Business leaders and investors in Nigeria say they are facing an unprecedented shortage of foreign exchange with the contribution of supply from the official source falling in some cases to below 23% a ratio of their total FX requirement.
In a good number of cases, that number was as low as 12% with the blending rate rising as high as N430 to the dollar and this is now beginning to be reflected in higher prices of basic items like flour.
When asked if they have ever encountered problems sourcing the FX required for their businesses, 86% said yes, 9.3% said no, while, 2.7% said they sometimes encountered problems accessing FX.
The Nigerian economy entered into a recession in the third quarter of 2020. Earlier before this, the nation’s data agency, the National Bureau of Statistics (NBS), announced that 23 million Nigerians were unemployed.
Coupled with the inflationary pressures in the country, it then means that urgent steps must be taken to address the scarcity of forex to businesses.
Consequently, some 34% of affected firms said they had been forced to lay off staff, while some 32% said they cut salaries to remain in business on account of the forex scarcity and other pressing factors.
When asked if they have ever had to lay off staff because of FX difficulties, the majority of respondents said yes and the number of employees laid off, according to them, ranged from 2 to 50 per firm.
The survey was conducted by Business Day’s Research and Intelligence Unit (BRIU), with a special focus on the sources and utilization of forex, and was administered in the first week of December 2020 to ascertain the sources and utilization as well as the ease of access to FX for Nigerian businesses.
Business Day, 10 December, 2020
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