Amid soaring inflation rates and a dwindling foreign exchange (FX) reservoir, Nigeria’s economic health continues to plummet. As a result, a record high number of Micro, Small, and Medium Enterprises (MSMEs) have shuttered, and corporations are facing immense financial strain.
According to a report by *The Sun*, the naira’s value against the dollar plunged to N1,316/$1 in the parallel market. With rising FX demands and no promising signs of local currency appreciation, there are mounting concerns. The Central Bank of Nigeria (CBN) has intensified scrutiny on commercial banks suspected of hoarding FX, artificially inflating demand.
An unnamed new generation bank is currently under investigation for allegedly concealing a significant FX amount in an offshore branch. Bureau de change operators claim these banks are withholding FX to later sell at exorbitant rates.
“The banks’ FX hoarding is exacerbating the naira’s decline. Some banks buy from I&E only to sell for profit in the parallel market. This is countering CBN’s efforts to stabilize the naira,” an insider explained.
The severe economic conditions have obliterated approximately 7.5 million MSMEs between 2021 and August 2023. Factors like high electricity tariffs, lack of financial accessibility, costly petroleum products, and a challenging business environment are to blame, as stated by the Association of Small Business Owners of Nigeria (ASBON).
President of ASBON, Femi Egbesola, remarked, “Our data shows 39 million businesses currently operate. 20% of those, or 7.8 million, have collapsed.”
Major corporations, including Airtel Africa and Nestle, reported losses amounting to $385 million in 2022 due to the weakening naira.
Furthermore, the National Bureau of Statistics (NBS) highlighted that inflation increased to 26.72% in September 2023, marking the ninth consecutive month of inflationary growth.
Economic experts assert that increasing crude oil production and diversifying exports are crucial for stabilizing the economy. They also recommend reducing imports by promoting local production and reviving refineries to save on crude oil export and refined petroleum re-importation costs.
Frank Onyebu, former chairman of the Manufacturers Association of Nigeria (MAN), emphasized the need for genuine leadership. He said, “Economic indicators reveal little has changed. Authentic leadership, coupled with impactful policy changes, is the key.”
Experts also stress the potential of the manufacturing sector in rejuvenating the economy, urging the government to prioritize it. They believe enhancing revenue, addressing deficits, and fixing refineries can pave the way for economic recovery.
