Small Business Owners Fret Over Exchange Rate Instability

By Bliss Okperan

The exchange rate instability in the country is already giving small business owners sleepless nights and it threatens their investments.

This concern was raised recently by the National Vice Chairman of the Nigerian Association of Small-Scale Industrialists, Mr Segun Kuti-George.

He emphasised that business owners would have to increase their prices because of the unavoidable consequence of the current exchange rate crisis in Nigeria.

According to him, if consumers are unable to meet up with the increase in the cost of goods and services, businesses would be forced to shut down their operations, which would, in turn, affect the economy.

Mr Kuti-George wondered why the floating of the Naira has not achieved the major aim of curbing speculative activities in the foreign exchange market.

“It is ironic that what works in other places doesn’t work in Nigeria. The cost of production is rising, because we still import a large part of our input, especially equipment. Most of the raw materials that we use are imported.”

“So, when the cost of input goes up, the cost of production also goes up. This will happen to the price of products.”

“The question now is – will people be able to afford our products now? Will imported products not be cheaper than our own to the extent that people will be rejecting our products for imported ones? Unless the tide is stemmed, there will be more factory closure,” he said.

The businessman urged the government to move swiftly to stem the tide of Naira depreciation, especially in the parallel market, where more customers access FX to prevent more factories from shutting down.

Recall that in June 2023, the Central Bank of Nigeria (CBN) unified the exchange rate windows in the country, with the aim of keeping the Naira stable against foreign currencies, particularly the United States Dollar.

But since this action was taken, the domestic currency has suffered heavy loss, with its value depleting to over N1,000/$1 in the black market and the Peer-to-Peer (P2P) segments of the forex market.