Barely five days after the Central Bank of Nigeria (CBN) announced plan to redesign the naira notes, scarcity of foreign exchange has worsened in the parallel market.
The situation worsened last weekend after the announcement by the CBN to redesign the N200, N500 and N1, 000 notes, announcing that the new notes would be in circulation from December 15.
The lack of dollars and the cumbersome procedures Nigerian banks handle their offshore operations have continued to hurt local businesses that rely on forex to fund raw material imports and pay for services.
Naira’s downward spiral reached another historical low, exchanging for N800/$1 at the parallel market as forex scarcity continues to bite and hurt businesses.
The Naira also crashed against the British pound sterling at the parallel market, exchanging for N890.
Following the latest announcement, politicians have continued to approach BDC operators to easily convert their soon-to-expire stockpiled naira to foreign currencies, as the apex bank gave all Nigerians six weeks to return all old naira notes to the bank’s vault.
According to experts at the Centre for the Promotion of Private Enterprise, output has declined significantly in many industries because of challenges accessing raw materials due to the scarcity of foreign exchange, with many players restoring the patronage of the parallel market to run their businesses.
Findings by Blueprint show that “many players in the economy now resort to the patronage of the parallel market at very prohibitive cost, at very little access exist on the official window, and that the depreciation of the exchange rate has worsened profitability of investments.
“Foreign investors are currently struggling to repatriate their profits, dividends, and income away from the nation which is also affecting investors’ perception, and reputational and nation risk issues.”
Speaking on inflation, it said: “Exchange rate depreciation, high energy cost, increasing financing of the deficit by the Central Bank of Nigeria, the problem of insecurity which is affecting agricultural production, and high cost of logistics are increasing inflation in the nation which increased to 20.77 per cent in September.”
It explained that this increasing inflation is taking a toll on businesses, increasing production costs, elevating operating costs across sectors, reducing profit margins, and reducing turnover and sales for businesses.
“The central bank has abandoned its policy of lower interest rates by switching to high-interest rates as tackling galloping inflation becomes a top priority.”
According to some experts, “the apex bank may consider allowing the official rate at the NAFEX market to adjust downwards to the outflow of forex. This will also create more revenues for the government helping address their local debt burdens.”
Kachikwu warns
Meanwhile, the presidential candidate of the African Democratic Congress (ADC), Dumebi Kachikwu, has faulted the plan to redesign Naira by the CBN.
He called on President Muhammadu Buhari to convene an emergency economic summit to find solutions to the present economic challenges.
Speaking to journalists in Abuja, Monday, Kachikwu predicted that the policy would further worsen the economy through closure of small scale industries and render millions of workers jobless.
He lamented that the redesign of the Naira coupled with insecurity and skyrocketing inflation, has continued to throw millions of Nigerians into the poverty bracket.
Kachikwu said: “It has been an eventful past one week. The security advisory by some of the western nations and the departure of embassy officials and their families has led to panic amongst Nigerians.
“Even though President Buhari has sought to assure Nigerians that all is well, one begins to wonder what is really going on. The President failed to respond to rumours that some convicted terrorists were released to secure the freedom of the remaining Kaduna train captives.
“Some now accuse his government of undermining the efforts of our men and women in the field by the indiscriminate release of those who have sworn to destroy our way of life. Only the President can confirm if this is true or not.
“Nigerians now live in fear of the unknown as they wonder if they could be in the right place at the wrong time. Our highways have gotten worse as bandits now take on and kill convoys with several policemen.
“If those with a retinue of police aides are being attacked and, in some cases killed, then who is safe in Buhari’s Nigeria?
“As if this is not bad enough, the President continues to destroy the Nigerian economy with wrong and ill-timed policies that mostly benefits a few.
“Millions are daily thrown into the poverty bracket. Our middleclass has been wiped out as the dollar today exchanges for N800 and above.
“Diesel which powers most businesses and industries retails for around N900. A bag of local rice sells for N50,000 in some parts of Nigeria.
“A bag of Dangote cement retails for N4100. Mind you cement is the building block for the construction industry and that same construction industry is a key driver of any economy.
“One begins to wonder if this government is deliberately trying to set a record of creating the greatest number of poor people in the shortest period possible.
“How do you explain timing of the redesign of the naira? The sensible thing to do is weigh the pros and cons before taking such a decision which has further weakened the naira.
“How many Nigerians actually store money in their homes as is being speculated? Do we further destroy the naira because of a few Nigerians?
“Why can’t our security agencies up their game, identify those who have been speculated to store billions in their homes and then use legal means to recover the money.
“By the way, who says all money stored at home is ill-gotten wealth? There are those who simply don’t trust banks or don’t want to incur the extortionist bank charges imposed by some banks.
“Our economy is in tatters while the managers of our economy fight over who informed who or who got Presidential approval.
“As the naira continues to plunge, more businesses will collapse this week. Thousands will be thrown into the employment market daily.
“This is our reality. We can’t continue to keep quiet while our President continues to pauperise us.”
ADC standard bearer on Twitter
Also speaking on Twitter Space session hosted by Dr. Ademola Bayonle on his Village Square platform where Nigerians from all over the world take him on, the ADC presidential candidate challenged Nigerians to be the change they wanted.
He said: “I think that the incoming President of Nigeria has to first of all understand the root cause of our failure as a nation. “Having understood what the root cause is, he now has to design specific solutions to our problems then put together a team of competent Nigerians who have what it takes to deliver or to implement those solutions.”
On the dwindling fortunes of the nation’s economy and rising inflation, he said: “We all understand that the global economic downturn was triggered by COVID and every nation is responding to it differently depending on the managers of the resources of that nation.
“Nigeria lost a huge opportunity in responding to COVID and the opportunity we had with agriculture. “We knew that nations would struggle in meeting their supply gaps when economies opened up.
“Across Nigeria we have arable land that is good for agriculture. “Farmers are the richest people all over the world. Nigerian farmers are the poorest people.”
Kachikwu however insisted that ‘Jakpa syndrome’ especially in the healthcare, was being encouraged by western and developed countries to steal the nation’s budding talents and its wealth.
