Nigeria suggests dollars for haj pilgrims at below market rate

Nigeria suggests dollars for haj pilgrims at below market rate

Nigerian Muslim pilgrims travelling to Saudi Arabia this year should be able to buy their dollars for 200 naira, far below the official rate, the country’s parliament has recommended.

A report by lawmakers in Nigeria’s upper house said this followed an investigation by the Senate’s foreign affairs committee into alleged extortion in haj operations.

Africa’s biggest economy has at least six exchange rates — an official rate and a black market one, a retail rate set by licensed exchange bureaus, and a rate for foreign travel and school fees, in addition to the one for Muslim pilgrims.

“The committee strongly recommends the concession of 200 naira to a dollar for haj to bring down the cost to a bearable level,” the report seen by Reuters on Friday says.

Severe dollar shortages have been a hallmark of Nigeria’s recession, now in its second year. The downturn was brought on by lower prices for oil, the government’s main source of income, which is mostly paid for in hard currency.

Senate President Bukola Saraki said Nigeria’s medium term expenditure framework (MTEF) was based on an exchange rate of 305, but added “businessmen are getting 200 naira, then definitely pilgrims deserve 200 naira as well”.

The central bank offered pilgrims dollars at 197 naira, before it partially devalued the currency for retail customers in February after it hit 520 to the dollar on the black market.

The naira has been stuck at around 305 levels on the official currency market since last August, but it trades at a market determined rate of 365.33 at a newly introduced window for investors.

On the black market it traded at 366 against the dollar on Friday.

Spokesman Isaac Okorafor said he was unable to provide comments on the Senate’s recommendation.

Nigeria runs a convoluted exchange rate system which has masked the pressure on the naira. The bank has said it has used a multiple exchange rate to eliminate “frivolous demand” for hard currency.

Investors have cheered the new window launched in April with some more adventurous stock and bond funds that fled the frontier market two years ago cautiously returning.

The new window has also led banks to more than double foreign currency limits on debit cards for clients travelling abroad, something they restricted completely at the peak of the currency crisis.

Camillus Eboh
(Additional reporting by Oludare Mayowa; writing by Chijioke Ohuocha; editing by Alexander Smith)

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Adekunle Owolabi
Adekunle Owolabi 559 posts

Adekunle Owolabi studies democracy, human rights, public opinion, political behavior, civil rights and policy aimed at improving the human condition, with a focus on African countries.

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