Unilever Says It's `Insane' If Nigeria Currency Policy Stays

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  • Clarity on the `right exchange rate' would help businesses
  • Nestle's local unit is approaching more banks to source forex

Nigeria would be misguided to persist with currency policies that have led to a record difference between the naira’s official and black-market rates, according to the local head of Unilever Plc.

“It would be very insane to continue like this for months and months,” Unilever’s Africa President Bruno Witvoet said in an interview on Monday at a conference in Abidjan, Ivory Coast’s commercial capital. Clarity on what the “right rate” is would help businesses “make more sensible decisions,” he said.

The central bank of Africa’s biggest economy and oil producer introduced capital controls and restrictions on some imports in a bid to prop up the naira, which has been effectively pegged at 197-199 against the dollar since March 2015. Those measures have deterred foreign investment and led to a scarcity of dollars, with the black-market exchange rate falling to around 325 per dollar.

President Muhammadu Buhari has backed the central bank’s stance and ruled out a devaluation on the grounds it would cause prices to rise. That’s already happening, with inflation surging to a three-year high of 11.4 percent in February from 9.6 percent the previous month.

‘Temporary Phase’

Buhari said in a speech on Monday that the hard-currency squeeze is “a temporary phase which we shall try to overcome.”

Governor Godwin Emefiele said on Tuesday the central bank is committed to currency stability, though it noted concerns about foreign-exchange shortages. The central bank was in consultations with stakeholders on ways to improve foreign-exchange supplies, he said, after the Monetary Policy committee unexpectedly raised the policy rate by 1 percentage point to 12 percent.

“Nigeria has a lot of opportunity and Unilever Nigeria is a locally listed company with a great future where over 90 percent of our sales are produced within Nigeria,” Witvoet said. “We’ve invested over $150 million in recent years with ongoing investment in our brands and facilities such as our new tea packing operation.”

Other foreign-owned companies, including Nestle SA’s Nigerian unit, are having to approach more banks to get around the scarcity.

“We just widened our number of banks to source forex,” Kais Marzouki, Nestle’s chief executive officer for West and Central Africa, said in an interview in Abidjan on Tuesday. “So far we have been able to manage.”