Share
How naira scarcity threatens trade & supply chains
As the naira scarcity continues to bite harder, it’s not business as usual for trade and supply chains’ transactions as there are some complaints of challenges with electronic payment alternatives and lack of cash. Bamidele Ayemibo, an Export Consultant joins CNBC Africa for more.
Fri, 03 Feb 2023 11:51:48 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Challenges faced by exporters in accessing cash for supply chain operations
- Risk of 'dollarization' due to uncertainty around the naira
- Need for transparency and efficiency in cash distribution to mitigate effects of naira scarcity
The scarcity of the naira continues to present challenges for trade and supply chains in Nigeria, affecting various sectors of the economy. One of the key issues being faced is the difficulty in accessing physical cash, leading to disruptions in electronic payment alternatives and impacting the smooth flow of business transactions. The recent approval of over-the-counter payments for new notes by the Central Bank of Nigeria (CBN) has been a welcome move, but questions remain regarding the effectiveness of the policy in addressing the underlying problems at hand.
In a recent interview with CNBC Africa, Export Consultant Bamidele Ayemibo shared valuable insights into the implications of the naira scarcity on manufacturers and the export business in Nigeria. Ayemibo highlighted the challenges faced by exporters in accessing cash for various stages of the supply chain, from farmers to local buying agents and merchants. The timing of the cash shortage is particularly critical, as it coincides with the peak export season, potentially leading to a reduction in export volumes and foreign exchange inflow.
One of the major concerns raised during the interview was the potential 'dollarization' of the economy, as traders and businesses start considering alternative currencies due to the uncertainty surrounding the naira. Ayemibo noted instances of people in border states already trading in foreign currencies, signaling a shift away from the naira in commercial transactions. This trend could further exacerbate the pressure on the naira and impact the competitiveness of Nigerian exports in the global market.
While discussing possible solutions to mitigate the challenges posed by the naira scarcity, Ayemibo emphasized the need to identify the root causes of the problem. He expressed concerns about the transparency and efficiency of cash distribution, pointing out discrepancies in the availability of new notes and reports of malpractices by some banks. The lack of clarity from the CBN on the issue has also contributed to the confusion among businesses and individuals, leading to increased reliance on parallel markets for foreign exchange.
In conclusion, addressing the naira scarcity and its impact on trade and supply chains will require a concerted effort from regulatory authorities, financial institutions, and market participants. Enhancing cash distribution mechanisms, improving transparency in currency management, and fostering confidence in the naira are essential steps to restore stability and facilitate smoother business operations in Nigeria. As the country grapples with these challenges, stakeholders must collaborate to find sustainable solutions and safeguard the resilience of the economy.
SIGN UP FOR OUR NEWSLETTER
DAILY UPDATE
Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.