FG Finally Finds Solution to Exchange Rate Concern, Announces Important Partnership
- Nigeria and Japan have started a strategic venture capital initiative to give high-growth companies finance in Naira.
- This tactic aims to shield businesses from exchange rate worries while providing long-term concessional financing
- The Japanese government has now formally approved the program, paving the way for its commencement
Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
A strategic venture capital effort has been launched by Nigeria and Japan to provide Naira-denominated financing to high-growth firms.
Source: UGC
This strategy seeks to offer long-term concessional finance while protecting companies against exchange rate concerns.
To complete the fund's framework, Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, met with representatives from the Japan International Cooperation Agency (JICA) and the Nigeria Sovereign Investment Authority (NSIA) in Abuja on Wednesday.
The program is now officially approved by the Japanese government, opening the door for its launch.
The fund is a timely investment that fits with Nigeria's economic priorities, according to Mr. Wale Edun. He pointed out that it will further President Bola Tinubu's Renewed Hope Agenda for inclusive growth while offering crucial financial support across the capital structure, from debt to equity.
According to NSIA CEO Aminu Umar-Sadiq, the program satisfies two important goals established by the Minister: securing first-loss or grant capital to lower private sector risk and protecting investments from foreign exchange volatility by using Naira. He went on to say that the fund is completely approved and prepared for implementation thanks to JICA's cooperation.
Takao Shimokawa, the director general of JICA, revealed that diplomatic agreements would be completed in a few weeks, with full implementation to follow.
“By combining international concessional financing with domestic currency stability, the fund introduces a new model for venture capital in Africa. It is designed to empower Nigerian entrepreneurs and drive innovation across key sectors of the economy,” the ministry said.
Meanwhile, JP Morgan, an American investment banker, has said the change in the leadership of the Nigerian National Petroleum Company Limited (NNPC) and the release of Nigeria’s net foreign exchange reserves (NFER) are changing the tide in the market.
Amid increasing global uncertainty, JP Morgan upheld a positive rating on the Nigerian market, stating it is insulated from US slowdowns.
The company disclosed this in its note to investors on Wednesday, April 2, 2025, stating that the Nigerian market provided enough rate protection to ease potential FX losses.
According to the bank, it expects Nigeria's T-Bills to continue to perform well due to imminent catalysts as the Central Bank of Nigeria (CBN) published net FX reserves, while President Bola Tinubu changed the board and management of the NNPC.
It rated the net FX reserve release as a short-term catalyst and NNPC leadership change as a medium-term catalyst.
Source: Getty Images
Legit.ng reported that President Tinubu replaced the NNPC leadership less than 24 hours after CBN released the country’s NFER. JP Morgan sees the two decisions as a confidence booster for Nigeria, which has battled FX and macroeconomic challenges.
After the decisions, the forex market experienced some stability, though the naira depreciated slightly.
CBN speaks as naira crashes against US dollar
Legit.ng reported that the Nigerian currency, the naira, witnessed another depreciation against the US dollar in the official and unofficial foreign exchange market.
New data showed that the naira in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Tuesday, March 25, 2025, closed at N1,533.66/$1.
The latest rate represented a 0.09 per cent or N1.37 difference when compared to the previous day’s value of N1,532.29/$1.
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Source: Legit.ng
