The devaluation of the Naira made Abdul Samad Rabiu lose $2.73 billion in a day. This comes as the weight of BUA Cement Shares was weakened by the recent unification of the Naira’s exchange rate system.
Abdul Samad’s wealth largely comes from his shares in BUA Cement, Nigeria’s second-largest cement producer. According to the company’s website, Samad owns about 98% of the company’s shares directly and through three other companies. He also controls a 93% stake in BUA Foods, which owns Nigeria’s largest noodle and flour mill.
Samad’s loss can be closely linked to the decision of the Central Bank of Nigeria (CBN), to auction dollars at a rate nearly 30 per cent weaker than the tightly controlled official market.
What you should know
Recall that President Bola Tinubu recently suspended the central bank governor, Godwin Emefiele. The President cited concerns over the multiple exchange rates implemented by the bank.
The multiple exchange rates operated by the apex bank created foreign currency shortages, impeding investors from repatriating funds from Africa’s largest economy.
Following Tinubu’s announcement, the trade restrictions on the official market were lifted, causing the naira to reach an all-time low of 750 to the dollar, a significant decrease from the previous day’s rate of 477 Naira to the dollar.
This is the first time since 2016 that the naira had recorded a big fall on the official market. It also comes before the central bank introduced a managed exchange rate in 2017.
Tinubu who inherited an anaemic economic growth, record debt and shrinking oil output has promised to put the economy back on track. He also asked the public to support some painful decisions.
Speaking on the development, the CEO at Financial Derivatives Company said, “What we are seeing is the removal of distortions created by inefficient pricing of foreign exchange and in the next few weeks we should start seeing the naira finding its level.”