Nigeria, UAE announce Joint FX Liquidity Program and Bilateral Agreements

Nigeria’s President Bola Tinubu yesterday announced a joint foreign exchange (FX) liquidity program with the United Arab Emirates (UAE) following a high-level meeting with UAE President Sheikh Mohamed bin Zayed Al Nahyan in Abu Dhabi.

President Tinubu announced the launch of a cooperative FX liquidity programme between Nigeria and the UAE. However, detailed programme specifics, such as its scope and aims, were not released during the announcement. President Tinubu promised that "details will be announced in the coming weeks."

A “joint foreign exchange (FX) liquidity program” refers to a collaborative effort typically undertaken by multiple financial institutions, central banks, or market participants to provide liquidity or access to foreign exchange markets.

The primary purpose of such programs is to stabilise or support the functioning of foreign exchange markets, especially during times of crisis, extreme volatility, or liquidity shortages. This support can include buying or selling currencies, offering credit lines, or engaging in coordinated actions to stabilise exchange rates.

These programs are essential for maintaining the stability and proper functioning of foreign exchange markets, as disruptions in these markets can have far-reaching consequences for international trade, investment, and financial stability. Joint efforts ensure that there is a collective response to address liquidity challenges and maintain confidence in the currency markets.

In his address to the nation, the President conveyed a strong sense of optimism and a firm commitment to establishing a robust partnership with the UAE. He emphasised that since his inauguration as president, he has been rolling out policies aimed at mitigating the foreign exchange crisis in Nigeria, which has impacted the country’s external reserves and created challenges for businesses.

Tinubu highlighted that the UAE had previously suspended flights in and out of Nigeria due to difficulties in repatriating funds from the country, a consequence of the FX crisis. This had a negative impact on the Nigerian economy and investor confidence.

Tinubu's announcement included several significant developments, including the immediate lifting of the UAE's visa ban on Nigerian travellers and the resumption of flight schedules in and out of Nigeria by UAE-based airlines, Etihad and Emirates, without an immediate payment requirement from the Nigerian government.

Both presidents agreed on a framework for the UAE government to make significant investments in the Nigerian economy totaling several billion dollars in sectors such as defence and agriculture.