By Gloria Ogbonna
The naira's sharp decline against the US dollar at both the official I&E window and the parallel market has raised serious concerns over the past few months.
According to findings by The PUNCH, the naira plummeted by 38.9 percent against the dollar at the official I&E window of the Central Bank of Nigeria, falling from N745.19/$ on October 3, 2023, to N1035.12/$ as of January 3, 2024.
This drastic devaluation has profoundly affected various sectors, particularly the manufacturing industry and the organised private sector (OPS). Representatives from the Manufacturers Association of Nigeria, Lagos Chamber of Commerce and Industry, and Nigerian Association of Small-Scale Industrialists expressed worry over the adverse impact of the weakening naira on their operations.
They highlighted concerns about downsizing, potential closures, and severe hits to their bottom lines due to the currency's devaluation.
Despite government efforts to bolster liquidity in the foreign exchange market, including receiving foreign exchange support from international financial institutions like the African Import-Export Bank and securing emergency loans, the naira's value has continued to spiral downward.
The persistent volatility has raised fears among economists and analysts, who stress the urgent need for measures to control inflation, stabilize the foreign exchange market, improve infrastructure, and ensure consistent trade policies.
The naira's decline has echoed the concerns of the World Bank, which emphasized the necessity of stabilizing the official FX market and adopting market-reflective rates to mitigate risks related to expected net Foreign Direct Investment (FDI) and net Foreign Portfolio Investment (FPI).
While the Central Bank Governor, Olayemi Cardoso, assured that the bank was addressing concerns, OPS representatives feared that sustained forex scarcity might force more companies to downsize or relocate operations.
They urged the government to prioritise forex and credit allocation to manufacturers to alleviate the impact of the ongoing currency crisis.
The prevailing situation indicates the urgency for strategic measures to stabilize the forex market, strengthen the naira, and create a more conducive business environment to prevent further adverse consequences on Nigeria's economy and industrial sector.
Punch
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