The Dollar Shortage Has Arrived: Africa Runs Out Of Dollars

Tyler Durden's picture

Two months ago, when looking at the latest basis spreads, we showed that a disturbing development, first flagged here in March, was getting worse: namely the "Global Dollar Shortage Intensifies To Worst Level Since 2012."

We had expected this shortage to manifest itself synthetically - and gradually - primarily in the form of pressure on asset prices as market participants who found themselves in a dollar-deficit position were forced to liquidate USD-denominated assets. This indeed happened over the year as many emerging markets, and sovereign wealth funds, not to mention China, proceeded to offload USD-denominated reserves.

However, in an unexpected turn of events, the disappearance of not just synthetic but very physical dollars has hit one region much harder and much faster than we expected. Africa.

According to the WSJ, some of Africa’s largest economies, including Nigeria, Angola, Ethiopia and Mozambique, are restricting access to the greenback to protect dwindling reserves.

The implications are dramatic as the lack of dollars for everyday business operations means businesses from Transcorp Hotels to international giants like General Electric Co. and Coca-Cola Co., are all struggling to get the dollars they need for imports or to send profits back home.

While the shortage was predicted here on many occasions, however it is quite different to see it in action. The shortage comes as the inflow of dollars from resource exports, from oil to cotton (but mostly oil) has plummeted with the prices of these commodities. The commodity rout also is putting pressure on local currencies, which some central banks are trying to support with their dwindling supply of dollars.

This dollar squeeze is frustrating investors, increasing costs and delaying projects. It may hamper future investment in countries reeling from the fall in commodity prices. “It’s been a rough ride for a lot of companies in Nigeria, if not all the companies,” said Mr. Ozigbo, chief executive of Transcorp Hotels.

Nowhere has the dollar shortage been more acute, however, than Nigeria which gets more than 90% of its foreign-currency reserves from oil exports. Oil’s decline sent the value of the naira, Nigeria’s currency, sharply lower at the start of the year. In March, the Central Bank of Nigeria fixed its exchange rate at around 199 naira to the dollar. By this month, its currency reserves were down 18% to $29.5 billion from the same month last year; the are declining fast.


As also reported previously, this past summer Nigeria's central bank introduced a list of 41 items, from meat to concrete, that it won’t release dollars for. But no matter what a buyer wants their dollars for, their request has to be vetted against this list, slowing down any attempt to buy the currency.

A trader exchanges dollars for Nigerian naira in Lagos, Nigeria.
Photo: Joe Penney/Reuters

While the capital controls may have slowed the collapse of the Nigerian currency, all the central bank has managed to do is shift the impact of dollar shortage away from its own reserve balance sheet and into the domestic economy, which has hit a brick wall now that there are hardly any dollars with which to run day-to-day affairs.

Other African former energy exporting titans have followed in Nigeria's footsteps: Angola now lists industries, including the oil and food sectors, that have priority for the country’s dollar reserves, In Mozambique, the government requires companies to convert half of any dollar revenues into the local currency, as it looks to shore up its reserves.

“It’s obviously not like it used to be, where you would go to the bank and get your dollars,” said Jay Ireland, the Africa chief executive officer for GE. “Now it’s a process that they require and it takes longer,” he said, talking about Nigeria and Angola.


Mr. Ireland said GE remains committed to long-term projects in Africa, but the dollar shortage means that it now takes local clients longer to buy GE products priced in dollars.

This is also known as the "Venezuela approach", where incremental FX capital control regimes were attempted only to discover that none of them actually work.

Meanwhile in Africa, the dollar shortage is so acute, even some of the world's safest and most respected companies with African operations are starting to fell the impact. Case in point Coca-Cola, which has been in Africa for almost a century and can obtain dollars from across its businesses. However, "the beverage giant is concerned that its suppliers will start to feel the pinch as they struggle to fund imports that they need. “If there are no changes in monetary policy it might become a bigger challenge and that is a space we are watching very closely,” said Adeola Adetunji, Coca-Cola’s managing director in Nigeria. “Business is not as usual.

As for smaller, less reputable companies, the dollar shortage means business is effectively frozen:

Mr. Ozigbo’s Transcorp needs dollars to pay contractors and to import building materials to upgrade one hotel and build another, among other construction projects.


Last year, getting a “sizable amount” of dollars would have taken 48 hours to a week, Mr. Ozigbo said. Now, Transcorp is lucky if it can obtain the money within three weeks, he said.


Amid delays, the cost of upgrading the Hilton in Abuja has ballooned from an estimated 16 billion naira ($79 million) to about 26 billion naira since last year.  Mr. Ozigbo now has serious doubts about whether his project will remain economically feasible.

