- As situation deteriorates, people send more money home
- CEO says 2016 will be `very good' year for Nigerian unit
MoneyGram International Inc., the world’s second-largest money transfer provider, expects faster sales growth in Nigeria even as Africa’s biggest economy buckles under lower oil prices and foreign-exchange controls that have created a scarcity of dollars.
If the situation in Nigeria were to deteriorate, people living abroad will send more money home to help support their families, Chief Executive Officer Alex Holmes said on Wednesday in Lagos. Transactions from the continent’s most populous nation increased in 2015 compared with the prior year, he said, declining to be more specific.
Africa’s largest oil producer is struggling to cope with a plunge in crude, which accounts for about two thirds of government revenue, as prices slumped to a 12-year-low this year. Growth in gross domestic product slowed to 2.8 percent in 2015, the weakest since 1999.
“Nigeria is a very virile receive market,’’ Holmes said. “If GDP and the oil price stay low over a prolonged period it could begin to impact our business, but for 2016 we feel very good. As the population grows, so does our business.’’
The company is working on ways to ensure that people who receive naira payments get it at a “fair’ exchange rate, he said, without elaborating. “We focus on putting an improved rate into the market as often as we can, so that we are balancing the difference,’’ between the official and black market rate, he said.
The Central Bank of Nigeria in 2013 ordered lenders to redeem all inward money transfers in naira to the recipients at the prevailing interbank foreign-exchange rate because the economy was using too many dollars, posing threats to the value of the naira.
Authorities have rationed dollars and brought interbank foreign-exchange trading to a halt since February last year in a bid to prevent the naira falling. The measures have all but pegged the currency at 197 to 199 per dollar. As dollars have become more scarce, the black-market exchange rate has plummeted, reaching 324 per dollar on Wednesday, according to Lagos-based Everdon Bureau de Change.