The June 2023 unification of Nigeria's FX windows — collapsing the official rate and the Investors and Exporters (I&E) window into a single market-determined rate — was the single most consequential change to Nigerian trade finance costs in the past decade. For importers who had structured their working capital assumptions around an official rate that bore little relationship to the parallel market, the adjustment was immediate and brutal. For exporters, the picture was more complicated: naira proceeds from USD sales jumped, but input costs denominated in naira also rose as imported raw materials repriced.
Writing this in late 2025, we are roughly two years into the post-unification regime. The dust has not fully settled. The naira has continued to depreciate on the unified market, trading in ranges that would have seemed implausible in 2021. But the structural clarity of a single market rate has changed how we at Trade Lenda approach FX exposure in trade finance underwriting — and it has changed how the importers and exporters we work with need to think about their trade cycles.
What Changed Overnight: The FX Window Unification
Before June 2023, Nigeria operated a tiered FX market. The Central Bank maintained an official rate (used for critical imports: fuel, food, medicine, and government transactions). The I&E window operated at a rate closer to, but still below, the parallel market. The Bureau de Change (BDC) segment operated at the widest spread. An importer financing a ₦50 million LC at the official rate was paying materially different naira than an importer accessing FX at the I&E window or the parallel market.
Unification abolished the multi-tier system. In principle, all legitimate FX demand — import finance, dividend repatriation, personal travel, education payments — would be met at the same market-clearing rate, determined by supply and demand. In practice, this meant the official rate adjusted sharply upward toward the I&E window rate, which had been functioning as the closest approximation to market clearing. For importers who had been accessing subsidised official-rate FX for restricted import categories, the cost of their USD purchases increased substantially in a single move.
The ripple effects were predictable and immediate. Import LC costs jumped. A ₦50 million LC at the old official rate might have required ₦75 million to cover the same USD value at the post-unification rate. That gap — 50% or more in many cases — hit directly as increased working capital requirements. Importers who had structured their financing assumptions around pre-unification rates found themselves either needing to renegotiate supplier terms, absorb the cost (compressing margins), pass it on to end customers (pricing pressure), or reduce order volumes.
The Compounding Effect: Rate Depreciation After Unification
The June 2023 adjustment was not the end of the story. Having unified the windows, the CBN allowed the rate to continue moving in response to market forces. The naira depreciated further through 2023 and into 2024, at various points trading at levels that represented a cumulative devaluation of well over 50% against the dollar from the pre-unification official rate. For an importer doing repeat quarterly shipments, each successive shipment was priced at a weaker naira than the last.
The practical consequence for trade finance costs: the naira amount required to service a fixed-USD import finance facility has grown continuously. An importer who took a 90-day import finance facility priced in naira at disbursement faces the risk that by repayment, the underlying USD goods have effectively cost them more in naira terms — not because the facility rate changed, but because the naira weakened between disbursement and the time their goods sold in the domestic market.
This is the FX mismatch problem that has always existed in Nigerian import finance, but it became acutely visible after June 2023. When the official rate was artificially stabilised, importers could at least plan around a known number. The unified market rate is more honest but also more volatile. That volatility is a cost that does not show up in the financing rate — it shows up in the gap between what you budgeted for a trade and what you actually paid.
How Trade Finance Costs Have Shifted in Practice
We see this in our own application data. Before and after the unification, the same importer doing the same commodity in the same volume needed materially different naira facilities to cover the same USD transaction. Three distinct cost shifts stand out:
Import LC and Invoice Financing Amounts
For a ₦200 million electronics import that, at the pre-unification official rate, represented roughly $160,000 USD, the same USD value at post-unification rates would require substantially more naira to cover. The minimum invoice threshold we set for our import finance product — ₦5 million to ₦500 million — encompasses a much wider range of USD values than it did in 2022, simply because the naira value of a given USD shipment has expanded. The same physical container of goods costs more naira to finance.
Demurrage and Holding Costs
The indirect cost that catches importers off guard: demurrage at Apapa and Tin Can Island is typically invoiced in USD by shipping lines (following global container shipping norms). Every day a container sits beyond the free demurrage period — standard is 7–14 days at most Nigerian ports, though this varies by shipping line — the importer owes USD-denominated charges. At a weaker naira, those charges convert to higher naira obligations. An importer experiencing port congestion delays in 2025 pays more naira for the same number of delay days than they did in 2022, even if the USD demurrage rate did not change.
Correspondent Bank Charges for LC Processing
Documentary credit processing involves correspondent banks — typically international banks that handle the confirmation and/or negotiation of LCs for Nigerian issuing banks. These correspondent banks charge fees denominated in USD. Post-unification, those fees convert to higher naira obligations. Combined with the increased base cost of the LC itself (more naira per USD of LC value), the total transaction cost of a traditional bank LC has increased substantially in naira terms.
