Article summary
- The percentage of those who said their enterprise was significantly impacted totalled 76.09%.
- 96% had to lay off staff or reduce working hours to weather the cash shortage. About 41.30% did not have to make such adjustments.
- 61% of the business owners said they faced disruptions to their supply chain.
A staggering 36.96% of Nigerian businesses have been forced to lay off employees due to cash shortages and constraints resulting from the Central Bank of Nigeria’s (CBN) Naira Redesign policy of 2023, as revealed in a report by socioeconomic research firm SBM Intelligence.
In a report titled “Strapped: Impact of the Cash Scarcity on Individuals and Businesses,” the report emphasizes the substantial repercussions of the policy, with businesses struggling to cope with limited access to cash. Obtained by Nairametrics, the report sheds light on the severe economic conditions faced by both individuals and businesses in Nigeria.
According to the businesses surveyed, 56.52% said they experienced fraud or theft due to scarcity.
Staff Layoff
In the report, SBM stated that engaged 46 businesses across the five geopolitical zones to gauge the impact of the cash shortage on them from egg producers stuck with their produce to rice traders who had to bring down their prices to make sales, most of the business owners interviewed said they were negatively affected by the cash shortage.
- “The percentage of those who said their enterprise was significantly impacted totalled 76.09%. A further 17.39% said their businesses were somewhat affected. Just about 6.52% said their ventures were not affected at all.
- “Out of the 46 businesses interviewed, 36.96% had to lay off staff or reduce working hours to weather the cash shortage. About 41.30% did not have to make such adjustments.
- “However, when you remove those who said those issues did not apply to them, nearly half had to make staff cuts or reduce work hours. About 47.22% had to make staff or work-time changes, while 52.78% were resilient enough to stand the cash shortage without reducing staff strength or opening periods.
The report revealed that in February and March, Stanbic Bank’s monthly Manufacturing Pur- chasers Managers’ Index reached historic lows of 44.7% and 42.3%, respectively, which they say was down to the inability of businesses to meet new orders and a drop in demand for fresh purchases.
SBM noted that 8.70% of enterprises said they were not affected, 91.30% said they had to either renegotiate payments or deep into their savings adding that About 54.35% said they had to delay or restructure payment plans, while 36.96% said they had to dip into personal funds or egg nests.
Digital Payments and Disposable Income
Meanwhile, they added that a forced outcome of the cash shortage was an increased interest in accepting digital forms of payment.
- “An approximated 86.96% of businesses said they had to accept digital payments or other forms of payment due to the naira scarcity. The other 13.04% said they stuck with their existing practice. The businesses were also asked if they have had to reduce prices, to which 39.13% said “yes.”
- “41.30% saw a reduced willingness in buyers to spend, while 58.70% said buyers wanted to use alternative modes of payment other than cash.
Disruptions
SBM noted that 82.61% of the business owners said they faced disruptions to their supply chain, adding:
- “About 52.17% of them said the impact was significant, while 30.43% said the disruption to their supplies was not so significant.
- “Roughly 56.52% of the businesses interviewed said they experienced fraud or theft due to scarcity. A further 41.30% reported escaping these negative outcomes.”
They urged that CBN’s ambitious attempt to introduce new banknotes within a short time devastated businesses and individuals, yet the policy failed to achieve its stated goals of curbing money politics, accelerating electronic payments adoption and putting a floor on inflation.
The report also added that the CBN should have pushed for a reduction in transaction failures and beefed up financial infrastructural integrity whilst taking the lead in engaging with regulators and private sector stakeholders to ramp up broadband penetration.
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