International payments data of the Central Bank of Nigeria (CBN) has revealed that Nigeria’s letter of credit payments has slumped by 63 per cent in the first quarter of 2024 compared to the same period in 2023.
A letter of credit, or a credit letter, is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. If the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.
From the apex bank’s data, the total letter of credit payments made via official channels for Q1 2024 was $204.47 million, reflecting a shortfall of $344.75 million compared to Q1 2023 of $549.22 million.
The significant dip highlights the challenges the country faces in its international trade and financial transactions. A breakdown of the analysis by Nairametrics shows that January 2023 recorded payments of $107.78 million. This was followed by an increase in February 2023, where payments reached $171.95 million. March 2023 saw the highest payment for the quarter, totalling $269.49 million.
