASE in West Africa

post-image

 

 

CyberDome, West Africa’s leading Managed Security Services Provider (MSSP), has announced a collaboration with Cato Networks, the SASE leader ,to deliver Secure Access Service Edge (SASE) across the region.

The collaboration has been described as a game changer for organizations in West Africa, delivering the Cato SASE Cloud Platform —which converges networking and security in a single, cloud-native platform through CyberDome’s always-on, locally managed Security operations Center (SOC). The result: a modern,secure-by-design infrastructure built for today’s cloud-first world.

“We’re blowing past the limitations of traditional IT,” said Eyal Titinger, Co-founder of CyberDome. “This collaboration brings together global technology and local expertise to deliver seamless, secure, and scalable connectivity—exactly what West Africa’s fastest-growing enterprises need.”

Goodbye Boxes. Hello Cloud Power.

This collaboration empowers organizations to eliminate legacy hardware and embrace agile, software-defined infrastructure. Benefits

include:

● Real-time, secure connection of users, offices, and cloud

resources across geographies.

● Built-in zero trust and SASE security to protect every edge.

●…

Read More