- Unregulated Black Market still a challenge- expert
By Olawale Lamina
EFEMS platform is a fully electronic system that provides real-time pricing and visibility of buy and sell orders.
The naira has made a noteworthy recovery, appreciating by N125 against the United States dollar within a month following the implementation of Electronic Foreign Exchange Matching System, EFEMS.
The development which marks a paradigm shift in Nigeria’s FOREX market was confirmed by data from the Central Bank of Nigeria (CBN).
The apex bank stated that the naira recovered by 8 percent as the dollar was quoted at N1,535 on January 3, 2025, compared to N1,660 quoted on December 2, 2024, the official launch date of EFEMS trading.
The CBN first announced the introduction of EFEMS on October 3, 2024, as part of a series of reforms aimed at addressing speculation and enhancing transparency in Nigeria’s foreign exchange market. EFEMS was specifically designed for authorised dealers operating within the Nigerian Foreign Exchange Market (NFEM) and became operational on December 2, 2024, after a successful two-week trial in November last year.
The EFEMS platform is a fully electronic system that provides real-time pricing and visibility of buy and sell orders. By automating the matching of orders, it ensures that transactions occur at the most competitive prices available, significantly reducing the chances of price manipulation and other market distortions.
Also, the system curtails speculative trading and mitigates the volatility often caused by such distortions, improves regulatory oversight, offering enhanced monitoring capabilities for FX activities and ensuring that all trades are conducted within a transparent and well-regulated standards.
It would be recalled that prior to the introduction of EFEMS, Nigeria’s foreign exchange market relied on manual or semi-automated trading processes, which were prone to inefficiencies and potential manipulation. But the introduction of EFEMS now eliminates these challenges by centralising transactions on a single regulated platform and ensuring real-time visibility and seamless processing.
Emphasizing the importance of the reform, Olayemi Cardoso, the governor of the CBN, by saying that,“Over the past year, we have undertaken critical reforms to unify Nigeria’s exchange rate, eliminating distortions and restoring transparency. This unification has enabled us to clear the outstanding foreign exchange obligations, giving businesses—ranging from manufacturers to airlines—the confidence to plan and invest in the future. To further enhance the functionality of the foreign exchange market, we are introducing an electronic FX matching system, which has proven effective in other markets.”
In acknowledgement of the recent progress being made, CEO of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf noted that the CBN’s action in stabilising the foreign exchange market but pointed out that the unregulated black market continues to pose significant hurdles. He said: “The measures taken by the CBN are yielding some positive results, but it is a work in progress.
“Speculators and manipulators in the market are constantly devising new tricks, so this must be a continuous effort.”
In 2024, the nation’s domestic currency experienced a sharp depreciation, losing 40.9 percent of its value against the dollar in the official market, despite an increase in external reserves. This decline underscored the persistent challenges facing Nigeria’s currency market, despite moves to turn around the economy.
Meanwhile, operators in Nigeria’s telecommunications sector are already anticipating more investments in the new year based on the relative stability recorded in the forex market towards the end of 2024.
The industry leaders are confident that the worst of the volatility witnessed in the foreign exchange market last year is over.
According to them, the declining value of the naira was not the main problem but the high rate of instability in the forex market, which made planning very difficult for many of the telecom operators. But they expressed the confidence that the naira will continue to experience stability this year.
For instance, the CEO of MTN Nigeria, Mr. Karl Toriola, shared in the optimism, predicting a more stable foreign exchange environment in 2025.
He stressed that the worst of the volatility may have been over as a repeat of the instability is not expected in 2025.
He stated that,”I don’t expect any repeat of the kind of volatility we experienced last year, which was driven by the move towards a more liberal foreign exchange market.”
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