The Nigerian Naira’s continuous decline in value has had a significant impact on cross-border traders and the economy. At the close of business last Friday, the Naira traded at N2,010 per CFA1000 in the West African sub-region.
Over the weekend, the Naira traded at N1,870 per CFA1000 in the open market, and just last Thursday, it was sold at N1,800 at one of Nigeria’s busiest land borders, the Seme-Krake border in Lagos.
This ongoing devaluation of the Naira has led many cross-border traders to abandon their businesses, and it has also had a ripple effect on the prices of commodities. For instance, petrol is now being sold at a record high of over CFA 1000 (approximately N2,010) per liter. This has made smuggling of petrol a lucrative business since the removal of subsidies in May.
Furthermore, the scarcity of CFA Francs in circulation has forced markets in Niger Republic’s bordering communities to transact in Naira. Residents and traders in these areas have reported that Naira is now the dominant currency in provinces bordering Nigerian states like Borno, Yobe, Kano, Katsina, and Sokoto.
Aminu Abdulkadir, a resident of Diffa, mentioned that the CFA Franc has become extremely scarce in Niger Republic since a military coup. He noted that Naira is widely used for transactions, except at filling stations and for government revenue remittances.
The scarcity of the CFA Franc has compelled many businesses to switch to the Naira, which is more readily available. Some traders have attributed the CFA Franc shortage to government officials’ hoarding and suspicions of external influence, while others claim that Nigerians are coming into Niger to exchange CFA Francs for dollars, causing the value of the Naira to drop further against the Franc.
As a result of the Naira’s steep devaluation, cross-border businesses, such as the trade of rice and frozen poultry products, have become significantly less lucrative. The price of a 50kg bag of rice, previously selling for N9,000 to N12,500, has surged to about N35,000 across the Seme border. Similarly, a carton of frozen poultry products, previously priced at N8,000, is now being sold for N28,000.
Traders who used to benefit from cross-border business are now facing financial challenges, as the Naira’s value continues to deteriorate. John Ebube, a trader in Lagos, highlighted that the Naira’s decline started around two months ago, with the exchange rate plummeting from about N1200 to CFA 1000 in August to the current rate of N2,010.