The country’s lingering foreign exchange shortage has worsened, as the parallel market’s exchange rate creeps closer to N590/$1.
According to the Manufacturers Association of Nigeria, the development might result in enormous job losses in the manufacturing industry, among other areas.
The development comes more than eight months after the Nigerian Central Bank halted the selling of foreign currency to Bureau de Change operators and vowed to increase liquidity in commercial banks.
On the black market, the exchange rate was N585/$1 and N785/£1, compared to N582/$1 last Friday.
Banks have also curtailed clients’ access to currency, imposing a monthly restriction of $20 for online transactions.
Manufacturers and travelers who are frustrated have been obliged to use BDC operators more frequently than previously.
It was discovered that banks were only able to satisfy around 30% of client needs in some cases.
“I used the CBN online to apply for a $5,000 Business Travel Allowance. However, my bank told me it could only lend me $2,000,” a businessman who asked to remain unnamed said.
However, it was discovered that manufacturers’ experiences were significantly worse.
In an interview, MAN Director-General Segun Ajayi-Kadir noted that manufacturers increasingly rely on the illicit market for foreign exchange.
According to Ajayi-Kadir, the high cost of diesel and the paucity of foreign currency have considerably raised the cost of manufacturing, and businesses may be obliged to lay off some workers to cope with the new reality.
He also suggested that the northern land borders be reopened to allow gasoline merchants to import diesel from neighboring nations with refineries, such as Niger and Chad.
“Absolutely,” he answered when asked about employment losses. It’s especially challenging for tiny businesses because how can you pay staff if you’re not producing? As a result, industries may be pushed to resize. That is why we are doing all of these consultations in order to gain the government’s attention.
“The paucity of currency is especially problematic since it disproportionately impacts the industrial sector. The manufacturing sector has a multiplier effect on the economy; hence it should be prioritized.
In the face of enormous demands, our members are allocated excessively minimal sums”.
“We need currency to buy supplies and spare parts that aren’t accessible locally.” We were pleased when the CBN said that it will cease allocating forex to BDCs in order to put more money in banks, but this has not occurred.
We went to the BDCs for more than 90% of our requirements. You are handed $2,000 when you beg for $400,000. You want $1 million and are given $50,000. This is inexcusable.”