Impact of Naira Devaluation on Trade and Prices

Naira Devaluation

The drop in the value of Nigeria’s currency, the Naira, has made things difficult for businesses that trade across borders, especially at the Seme-Krake border in Lagos. For instance, the cost of a 50kg bag of rice has climbed to N35,000, and a box of frozen chicken now costs N28,000. A Lagos trader, John Ebube, points out that as the Naira loses value, money problems get worse.

Fuel Smuggling and Market Shifts

Because the Naira is worth less, smuggling petrol has become a way to make money. Petrol prices soared after Nigeria stopped helping with petrol prices in May. Now, a liter of petrol costs more than N2,010. This issue has grown because people in Nigeria are trading their money for dollars in Niger.

There’s also a cash shortage of CFA Francs caused by political troubles and some government officials keeping money to themselves. This has made the Naira more commonly used in markets near Nigerian states like Borno and Kano. A trader from Diffa, Aminu Abdulkadir, has seen this change.

Challenges for Traders

The Naira’s falling value has also shaken up trade in West Africa. As the Naira’s value has dropped to N2,010 for CFA1000, many traders are leaving the business because they’re not making enough money. The CFA Franc is getting stronger against the Naira, which has gone from an exchange rate of 1100 CFA to N1,200, and now it’s between N1600 to N1700. The high prices for things like rice and chicken mean less profit for traders, making their businesses hard to keep going. (Source)