The Central Bank of Nigeria (CBN) has revealed that Nigeria’s foreign trade by Letter of Credit (LC) payments depreciated by 52.5 per cent Year-on-Year (YoY) in the nine months of 2024 to $506.1 million when compared to $1.07 billion in nine months of 2023.
Letter of credit is a financial instrument commonly used in international trade. It provides a guarantee by a bank (on behalf of an importer) to pay a specified amount to an exporter (the beneficiary) upon meeting predefined conditions.
This significant decrease in the nine months of 2024 highlights the challenges the country faced in international trade and financial transactions. Parts of these challenges include Foreign exchange scarcity, importation restrictions, and CBN monetary policies, among others.
The reduced global demand or disruptions in international supply chains may have impacted Nigerian trade during the period.
In 2023, the CBN in its ‘international trade’ statistics reported $1.31 billion letter of credit, about 4.01per cent drop from $1.36 billion reported in 2022. For the nine months of 2024, CBN recorded $102.6 million highest and $21.5 million lowest letters of credit in February and May 2024, respectively.