To be sure, African central banks have a simple way out: stop defending their currencies, and let the market determine the fair value. The problem with this approach is that it promptly leads to an immedate devaluation of the currency, and without fail, hyperinflation and social unrest. The latter is not an option for many African countries where inflation is already running red-hot in the double digits.

Angola, which is Africa’s second-biggest oil producer after Nigeria, has also been using its dollars to prop up its currency, the kwanza. Its central bank says it plans to stay on that course.


“If we devalue, it will have a huge impact on inflation because most of our food is imported,” said Gualberto Lima Campos, deputy governor for the Central Bank of Angola. The country has a 14% annual rate of inflation.

Of course, defending one's currency is a losing game as not only Argentina most recently, but the Swiss National Bank most infamously, will admit.

"As African central banks place restrictions on access to their dollars, while burning through these reserves to support their currencies, they are also storing up longer-term troubles. “Few investors will want to put money into a country at an official exchange rate that is not set by the market and which is not seen as sustainable in the long run,“ said Charles Robertson, global chief economist at investment bank Renaissance Capital."

For now Africa has avoided the "hyperinflation monster", the result of an all too predictable scarcity of dollars, however the countdown is on and with every passing day that oil prices do not rebound, the inevitability of a full-on continental currency collapse, with hyperinflation and social unrest to follow, becomes increasingly more likely.

Worse, Africa is just the start: while the manifestations will differ, the mechanics of the dollar shortage, which we recently quantified in the trillions of dollars, are universal, and should the Fed's rate divergence path with the rest of the world continue pushing the USD ever higher, soon this USD-shortage will escape the confines of the world's poorest continent and make landfall somewhere where it will be far more difficult to ignore the adverse consequences of the global commodity collapse and the Fed's monetary policy.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
blabam's picture

Fracked in the ass. 

BLOTTO's picture

They ran out of money, before they could even get clean drinking water.


Thats normal.


Our Life - One giant cosmic lie

Antifaschistische's picture

note to self #14.  There is a difference between physical fiat and electronic fiat.   physical fiat is significantly more valuable in any shtf scenario...including avoiding being Cypressed. 

...and if you're like just like making things hard on the US Treasury anyway by stacking One's and nickels since for every one you stack, they have to print or stamp out another one.

FreeMoney's picture

Note to self...This is the result of money printing in local currrency to fund government deficit spending.  Keynes destroys africa again...

Deathrips's picture



You can NEVER run out of lies from liars!

I hear fire makes liars dissapear.


Take that shit to the bank.



Bokkenrijder's picture

Since a few months already, ATM's in Russia no longer issue any US Dollars.

Previously there was always an option whether you wanted to get Rubles or Dollar, but that is no longer so.

I will probably be in Azerbaijan in the next few days where ATM's are similarly equipped to issue either Manat or US Dollars, and I'm curious to see if they also still have the possibility to issue Dollars after the Manat crashed:

Lost My Shorts's picture

What always puzzles me is -- how do you reconcile articles like this with the endless moan that the dollar is about to lose its reserve status, we are all doomed, the petrodollar is over, we are all doomed etc.  It seems the dollar still has a healthy reserve status with just about every African, never mind all their central banks.

sessinpo's picture

  Lost My Shorts     What always puzzles me is -- how do you reconcile articles like this with the endless moan that the dollar is about to lose its reserve status, we are all doomed, the petrodollar is over, we are all doomed etc. It seems the dollar still has a healthy reserve status with just about every African, never mind all their central banks.


Those people saying it was over, are just early. I still give the US dollar about a year.

Watch what happens militarily. That is the key - whether the US can still back up the US dollar with the military. Russia and China are trying to change that. It is just like past empires in history. They expanded and fought wars. At the end of their reign, their military could not back up the currency. Economies imploded and so did that empire.

NoDecaf's picture

@ Lost My Shorts - When physical dollars disappear, how long would you hold onto them at max value? Said differently, how long would you hold onto a million dollar shack in a housing bubble? If not you, then someone will start the selloff... When that tide turns, it's coming back as a tsunami.

Demdere's picture

At least a reciprocal relationship : This year the US will create $5T in fiat electrons to roll over the national debt, inflation will be very high.  ShadowStats said 10% from the $1T / year QE.  50%?

If so, our government's life will be short.

And that will be converted into some violence crisis so divide and rule goes on working.  Otherwise, Israeli-Neocons hang.

We know full well who is responsible for the kleptocracy. 9/11 FF showed us who has the whip-hand in America.

COSMOS's picture

They should just counterfeit the dollars, its funny money anyways.

