In a bid to stave off potential business collapses attributed to lingering foreign exchange (FX) challenges, industry operators are urging the government to implement robust fiscal incentives for sectors crucial to attracting FX into the country.
The year 2023 proved tumultuous for the Naira, marked by a backlog of unfulfilled FX promises and pro-market reforms, resulting in a staggering 50% loss in the currency’s value. Analysts foresee the Naira’s downward trajectory persisting throughout much of 2024, prompting urgent calls to ease FX supply constraints, bolster weak foreign reserves, and stabilize the exchange rate. The goal is to avert the impending threats of job losses and company closures, particularly impacting small businesses.
As of Tuesday, the local currency experienced a 4.72% depreciation, closing at N878.57 to a dollar, reflecting a substantial N39.62 loss compared to the previous day’s closing at N838.95.
Victor Chiazor, Head of Research at FSL Securities, highlighted the ongoing challenges faced by businesses and organizations operating in Nigeria, citing the scarcity and high volatility of FX. Chiazor recommends substantial government investment in infrastructure to support the manufacturing sector, calling for major investments and cleanup in the oil sector. He also advocates for incentives for sectors attracting FX to meet international standards.
Patrick Ajudua, President of the New Dimension Shareholders Association of Nigeria, stressed the immediate need for government intervention to stabilize the market. Ajudua emphasized the impact of FX issues on the survival of companies, particularly in the manufacturing sector, citing consequences such as erosion of consumer purchasing power and losses incurred by sellers. He underscored the urgency, noting the departure of multinational and listed firms from the country.
Moses Igbrude, President of the Independence Shareholders Association of Nigeria, emphasized the pivotal role of improving logistics performance for developing economies to engage more deeply in foreign trade and exports. Igbrude expressed concern over Nigeria reportedly losing an estimated $15 billion annually due to congestion and maritime-related issues at the seaports. He called for strengthened policy reforms to incentivize exporters and the elimination of bottlenecks and unnecessary logistics hindering the free movement of goods and causing revenue losses at the ports.
As economic stakeholders unite in their calls for government action, the focus remains on implementing strategic measures to mitigate the current economic challenges and fortify Nigeria’s financial landscape against future uncertainties.
Credit: The Guardian
