- Travel allowances at 197 naira/$ vs 319.25/$ interbank rate
- Move met by criticism by some Nigerians as recession looms
Nigeria’s government will offer a concessionary exchange rate to more than 65,000 Muslim citizens intending to make the pilgrimage to Saudi Arabia this year, even as the country turns to borrowing to plug a budget gap.
A preferred foreign-exchange rate of 197 per dollar will apply for pilgrims’ travel allowances of $750 to $1,000, the Central Bank of Nigeria said on its website. That compares with an interbank rate of 319.25 per dollar at the close of Friday or the black market rate, which weakened this week to almost 400 per dollar.
Presidential spokesman Femi Adesina declined to confirm the full amount allocated by the government for the subsidy. Vanguard newspaper reported Saturday that the total cost would be as much as 7.9 billion naira ($25 million), citing its own calculations. This compares with 2.4 billion naira last year, the newspaper said.
The subsidy was met with criticism on Twitter and online forums by Nigerians who questioned the government’s priorities.
Africa’s biggest economy presented a 6.1 trillion budget for 2016 and intends to borrow abroad to help plug a 2.2 trillion naira gap. The economy shrank by 0.4 percent in the first quarter and may contract 1.8 percent this year, according to the International Monetary Fund.
“We have presently problems in funding of so many issues in Nigeria, like education, and even paying salaries,” said Kunle Famoriyo, spokesman for the Afenifere Renewal Group, a body representing the political and cultural interests of the Yoruba, one of the three main ethnic groups in Nigeria. Subsidizing any religious pilgrimage is “not economically ok,” in particular in the current context, he said on the phone from Ibadan.
Adesina declined to comment on the negative reactions when reached by phone Saturday. Another presidential spokesman, Garba Shehu, said on Twitter that the exchange rate of 197 naira per dollar was approved by President Muhammadu Buhari about three months ago, before the new foreign-exchange regime came into being. The official rate was 197 until June 20, when a 15-month peg to the greenback was lifted.
The rate has been approved for both Christian and Muslim pilgrimages this year, Shehu said Friday via Twitter. The central bank said in an Aug. 4 circular that it will sell dollars to designated lenders in the cities of Lagos and Abuja, who won’t charge pilgrims buying the currency.