The recent devaluation of Nigeria’s currency by about eight percent has raised concerns among some analysts that the action could trigger inflation and leave people with less money to spend. CCTV America’s Deji Badmus reported the story from Lagos.
Currency devaluation leads to inflation fears in NigeriaNigeria is worried about its economy. Analysts fear runaway inflation that may pressure the population. Recent devaluation of its currency is one the signs showing that Nigeria may be facing tough times ahead. CCTV America's Deji Badmus reported the story from Lagos.
It looks like business as usual on the streets of Nigeria. No outward sign of the move by the country’s central bank to devalue the naira-the country’s currency. But dig deeper and there is deep concern among Nigerian business community that this move could have far-reaching consequences on the country’s economy. Tunde Olaleye owns a shop where he sells computers and accessories. Virtually all the items here are imported. He was planning to travel to buy new items when news of the devaluation of the naira broke. He’s putting off the journey for now.
“For an average businessman that travels, you need more naira to be able to buy the same amount of dollars you used to buy. Now by the time you come back, the cost, expenses everything added together, you can’t sell your goods at the same price,” Olaleye said.
In a country like Nigeria that depends on imports, there are many like Tunde, who get their supplies from abroad. The devaluation has created jitters and led many Nigerians to turn to the black market, where rates are far above the official one. Economist Henry Boyo, is also a local manufacturer. He imports most of his materials. He says with the devaluation, local manufacturers are in for a tough time.
“The eight percent devaluation is only related to specific items of imports. The larger sections of imports will be accommodated under 180 naira per dollar. So, in other words, you may be really talking about depreciation close to 20 percent on naira value at the moment. So that will create a problem for all industries who are dependent on raw materials imports,” he said.
Despite the measures taken by the Central Bank, the naira continues to perform badly against the dollar. On Monday, it fell to a record low of 184 to a dollar in the interbank market, well above the official devalued rate of 168. Boyo blames the fall of the naira on excess liquidity not declining oil prices. Some analysts predict a further slide in the naira before the end of the year and a return to double digit inflation something Nigerians can expect to feel in their daily lives.