As long as they have yuans they are fine.  They can buy any commercial or consumer products they want with yuans.

Theosebes Goodfellow's picture

~"In March, the Central Bank of Nigeria fixed its exchange rate at around 199 naira to the dollar. By this month, its currency reserves were down 18% to $29.5 billion from the same month last year; the are declining fast."~

Hmmmm, sounds like the naira has moved into "asswipe" territory. A guy with a suitcase full of Bejamins could corner the market in hookers and uhm..., spices.

Captain Obvious.'s picture

Because Zimbabwe has changed to Yuan.

Augustus's picture

Lost My Shorts

What always puzzles me is -- how do you reconcile articles like this with the endless moan that the dollar is about to lose its reserve status, we are all doomed, the petrodollar is over, we are all doomed etc.


it is pretty comical, isn't it?  Gold buggery at the best.

Puutie must have made the ruble a reserve currency.  That means that USD is no longer necessary for Russian peoples.

Or maybe the money tree they picked those USD from has died.  Those ZH followers who bought those baskets of rubles must love Puutie a great deal.


DownWithYogaPants's picture

A trader exchanges dollars for Niggerian naira  --  caption on the photo above made me laugh

zeronetwork's picture

Governments, sincere with their people make dollar disappear from their country before it turn out to be a confetti and save their population from dollar disaster.

Relentless's picture

If we devalue, it will have a huge impact on inflation because most of our food is imported,” said Gualberto Lima Campos, deputy governor for the Central Bank of Angola


Question - why do they import their food? Answer - because US international aid is strucutured to force third world countries to export resources and grow cash crops instead of food. They get their food by importing US grain. Which is great if you are part of the bureaucracy and part of the bribe chain, but bugger all use if you're a peasant.

Professor Fate's picture

As Weimar discovered so brutilly, if you have a perpetual negative trade balance and are forced to import food and building materials, sooner or later your fucked.  Africas clear destination is more revolution as all the little Obamas start to starve.  The bad thing about oil is you can't eat it.

Fate the Magnificent
"Push the Button, Max" 

Save_America1st's picture

I guess these countries are too scared that the Freedom Bombs would reign down upon them like in Libya, Syria, Iraq, etc. if they ever decided to kick the fucking central banksters out and started using a sound monetary system, ay? 

I wonder if China will be willing to defend these countries militarily at some point as they expand the yuan throughout Africa and eventually back it with a percentage of their huge gold stash?

Muddy1's picture

Agnola's currency is the Kwanza?????  So much for Happy Kwanza!


THis article puts whole new aspect on the email's many of us have received from a Nigerian Prince who needs our help to get his fortune out of the country!!!

MrNosey's picture
MrNosey (not verified) BLOTTO Dec 23, 2015 4:19 PM

'Our Life - One giant cosmic lie'


And unfortunately they can't even print out a wad like the US when they run out and will have to borrow some at interest!

No matter it will all change in the New Year......

Money_for_Nothing's picture

My understanding (which may be incorrect) is that a large number of poor Africans reject the ideas of clean drinking water and do stuff and don't do other stuff that is very unhygienic. Hard to teach a man to fish if he doesn't think fish is edible. This may be God's way of saying to Africans, "Your as as capable as any of my people and I'm going to require you to show it to the world."

DownWithYogaPants's picture

Dear god please don't explain it.  They might listen and we're already being overrun.  Imagine if they didn't have appreciable infant mortality?

Pumpkin's picture

Same damn thing happened to me!

stant's picture

Somebody go check those c130s that flew them those dallas to iraq. Might be a pallet or two that got missed

KnuckleDragger-X's picture

Cash and carry only works if you have cash. I expected something like this, but not until Spring. Oh well, they can always use Buttcoin since it has magical superpowers.....

WTFRLY's picture

Joo World Order loading ... ... ... ... 35%

SillyWabbits's picture

Does this mean Africa will resort to a black market?

bamawatson's picture

well, they certainly have no white collar crime

DownWithYogaPants's picture

Oh my lord

Oh my soul

Never saw a Nigerian

With a white turdole

monk27's picture

They might resort to yuans...

JustObserving's picture

Obama's war on oil has taken out $3 trillion in revenues from oil producers.  That is a big chunk of the global GDP of $70 trillion or so.  

The fall in oil is affecting other commodities too.  Developing economies are screwed.  And Africa will remain screwed until oil prices recover.


NoDebt's picture

Africa will remain screwed forever.


OpenThePodBayDoorHAL's picture

Reminds me of what they say about Brazil: "It's the country of the future, and always will be"

zeronetwork's picture

Any country with corrupt politicians will remain screwed or will be screwed i.e.USA

arbwhore's picture

Do like Zimbabwe, shift to the yuan.

kerfuffled's picture
kerfuffled (not verified) Dec 23, 2015 2:13 PM

No problem, Yuan is legal tender in zimbabwe.

