Naira devaluation hits cross-border trade as commodity prices surge
2023.11.06 01:55
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The continuous devaluation of the Nigerian Naira, which recently peaked at N2,010 per CFA1000, has significantly disrupted cross-border trade and led to record high commodity prices. The situation has been particularly severe for traders dealing in rice and frozen poultry products at the Seme-Krake border in Lagos. The price of a 50kg bag of rice has surged to about N35,000 while a carton of frozen poultry products now costs N28,000. Trader John Ebube from Lagos noted that financial challenges are intensifying as the Naira’s value continues to fall.
The depreciation of Nigeria’s currency has also inadvertently turned petrol smuggling into a profitable business. Following the removal of petrol subsidies in May, petrol prices have reached an all-time high of over CFA 1000 (about N2,010) per liter. This situation has been exacerbated by Nigerians exchanging CFA Francs for dollars in Niger.
The shortage of CFA Francs, worsened by a military coup and suspected hoarding by government officials, has resulted in the dominance of Naira in transactions in markets in provinces bordering Nigerian states like Borno, Yobe, Kano, Katsina, and Sokoto. Aminu Abdulkadir from Diffa confirmed this shift.
The depreciating Naira has also led to a significant disruption in the West African sub-region. Recent trading rates hitting N2,010 per CFA1000 have triggered a mass exodus of traders from cross-border businesses due to dwindling profits. Furthermore, the CFA franc has started appreciating against the naira recently. From an earlier exchange rate of 1100 CFA franc to N1,200, it now fluctuates between N1600 to N1700. This change, along with a steep price increase for commodities like rice and frozen poultry products, has eroded the profitability of cross-border business. As a result, Nigerians engaging in cross-border trade are finding their ventures increasingly unprofitable.
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