The naira’s continued depreciation against the dollar is posing a serious threat to the survival of industries in the country. The naira traded at between N1,150 and N1,155/dollar at the parallel markets in Lagos and Abuja on Thursday.
At the official Investors & Exporters (I&E) Window, it opened at N986 before closing at N782.68.
The organised private sector and other stakeholders said that the naira’s slide had created severe challenges for manufacturers and business owners, such as increased import costs, high inflationary pressure, reduced profit margins and limited access to foreign markets.
The Director-General of the Nigeria Employers’ Consultative Association (NECA), Adewale-Smatt Oyerinde, told Daily Trust that the naira’s slide had affected industry and business capacity utilisation, production, employment, sales and profits.
He said, “The implication of the trend is grave for the economy and private businesses. The major impacts are that the working capital of private sector businesses and the real income of Nigerians have both shrunk due to high inflation, a precarious situation for the private sector businesses.”
He advised the government to adopt a guided float regime for exchange rate management, where the government could support the naira with complementary policies to maintain stability and prevent the collapse of the currency and its negative impact on the private sector.
He said, “The journey to a capitalistic state is audacious and gradual. More so, no economy is totally capitalistic. In the context of exchange rate management, the government should maintain a healthy balance between control and floating to circumvent the looming monetary collapse. Fortunately, the IMF or World Bank do not compel countries to totally float their exchange rate. It’s discretionary.
“In the context of the unification policy, as the CBN increases its intervention in the official window, the government may need to take an audit of registered BDCs, distribute them among the commercial banks and place their forex allocations with the host commercial banks. The BDCs then get forex allocations and submit reports of disbursement to the commercial banks. In this way, it’s easy to narrow the official market rate and the BDC rate.
“To complement the measure, non-registered BDCs or black market operators would need to be subjected to punitive actions.”
The Director-General of the Nigerian Textile Manufacturers Association, Hamma Kwajaffa, said that many companies had closed down while others had reduced their workforce to stay afloat.
He said that the naira’s depreciation had made the business environment hostile to many manufacturers and business owners who had to source forex at the black market.
The President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dele Oye, said that although the government was implementing policies such as foreign exchange management, foreign loans, export promotion initiatives, support for local industries and infrastructure development, it should do more by “capitalising on the current gains from the reduced subsidy on petroleum, investing part of the income in development banks and issuing an executive order to promote availability of single-digit medium and long-term loans to ease access to capital.”
Some entrepreneurs also told Daily Trust that the naira’s slide had made it difficult for them to remain in business.
A business woman who deals in imported fabrics, Rayo Ajibola, said that as of yesterday, a dollar was quoted to her at N1,200. “Our products are now expensive because we sell in line with the dollar rate. It has been very tough recently because the rate changes every day.”
Phone dealers also said that the naira’s free fall had affected the prices of mobile phones.