Access to dollars remains major hurdle for importers – Clea boss

Nigeria's foreign exchange market continues to present a major hurdle for importers, even after reforms introduced by the Central Bank of Nigeria. Sheriff Adedokun, founder and CEO of Clea, explained that the demand for dollars has long outstripped the official supply. This imbalance is largely due to the nation's reliance on oil for hard currency, meaning fluctuations in crude prices or production directly impact dollar inflows while import appetite remains constant.

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For a long stretch, we also had several official exchange rate windows running at once. If you had access to the cheaper window, you could turn around and sell on the parallel market, and that gap would reward the people closest to the allocation rather than the businesses actually trading.

Historically, multiple official exchange rate windows created opportunities for arbitrage, benefiting those close to the allocation system rather than genuine businesses. Years of substantial government borrowing, often financed by the central bank, further weakened the naira, encouraging dollar hoarding as a store of value. While recent reforms have bolstered reserves to over $50 billion and narrowed the gap between official and parallel rates, the ingrained habit of scarcity and distrust takes time to dissipate.

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Paying suppliers outside the country was harder than finding the goods in the first place.

Adedokun established Clea out of personal frustration with the complexities of paying overseas suppliers. The traditional methods involved agents, middlemen, or relying on individuals abroad, leading to scams and hidden fees. Bank transactions were also cumbersome, plagued by forex scarcity, monthly caps, and failed transactions. Suppliers, in turn, distrusted the origin of funds often routed through third parties. Clea aims to enable direct, fast, and trustworthy payments for individuals and businesses, eliminating these intermediaries and their associated problems.

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The supplier on the other side did not trust where the money came from either, because so much of it arrived through third parties. So, you had a trust problem on both ends.