The scarcity of foreign exchange which had made the naira to lose its value against other foreign currencies has resulted in the decline of foreign currency transactions, figures obtained from the Central Bank of Nigeria have revealed.
The value of foreign transactions declined by 58 per cent from N2.45bn in 2015 to N1.02bn in 2016, according to the CBN’s Nigeria Electronic Fraud Forum’s annual report of 2016.
In the report, which was obtained on Friday, the apex bank said the volume of foreign transaction also declined from 11.29 million to 10.3 million transactions.
The report attributed the decline to exchange rate volatility as well as the CBN’s regulation on foreign exchange.
This, it added, affected the velocity of foreign transactions across product channels in 2016.
The product channels are the Automated Teller Machine, the Point-of-Sales and web, among others.
An analysis of the foreign transactions showed that the ATM channel suffered the highest decline in value dropping from N1.39bn to just N474.45m. In terms of volume of transactions, the ATM payment recorded a decline from 4.9 million transactions to 3.71 million.
This was followed by the “other” payment channel, which dropped from N305.2m to N30.8m in terms of value and from 1.63 million to 359,985 in terms of volume of transactions.
In the same vein, the POS payment channel also experienced a decline in terms of value dropping from N655.64m to N413.1m.
However, its volume of transactions rose during the period from 3.29 million to 3.65 million.
The report stated, “The volume of processed transactions in 2016 amounted to 278,744,529, while the value was over N64tn.
“There was an increase of 71 per cent in volume of transactions; there was also an increase of 31 per cent in the value of transactions compared to 2015. There was a reduction in the total number of foreign transactions carried out in 2016 when compared to 2015.
“This reduction spanned across transaction values. It is quite clear that the exchange rates and the CBN regulation on foreign exchange affected the velocity of foreign transactions across product channels in 2016.”
The CBN has injected over $1.5bn into the foreign exchange market in the last two months in a bid to increase the value of the naira.
But analysts have described the apex bank’s intervention as an artificial solution to the forex crisis in the country.
A former member of the House of Representatives, Dr. Anthony Aziegbemi, said rather than using the current strategy, the apex bank should work with the fiscal authority to address the root of the huge demand for foreign exchange.