Businesses in Nigeria are going through hard times in the Nigerian economy due to second wave of naira depreciation and growing levels of insecurity.
All these are creating uncertainty for companies in Nigeria.
Reduced profitability, job losses, reduced tax income and even the possibilty of a corporation failing or leaving the West African nation as we saw in the case of GlaxoSmithKline and host of others.
Businesses in Nigeria are currently in “bad climatic condition,” Nigerian businesses’ strategic planning exercises for 2024 in the fourth quarter of 2023 have the naira falling to a record low of more than N1,500/$1.
And Forex analysist in Dubiss Forex Academy, says that the naira could heading towards N2,000/$1 before the end of the first quarter of 2024.
Femi Egbesola, the head of the Association of Small Business Owners of Nigeria (ASBO), issues a warning, stating that around 10 million firms are closing due to losses.
Along with insecurity, instability, erractic power supply and currency fluctuations are limiting businesses in Nigeria and eroding working capital, especially for manufacturers.
Within three months, Nigerian local companies’ tax revenue to the federal government fell by 36%.
In order to maximize revenue for the benefit of its population, Nigeria’s Tinubu administration pursued reforms in second quarter, nonetheless, these actions have decreased consumer purchasing power and inflationary pressures.
According to the Nigerian Bureau of Statistics (NBS), food inflation increased to more that 33% in December, while headline inflation increased to 28.9%.
As at December 15, the depreciation of the naira due to the liberalization of the foreign exchange was N463/$1 to N889/$1.
According to the most recent Nigeria Development Update report from the World Bank, 104 million people in Africa would be impoverished in 2023 as a result of slowing development and inflation in Nigeria.
The CBN raised the exchange rate for calculating customs duties at the country’s seaports to N1,444.6/$1, the fourth time this year.
Businesses in Nigeria are hoping for a stronger naira and stable economy.
Currently, naira is trading at N1,534.4/$1 at the official market on February 12.
Also businesses in Nigeria are also facing external challenges amidst global economic uncertainties.
