HomeBusinessNigeria's Economic Woes Deepen Amid Inflation, FX Shortages

Nigeria’s Economic Woes Deepen Amid Inflation, FX Shortages

Published on

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.

Latest articles

Wema Bank Rally Lifts Adebutu’s Stake to $90 Million

Kessington Adebutu’s stake in Wema Bank has risen to almost $90 million as the bank’s shares rally 147% in 2025, driven by digital banking growth.

Nigeria’s Grazing Conflicts Take 2,800 Lives in 5 Years

Open grazing conflicts in Nigeria killed 2,800 in five years as weak laws and poor enforcement fuel violence and displacement.

NEITI Expresses Confidence in Ojulari to Drive Oil Reforms

NEITI backs Ojulari to deliver oil sector reforms, restore transparency, and attract $60 billion in investments for Nigeria’s energy future

Ondo Man Arrested in Death of Neighbor’s Son

Police arrest man in Ondo over neighbor’s son death, sparking outrage and calls for justice in Akure community.

More like this

Wema Bank Rally Lifts Adebutu’s Stake to $90 Million

Kessington Adebutu’s stake in Wema Bank has risen to almost $90 million as the bank’s shares rally 147% in 2025, driven by digital banking growth.

Nigeria’s Grazing Conflicts Take 2,800 Lives in 5 Years

Open grazing conflicts in Nigeria killed 2,800 in five years as weak laws and poor enforcement fuel violence and displacement.

NEITI Expresses Confidence in Ojulari to Drive Oil Reforms

NEITI backs Ojulari to deliver oil sector reforms, restore transparency, and attract $60 billion in investments for Nigeria’s energy future