This is part of why the 48-hour invoice finance model becomes more attractive in the post-unification environment: the traditional bank LC process, already slow, has also become proportionally more expensive in naira terms. Speed and cost are both arguments for alternatives to the LC.
Strategies Importers Are Using to Manage FX Exposure
There is no perfect hedge available to most Nigerian SME importers — the FX derivatives market is shallow and largely inaccessible at the SME level. But several practical strategies have emerged among the importers we work with:
Shortening the Trade Cycle
The longer the gap between financing disbursement and goods sale, the more FX risk accumulates. Importers who can shorten their inventory-to-sale cycle reduce the window during which naira depreciation can erode their margins. Some importers have shifted from quarterly bulk orders to monthly smaller orders, accepting slightly higher per-unit logistics costs in exchange for reduced FX exposure duration.
USD-Denominated Supplier Agreements with Naira Payment Flexibility
Some Lagos importers have negotiated agreements with overseas suppliers that allow partial payment in naira via payment platforms with real-time FX conversion, rather than requiring full advance payment in USD. This is more complex to structure and not available from all supplier categories, but where it works, it shifts some of the FX timing risk onto the conversion platform rather than accumulating it in the importer's P&L.
Pricing Goods with an FX Buffer
This is the bluntest approach, but it is what most practical importers do: price imported goods with an assumed naira depreciation buffer built in. If current rate is ₦1,600/USD and the importer expects 10–15% depreciation over their 60-day trade cycle, they price for a ₦1,760–1,840/USD equivalent. If the rate holds or improves, their margin expands. If the rate continues falling, the buffer absorbs some of the loss. The risk is that pricing too aggressively loses them sales to competitors who are pricing at current rates and absorbing the exposure themselves.
Faster Capital Deployment
When capital is released faster — as with Trade Lenda's 48-hour model versus a 30-day bank LC — the importer can deploy it into goods purchases immediately rather than having naira sitting idle while the LC processes. Every additional day naira capital sits idle before converting to USD for a supplier payment is a day during which the naira-to-USD conversion may become less favourable. Speed of capital deployment is a form of FX risk management, not just a convenience.
For Exporters: The Other Side of the Equation
Nigerian exporters are not uniformly harmed by naira depreciation — in fact, exporters earning USD or other hard currency and converting back to naira have seen their naira proceeds increase substantially as the rate moved. A cashew exporter receiving $100,000 USD from a European buyer converts to significantly more naira at post-unification rates than they did in 2022.
The complication is on the cost side. Most Nigerian export production involves significant naira-denominated costs: labour, domestic logistics, energy. Some involve imported inputs (packaging materials, chemical treatments, processing equipment parts) that are themselves priced in USD and subject to the same import cost increases that affect importers. The net FX position of an exporter depends on the specific ratio of their naira versus USD-indexed costs — and many exporters have not modelled this precisely.
We are not saying exporters should be pessimistic about the FX environment — far from it. For commodity exporters with predominantly naira cost structures, the post-unification rate regime has expanded margins in dollar terms even as the domestic economy faces pressure. But those margins should not be taken for granted as a permanent state. Nigerian FX policy has historically been interventionist, and the conditions that produce a favourable conversion rate today may not persist.
What the CBN's Policy Direction Means for 2025 and Beyond
CBN has signalled commitment to maintaining a unified, market-determined FX rate and has taken steps to clear the FX backlog that accumulated under the previous multi-window regime. These are structurally positive developments for trade finance cost predictability — if the rate is market-determined and backlog-free, importers and lenders can at least model their FX exposure against a real price rather than an administered fiction.
The risk is not policy reversal to multiple windows — that would be a step backward that would likely not survive market pressure for long. The risk is continued depreciation pressure driven by Nigeria's import dependency, the current account structure, and USD demand that exceeds supply at prevailing rates. Importers who assume the rate has stabilised and structure their working capital without an FX buffer are taking a position they may not have consciously chosen.
At Trade Lenda, we price facilities in naira and our rate schedule is transparent. What we cannot do is absorb the FX risk that sits between disbursement and repayment — that risk belongs to the importer. What we can do is help importers move fast enough that the FX exposure window stays as narrow as possible. A 48-hour capital release against a well-structured invoice leaves an importer in a better FX position than waiting 30 days for a bank approval while the rate continues its march.
The naira environment is not easy. But it is now, at least, a single environment with a single price — and that is something trade finance can be built around more honestly than it could before.