The Nigerian naira has experienced a 38.9% depreciation against the US dollar in the past three months, falling from N745.19/$ on October 3, 2023, to N1035.12/$ as of January 3, 2024, at the official Investors and Exporters (I&E) window of the Central Bank of Nigeria (CBN).
This continuous decline has raised concerns among manufacturers and the organized private sector, with fears that companies may scale down operations, leading to worker layoffs.
The Manufacturers Association of Nigeria (MAN), Lagos Chamber of Commerce and Industry (LCCI), and the Nigerian Association of Small-Scale Industrialists expressed worries over the negative impact of the falling naira on their members. The naira’s volatility persists despite government efforts to enhance foreign exchange (FX) market liquidity, including clearing FX backlogs and receiving a $2.25 billion support facility from the African Import-Export Bank.
The naira’s decline is seen as a potential threat to economic stability, with fears that more companies may shut down or downsize operations. Manufacturers have intensified calls for the Central Bank to address the ongoing forex scarcity and provide a lasting solution to the crisis. The organized private sector urges prioritized forex and credit allocation to manufacturers, emphasizing the need for a comprehensive strategy to stabilize the foreign exchange market.
Concerns grow as the naira’s value remains under pressure, impacting businesses that heavily rely on imported materials and contributing to a challenging operating environment. The depreciation raises questions about the effectiveness of recent interventions and highlights the urgency of addressing structural issues in Nigeria’s economy to attract foreign investments and stabilize the forex market.
The World Bank has recommended measures such as controlling inflation, stabilizing the foreign exchange market, removing import restrictions, improving infrastructure, and pursuing clear, consistent trade policies to boost economic growth. As the manufacturing sector faces uncertainties, stakeholders call for concerted efforts to address the root causes of the forex challenges and ensure a more sustainable and resilient economic environment.
