FOLLOWING the devaluation of the Nigerian currency(Naira) in recent months, additional challenges have impacted the local currency of the West African market region as cross-border traders are now refusing to use the currency.
Investigations by Vanguard at the Seme border reveal that traders on both sides are now favoring either the CFA or the local currency of the non-francophone nations.
Previously, the Naira dominated the sub-region as the primary currency accepted for trade across borders due to the significant volume of trade between those countries and Nigeria.
The Nigerian currency was widely used in the informal payment systems of these nations.
However, Vanguard’s findings show that the Naira started losing its prominence in February, leading to complete rejection in March 2024.
Some traders interviewed by Vanguard, including Nigerians, expressed concerns that holding Naira has become highly risky due to its continuous depreciation since last year, with the most significant drop recorded last month.
Official reports indicate that the Naira, which was trading above N1/1.5CFA in the first quarter of 2023, plummeted to N1/0.9CFA in the second quarter and further to N1/0.8CFA in the third quarter of 2023.
Following a period of relative stability in the fourth quarter of 2023, the Naira started 2024 at N1/0.66067CFA in January. However, a second wave of devaluation in February caused a sharp decline to N1/0.38308CFA, reaching a new low of N1/0.37595CFA last week.
Traders are now taking precautions against further devaluation, although there has been a slight improvement in recent days.
The Naira’s value is still far from what it used to be in the subregion years ago. This situation is negatively impacting the cost of imported goods into Nigeria from West African countries, leading to a slowdown in business activities on both sides of the border between Nigeria and Benin Republic.
Visits to border markets in Benin-Nigeria revealed that many money changers or Bureau De Change no longer display the Nigerian currency as prominently as before.
Even transporters and motorcycle riders, known as Okada in Nigeria, have started refusing payments in Naira, citing potential losses when converting back to CFA. They consider CFA a safer option.
For instance, a motorcycle rider, Ibrahim Yakubu, who took our correspondent from the Seme border to the ‘Misebo’ market, refused Naira and insisted on being paid in CFA.
Yakubu mentioned that the Naira used to be strong and widely accepted for transactions, but that has changed.
A money changer, Taiye Ekiti, attributed this shift to the United States Dollar’s influence, stating that the Dollar’s cost has led to the Naira’s devaluation in Benin Republic and other neighboring countries like Togo and Ghana. He expressed helplessness, similar to other business owners.
A Nigerian trader, Mr. Achi Collins, who deals in second-hand clothing, noted that many traders no longer accept Naira, emphasizing the significant loss in its value over time.
Collins mentioned that most traders now require customers to convert their money to CFA before accepting it as payment.
While some traders near the Seme border might still accept Naira, the cost of goods is higher. In cities within Benin Republic, Naira is generally not accepted due to its weaker value compared to the strengthening CFA.
He emphasized, “If you want to make a purchase here, you need to exchange your Naira for CFA first.”
Previously, Naira was widely used along the West African coast, extending to Ivory Coast and Senegal. Nigerian sports journalists could freely spend Naira in markets across West Africa. However, those days are gone, and the Naira is now shunned in these countries.
