Nigeria’s naira crisis choking small businesses

Christian John fears he might soon be forced to relocate from Abuja where he’s been operating a point-of-sale shop. At normal times, thousands of agency banking kiosks like his, where customers nationwide deposit and receive money, serve as a boon to Nigeria’s financial inclusion drive.

With the naira crunch that has lasted months, getting notes for customers has been near-impossible. After commercial banks went dry in the early days of the crisis, agents like Mr John mopped cash daily from traders and fuel stations to give their clients.

That no longer works as more people use money transfers to conduct daily transactions. Mr John has since closed his business and has no other work.

“There is no money to continue with the business,” he told Pluboard. “The business is my only source of income as I am not currently employed, so if the situation persists longer than expected, that means some of us will have to go back to the village.”

Janet Hassan, who runs a similar business, said she has not fared better although she charges her customers more now for the few available bills daily.

“I still prefer when I was collecting small charges because it was coming in frequently. Now, I can stay more than a week without having access to my money at the bank,” said Ms Hassan, a nursing mother.

“Earlier today, I was looking for money to buy food for my baby, but couldn’t find any but some customers may feel that I have the money and I refuse to give them,” she added.

The shortage of naira notes caused by a bungled rollout of new notes has caused immense pain and anguish across Nigeria. In an economy heavily dependent on cash, it has left citizens unable to buy basics such as food, or to catch a bus work.

The crisis goes back to October when the central bank announced that new naira notes would be introduced in higher denominations to fight counterfeiting and hoarding. Nigerians had until Feb. 10 to turn in old notes. Many did so, expecting to receive the new notes in return.

Instead, banks rationed the few new notes available. Citizens have tried to get ways around the problem, using payment apps, debit cards and bank transfers. But with only 45% of adults having bank accounts in 2021, those methods exclude most of the population.

Devastating businesses

But the crunch has been particularly devastating for small businesses and has forced many to shut down or cut back.

Grace Kalu, who sells perfume in Kubwa, said she now struggles to make about 20% of sales compared to between 70% and 80%.

“Sometimes customers are unable to get physical cash to pay for goods and whenever they try to make money transfers, the network keeps disappointing. As a business person, I would not want to let go of my goods without receiving any form of payment, thereby losing patronage,” she said.

Ola Ade, who sells food items shop at Dawaki, Abuja, said she has unable to restock because her suppliers, prefer to be paid in cash due to the sometimes problematic telephone networks needed to transfer money. Cases of undelivered transfers have risen lately.

“When I go to my wholesale dealers to buy goods, most of them tell me that they would not accept cash transfers because of the poor networks and this always hinders me from purchasing enough goods for my business,” Mrs Ade said.

“Currently, as you can see now, my shop is empty. No sales, no customers, no goods. We pray that the situation improves soon because the suffering is too much. The small business that I am trying to build is even going down now, we are eating from the small savings we made” she added.

Doing nothing

The government has done little to ease the suffering. On Feb. 16, President Buhari ordered the recirculation of old 200 naira notes for another 60 days to ease business transactions and reduce the ongoing impact of the naira scarcity in the country.

That has made little or no difference. On Thursday, Mr Buhari apologized for the bungled policy.

“I apologise to you for the hardship caused by the change of the naira. It was done to boost the economy of the country, not to cause hardship to anybody,” he said in a video.