And in many areas they do physical gold, just like india.

Lumberjack's picture
Hillary Clinton's Nigeria record once again in the spotlight

Nigerian President Muhammadu Buhari's visit to Washington, D.C., Monday to discuss the fight against Boko Haram has prompted critics to again question why Hillary Clinton refused to label the West African insurgents as terrorists during her State Department tenure.

Buhari and President Obama discussed U.S. support of Nigerian counterterrorism efforts, which was made possible by Secretary of State John Kerry's decision to place Boko Haram on the terrorist watch list in late 2013, just months after Clinton left office.

The State Department under Clinton resisted congressional calls to designate Boko Haram as a terrorist organization.

Robert Jackson, acting assistant secretary of state for African affairs,testified before Congress in May of last year that the agency could have acted sooner on Boko Haram.

Clinton's ties to Gilbert Chagoury, a prominent Nigerian businessman and Clinton Foundation supporter, have prompted at least one member of Congress to question the motives behind her decision not to slap Boko Haram with a Foreign Terrorist Organization classification.

Sen. David Vitter, R-La., wrote a letter to Kerry in March asking the State Department to turn over emails in which Clinton discussed Boko Haram.

"[G]iven the drastic foothold Boko Haram was allowed to gain prior to being designated an FTO, the nexus between the Department's decision against designating Boko Haram as an FTO and connections to outside groups should be brought forward," Vitter wrote.

Vitter questioned whether the Clinton's relationship with Chagoury influenced her decision against labeling Boko Haram a terrorist group.

He noted Bill Clinton had participated in events with Chagoury while his wife was secretary of state, and that the Nigerian land developer had "previously agreed to a $66 million plea deal during international investigation into corruption charges against him."

Bastiat's picture

The evidence against the Clintons is piled higher than that waste dump that collapsed in China. It is a testament to the utter corruption and arrogance of the Democrat party that they dare try to foist these criminal scum on the electorate . . . again.  I guess getting away with putting the undocumented alien with the sealed records in there, twice, made them believe they could get away with anything.  Of course they need an utterly corrupt tool. 

It brings to mind a scene in the play "A Man for all Seasons," about Thomas Moore:  he says to his manservant:  "A man cannot serve two masters."  His servant responds, holding up a pouch of coins:  "I serve only one." 


Dr. Engali's picture

The fed is raising rates while every other central bank in the world is desperately cutting creating a global market call. If I was a cynical person I might think that the fed and it's owners are planning this global chaos....., if I were a cynical person. 

monk27's picture

They are too dumb to "plan" anything. However, they convinced themselves that being a "contrarian" is cool...

SoDamnMad's picture

Now in the rush for the cashless society like Sweden, isn't it all just digital dollars were are talking about. You generate a "barter sheet" for dollars like 2 goats for 1 dolla,  4 hrs of bricklaying for 1 dolla,  12 tomatoes for 1 dolla.  You march into the bank and say, "I got 4 ho's so gimme 100 dollas".   Simple, see.

I'm the Nigerian oil clerk wh has 3 million dollars left in a project that I will gladly split with you if you will just show good faith by putting a mere $15,000. into this account number so that the Nigerian treasury will know this is a viable firm and the 1.5 million can be transferred from the Oil Ministry.

lasvegaspersona's picture


If currencies just floated then the obvious would happen....countries with no exports would not be able to get imports unless they gave up gold (that is the only asset central banks will deal with). Too bad gold is not priced higher. Africa would be able to get Coke, Pepsi and maybe even medicines.

BruntFCA's picture

The tribe is also screwing Africa over big time. Nigeria borrowed 1billion in fiat from New York banks back in the 1970s, now due to the magic of compound interest it owes them about 50 billion.

I wish those black lives matter dudes would wake up and smell the coffee, they are being fucked by the tribe but also being financed by the tribe to deflect attention onto bollocks like white privilidge, how about Jewish privilidge?

Panafrican Funktron Robot's picture

Guess:  we have a short period of mild decline in the markets Q1/Q2 (maybe 15-20%) and Fed unleashes the Kracken once again.

yogibear's picture

Looks like monopoly money.

The fed acts like it's monopoly money.

More Ammo's picture

“If we devalue, it will have a huge impact on inflation because most of our food is imported,” 


Tropical country...maybe they should learn to grow some food instead of succumbing to the plundering.

When the NWO SHFT unfolds and reaches them the desired effect of killing the eaters will be self inflicted.