As Nigeria, Africa’s largest economy, experiences economic turmoil Nigeria’s central bank has suspended 9 local banks from trading Forex. This has occurred due to them not paying back money owed to the government, sources say. The banks were supposed to transfer $2.1 billion into the governments account at the central bank; however it has been almost a year since the deadline was passed.
The nine banks involved are: Fidelity Bank, Diamond Bank, First Bank, First City Monument Bank, Heritage Bank, United Bank for Africa, Keystone Bank, Skye Bank and Sterling Bank.
The state accounts were combined into the one at central bank last year by the president to combat corruption as he estimated government officials had stolen about $150bn in the previous decade.
Naira and bitcoin
The situation has caused more pressure on the suffering economy as it is in recession due to low crude oil prices. Petroleum, the major source of revenue, in Nigeria has had a fall in value which has lowered the price of the currency, as it depends on the value of the volatile oil. This has forced the government to develop other sources of revenue to stabilize the current situation.
There is also a foreign currency trade ban which means that customers are unable to access foreign currency accounts which has led to the banks suffering from unpaid loans. The Nigerian naira has fallen significantly as it went from being 280 naira per dollar in June to a record low of 365.25 recently. However it has recovered some value as central bank sold dollars to push its value and is at 327.5 (correct at time of writing).
However this problem could have been easily avoided if Nigeria had a wider range of revenue or simply used non-fiat currencies such as Bitcoin. This would significantly help Nigeria as Bitcoin prices are far more stable than the oil and would have slowed the rate of recession.