In the first nine months of 2024 (9M’24), Nigeria’s foreign trade payments via Letter of Credit (LC) fell by 146.5 percent year-on-year (YoY) to $434.05 million from $1.07 billion in the same period of 2023, according to the Central Bank of Nigeria’s (CBN) International Payments Data for the review period. An LC is a written document that is used for the importation of visible goods instead of cash before shipment.
The LC payment system is one of the most important indicators of a country’s creditworthiness. However, a decrease or increase may indicate changes in the volume of import trades.
According to the data, LC payments decreased by 15.6 percent to $204.4 million in the first quarter of 2024 (Q1’24) from $242.23 million in the fourth quarter of 2023. In Q2’24, LCs fell by 47.3 percent QoQ to $107.8 million.
The declining trend continued in Q3’24, with LCs falling by 13.9% to $193.8 million from $225.06 million in Q3’23. The reduction in letters of credit suggests a decline in importation operations as a result of rising customs duties, rigorous import controls, and the naira’s depreciation.
