Finance

Nigeria: Economic agents adopt CFA Franc for commercial transactions in 5 states

Nigeria: Economic agents adopt CFA Franc for commercial transactions in 5 states
Thursday, 02 February 2023 17:18

In Nigeria, the rapid adoption of the redesigned bank notes has accelerated demand for the CFA Franc in the States neighboring CEMAC and WAEMU countries even though those states are not covered by the central banks of the two CFA zones.

In five Nigerian states, several communities and economic agents are now using CFA Franc to settle their commercial transactions, many local media reports. The new development follows the naira scarcity that ensued with the ongoing introduction of redesigned banknotes.

According to Punch NG, the states concerned are Sokoto, Zamfara, Katsina, Adamawa, and Kwara. All five share borders with CFA Franc countries.  Sokoto, Zamfara, and Katsina share borders with Niger while Kwara shares a border with Benin, and Adamawa shares a border with Cameroon. Those states use CFA Franc in some of their commercial transactions given the importance of their exchange with WAEMU countries (and CEMAC in the case of Cameroon).

However, the use has intensified in recent days with the short deadline given by the Central Bank of Nigeria to exchange the old banknotes against the redesigned ones. According to a cattle dealer quoted by Punch NG, merchants now only accept the redesigned notes to avoid being left with stashes of the old notes. But since the new naira notes are not readily available, CFA Franc is becoming their haven.

 The potential demand for the CFA franc arising from this situation is not easy to estimate, as such transactions often take place in informal settings, but should the naira scarcity persist, it could distort the monetary policies of BCEAO and BEAC (the two central banks of countries using the CFA Franc), which base those policies on economic situations of CFA countries.

It is worth noting that the use of CFA Franc, by economic agents, is not caused by the naira scarcity only. The Nigerian currency strongly lost its value on the black market, which fuels most foreign exchange transactions, prompting border traders to demand the CFA franc which is relatively stable.

CFA Franc is not the only haven for Nigerians, nevertheless. The digital currency Bitcoin is also widely adopted despite the price drop it recorded in 2022. In the country, Bitcoin is exchanged at prices exceeding its official value.

On the same topic
• Fily Sissoko will oversee a $8.5 billion World Bank portfolio spanning Mozambique, Madagascar, Mauritius, Comoros, and Seychelles.• His mission...
• Bassirou Diomaye Faye denounces credit rating agencies’ methodologies as ill-suited to African contexts.• Senegal urges reforms to enable fairer...
(AfDB)-The Board of Directors of the African Development Bank Group has approved a $474.6 million loan for South Africa's Infrastructure Governance...
New card enables African payments without using US or European networks Aims to lower costs, protect financial data, and boost intra-African...
Most Read
01

Lebara Group is now bringing its affordable and reliable mobile services to Africa, starting with Ni...

Telecoms: Lebara Enters Nigerian Market with Strong Competitive Ambitions
02

• Gates Foundation commits $1.6 billion over five years to Gavi.• Bill Gates warns of rising ch...

Gates Foundation Pledges $1.6 Billion to Gavi to Boost Global Child Vaccination
03

Transport and food prices have been climbing steadily across Africa in recent years. In Côte d’Ivoir...

Côte d’Ivoire’s Fuel Price Cuts Haven’t Slashed Transport Costs–Yet
04

In a West African financial landscape marked by tighter regulation of the fintech sector, digital fi...

In Five Years, Francophone Africa Will be A Major Force in African Tech –Régis Bamba
05

• Maritime sector faces renewed risks amid military tensions in the Middle East• Blockade fears at S...

Israel-Iran conflict raises new threats for global shipping and oil trade
Enter your email to receive our newsletter

Ecofin Agency provides daily coverage of nine key African economic sectors: public management, finance, telecoms, agribusiness, mining, energy, transport, communication, and education.
It also designs and manages specialized media, both online and print, for African institutions and publishers.

SALES & ADVERTISING

Benjamin FLAUX
bf@agenceecofin.com 
Téls: +41 22 301 96 11 
Mob: +41 78 699 13 72
Média kit : Download

EDITORIAL
redaction@agenceecofin.com

More information
Team
Publisher

ECOFIN AGENCY

Mediamania Sarl
Rue du Léman, 6
1201 Geneva
Switzerland

 

Ecofin Agency is a sector-focused economic news agency, founded in December 2010. Its web platform was launched in June 2011. ©Mediamania.

 
 

Please publish modules in offcanvas position.