Forex Crisis: Job losses, factory shutdown loom as Naira falls to 1,025/$
The Naira sank further on Tuesday, trading between 1,005/$ and 1,025/$ on the parallel market.
Owners of small businesses, the Nigeria Employers’ Consultative Association, and manufacturers who talked to reporters voiced alarm about the declining value of the naira, warning that it would lead to factory closures and job losses.
The naira has been falling since the Central Bank of Nigeria enabled the national currency to float freely against the dollar and other foreign currencies in June.
As a result of this reduction, businesses are having difficulty obtaining raw materials, and more enterprises are likely to lay off additional people or close down.
With the naira’s depreciation, manufacturers are forced to curtail production, jobs, and raw material imports.
Bureau de Change operators who spoke to newsmen said the naira exchanged for the dollar at the parallel market between 1,005/$ and 1,025/$ on Tuesday.
A BDC operator in Lagos, Yusuf Kareem, who spoke to one of our correspondents, stated, “We bought for N1,005/$ and sold for 1,025/$ on Tuesday. The money is still scarce. The value of the naira has been falling.”
Another BDC operator in Lagos, Musa Yunus, said, “The naira was traded at 980/$ two weeks ago, but today, it is 1,020/$. We don’t know what will happen tomorrow because it has not been coming down.”
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Another BDC operator in Lagos, who simply identified himself as Idris, said, “I am not sure you can buy up to $1,000 from me now because it is not available. We buy at the rate of 1,000/$, but I sell at 1,015/$.”
Babangida, another BDC in Lagos, said, “I sell for N1,010 per $ and buy at the rate of N1,000.”
But the Assistant Provost, Association of Bureau De Change Operators, Zone 4, Wuse, Abuja, Muhammed Nera, said the rate closed at 1,015/$ on Tuesday.
The Chairman of the Nigerian Association of Small and Medium Enterprises, South-West, Dr Solomon Aderoju, in an interview with one of our correspondents, said the forex crisis would kill many industries.
According to him, the cost of production is increasing following the falling value of naira.
He stated, “When the SMEs produce, they won’t be able to sell because the purchasing power is eroding and people are not buying.
“Some of us who have borrowed money from the bank will not be able to honor our obligation. It’s a multiple problem. They will not be able to service the loans. Some of us import our raw materials from other countries, which means the cost of raw materials will also be mounting. These problems will kill SMEs. As I speak, many businesses have closed shop because of these problems.”
The Chairman of the Nigerian Economic Summit Group, Mr Niyi Yusuf, also identified some major consequences of the declining naira value.
He said, “This will lead to increasing imported inflation as prices of imported items will increase while also increasing export income in naira for those who export goods and services.
Also speaking, the Director-General of Nigeria Employers’ Consultative Association, Mr Adewale Oyerinde, said the primary focus should be how the government would address the challenges related to foreign exchange.
