Forex Crisis Is Killing Many Industries – Manufacturers, SMEs Cry Out As Naira Plunges To 1,025/$

Manufacturers and Small and Medium Enterprises (SMEs) have cried out over the ongoing forex crisis in the country, Naija News has learned.

According to them, the constant plunge of the naira is killing so many industries and causing many to lose their jobs.

This platform gathered that on Tuesday, the naira further fell as it exchanged for the dollar at the parallel market between 1,005/$ and 1,025/$.

Reacting to this, manufacturers have said if nothing is done, more companies will fold up, and many more will become jobless.

Speaking to The Punch, the Chairman of the Nigerian Association of Small and Medium Enterprises, South-West, Dr Solomon Aderoju, said the cost of production is increasing following the falling value of the naira, adding that businesses were also battling other challenges, such as high fuel costs.

He stated, “When the SMEs produce, they won’t be able to sell because the purchasing power is eroding and people are not buying.

“Some of us that have borrowed money from the bank will not be able to honour our obligation. It’s a multiple problem. They will not be able to service the loans. Some of us import our raw materials from other countries, which means the cost of raw materials will also be mounting. These problems will kill SMEs. As I speak, many businesses have closed shop because of these problems.

“This is not only the problem. There is also the cost of fuel and other issues we are battling with, such as the lack of marketability for our product. We have foreign products contesting with our local products in Nigeria. Some of these products are not even of high quality like ours, so there is no way to benchmark them because they are cheaper.

“And that is what is giving us concern over the African Continental Free Trade Agreement, which former President Buhari signed. If we are now having borderless transactions, that means other countries can now come here and bring down their product, which will be cheaper than our own.”

Also speaking, a facilitator with the Nigeria Economic Summit Group, Dr Ikenna Nwaosu, said many companies would shut down because of the forex crisis.

He said, “It will lead to some companies shutting down. First of all, if the cost of production and the cost of their raw materials exceed a certain stage and they can’t sell their final products because the market doesn’t accept a certain price, then they will end up losing. So many people are going to stop production, and that means there would be unemployment, maybe temporary unemployment. They could close down for some time, so there would be a snowball effect. It will lead to companies closing since the Federal Government has closed all special windows for foreign exchange. Finally, it will impact the educational sector because, for students who are going overseas, there is no special window for them. They used to buy at a special window, but now they are buying at the open market.

 “The next thing we will hear first is that the price of petrol will rise because of the cost of purchasing it. Secondly, the exchange rate for calculating import rates by the Nigeria Customs Service will rise. It will rise again, and once that happens, there will be a rise in import duty, and at the end of the day, the price increase is passed to the final consumer. It is also going to add to inflation, and with the rise in the price of fuel and rise in import duty, the rise of food will go up. And it means that the negotiation for the minimum wage would be stiffer. Nigeria Labour Congress is saying N200,000 as minimum wage. If the dollar is like this, what will happen? So these are the key impacts of this high dollar rate. I recommend that there should be a direct intervention from the CBN. The president’s instruction that the CBN should hand it off and let market intervention take over is not working for us. And, mind you, the war in the Middle East will worsen our high dollar rate.”

Similarly, the Director-General of Nigeria Employers’ Consultative Association, Mr Adewale Oyerinde, said the primary focus should be how the government would address the challenges related to foreign exchange.

Oyerinde said, “Presently, the forex situation poses a significant obstacle to procuring essential inputs and is causing disruptions in our financial projections. The escalating forex issue is hindering progress, and until it is resolved, our endeavours cannot take flight.”