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UPDATE 1-Nigerian cocoa export delays to likely worsen FX scarcity

Published 27/11/2020, 16:02

(Updates with currency impact, quote)
By Chijioke Ohuocha
ABUJA, Nov 27 (Reuters) - Delays to Nigerian cocoa exports
in the fourth quarter after new rules to crack down on shipments
with incomplete paperwork will worsen the country's dollar
shortage, the head of the cocoa association said on Friday,
further pressuring the naira.
Around 100,000 tonnes of cocoa have been caught up by the
new system, Mufutau Abolarinwa said. The delay to shipments of
Nigeria's second biggest export could worsen dollar scarcity in
Africa's biggest economy.
"October delivery is in default," Abolarinwa said by phone.
"But buyers are aware that the procurement is already at the
ports."
Delays could affect the quality of the export, he added.
Nigeria, the world's fifth biggest cocoa grower, slipped
into its second recession in four years in the third quarter
after struggling to recover from the impact of COVID-19.
The naira hit a new low of 495 on the black market on
Friday, widening the gap with the central bank's official rate,
where the currency has been trading within a range since
July. The central bank has been looking for ways to ensure that
export proceeds are repatriated to boost dollar supply on
official markets, thus choking the black market, where the naira
trades at a 23% premium.
Abolarinwa said the latest challenge has caused foreign
buyers to become wary of Nigerian cocoa and that no new
contracts have been issued.
Cocoa exports were choked in October after protests against
police brutality, coupled with curfews to quell unrest,
drastically slowed shipments to the ports.

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