Small Businesses Grounded As Naira Scarcity Bites Harder

Maryam Ahmadu-Suka (Kaduna), Iniabasi Umo (Uyo), Faruk Shuaibu (Abuja), Jide Olasunkanmi (Lagos), Zahraddeen Yakubu Shuaibu (Kano) & Victor Edozie (Port Harcourt)

The continued naira scarcity in all parts of Nigeria has grounded countless small and medium businesses and pushed millions of families to increased poverty.

Their troubles stem from the fact that it is cash that drives their businesses, and although many of them are willing to go cashless, there are many hurdles to cross.

In towns and villages, thousands of bean cake (akara) and fruit sellers, vulcanizers, roadside bukkas (food vendors), barbers, wheelbarrow pushers and bricklayers have disappeared.

“I have to close the business because only cash can sustain it,” Bintu Suleiman, who fried bean cake, said.

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“I sell for as low as N50, N100, 200 or more, so how do you expect a customer to transfer N50 to me?

“And there are thousands of women like me in this business but most of us are now out of business,” she said.

Bintu called on the Central Bank of Nigeria (CBN) to make lower denominations of N50, N100 and N200 available to ease businesses.

She said, “I heard that a court has directed the CBN to allow old currencies remain legal tender. But this is long after President Muhammadu Buhari directed that the CBN should make smaller denominations available but they could not. I believe that something is wrong somewhere because nobody is seeing both the old and new currencies. Honestly, life has been grounded.”

Mama Philo, another bean cake seller in Abuja said, “Life has not been fair to me. I have never had it this bad in my whole life.

“When the policy was introduced, I had to gather the little I had (N5,000), which I gave to a regular customer who has an account, to help me deposit. Now, to get the new notes, we are being told to pay N2,000 to get N5,000 at Point of Sale (POS) outlets. Eventually, I had to let go of N2,000, leaving me with just N3,000. How do I continue my business with N3,000, knowing that everything in the market has gone up?”

She said she had fed and educated her children through this business.

Daily Trust on Sunday reports that the naira policy has put an end to the businesses of people like Bintu and Mama Philo, plunging their families into despair.

According to a 2022 report by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the National Bureau of Statistics (NBS), there are at least, 39,654,385 (thirty nine million six hundred and fifty four thousand three hundred and eighty five) micro, small and medium enterprises (MSMEs) in Nigeria as of December 2020, contributing 46.31 percent to the country’s gross domestic product (GDP), and accounting for 96.7 per cent of businesses.

The figure showed a 4.5% decline from 2017 when there were 41,543,028 million MSMEs in Nigeria, indicating how small business owners struggle for survival in Africa’s largest economy.

Despite government effort to push for financial inclusion, Nigeria remains one of the top seven countries accounting for half of the world’s unbanked population.

According to the World Bank’s 2021 Global Findex report, the six other economies are China, India, Pakistan, Bangladesh, Indonesia and Egypt.

The report revealed that about 64 million of Nigeria’s 200 million people still do not have an account with a financial institution or mobile money platform.

Endless lamentations

Those who spoke to Daily Trust on Sunday agreed that although they were told that the cashless policy of the CBN was the way forward in line with global best practices, it is having negative effects on small and medium enterprises, as well as households in major cities across the country.

They argued that this might be because Nigeria was not prepared at all for the transition.

Checks indicate that some business owners, especially petty traders, do not have cash at hand to transact with, a development that has pushed some of them away from active business engagements.

Mostly affected are petty traders whose net worth is less than N10,000. Those dealing with perishable food items such as tomatoes, peppers, onions, fruits are the worst hit.

Salisu Abubakar, a provision seller said he incurred losses when the cashless policy was introduced and customers made payment through mobile transfer.

“Some of the transactions will be reversed to the sender and I won’t see them again, while others will inform me and resend it,” he said.

He urged the federal government to look into ways the cash crunch could be resolved.

A fashion designer, Habeebat Adekunle, said patronage had been low since the cashless policy was introduced as people would need to meet their basic needs before sewing clothes.

A bus driver, Waidi Adegite, also lamented the negative impact of the cashless policy on his business. He told our correspondent how he struggled to raise N7,000 to purchase a fairly used tyre for his bus.

“The policy is affecting the transport sector. As a bus conductor, we can’t go about with PoS machines as some passengers will claim they don’t have cash.

Our correspondent who spoke to some small business owners in Kaduna State gathered that many businesses who refused to accept transfer from customers are struggling to survive while those accepting transfers are booming.

Things are not looking up for Nike Adebayo, who owns a hair salon in Kaduna North Local Government Area.

“Over 70 per cent of my money is with my customers because they claimed the transfer services were bad. It got to a point that I was forced to ask for payment before service, just to make ends meet.

She said she had incurred losses since the policy was introduced, and called on the government to make available the old notes pending when the new ones are readily available to ease suffering.

She said she was making arrangements on how to get a PoS machine to reduce the burden. Food vendors, PoS operators and shop owners in Akwa Ibom are also struggling to remain afloat.

A PoS operator, Ekemini Nelson, said raising physical cash to transact business with her customers was a big problem as she had to resort to buying money at exorbitant rates to keep her business afloat.

“Getting the money to buy is a problem.

After queuing up at the bank you are only paid N3,000. And Automated Teller Machines (ATMs) are not dispensing cash. For example, I buy N10,000 at N2,000, and most times I have had to scout for where to get physical cash to do business.

“On one of such trips to the bank to get money one early morning, I was robbed. I was just walking along the road when some thieves jumped out of Keke and asked for money. When I told them that I didn’t have any money, they collected my phone,” she said.

Another business owner, Mrs Lovina Emole, said business had been slow because of the cashless policy, while a food vendor in the University of Uyo, Esther Ekpo, said her main challenge was how to raise cash to buy food items.

She said, “Many of my customers in the market insist on physical cash and refuse transfer. What would a meat or fish seller be doing with transfer or PoS? I currently owe them for the fish and other items I bought, and I don’t know how to raise cash to pay them.”

The Akwa Ibom State director of the Centre for Human Rights and Accountability Network (CHRAN), Otuekong Franklyn Isong, said the naira redesign policy was meant to frustrate ordinary citizens.

“Unfortunately, the way the cashless policy has been implemented has become like a target to some class of people. The president said the policy was against vote buying, but what happens to those doing business, students, petty traders, transporters, civil servants and the rest?” he asked.

In Kano, small and medium enterprises have been facing a lot of challenges since the introduction of the cashless policy. In an interaction with some of them, they disclosed how their businesses had seriously been affected by the policy, endangering their businesses and putting the jobs and lives of their workers at risk.

Daily Trust on Sunday gathered that the e-banking system adopted to solve the challenges doesn’t work perfectly. Small and medium enterprises have diverse means of receiving money from their customers or suppliers who feed them with working materials, but none can substitute for cash; and the delay from these alternatives is grossly affecting their businesses.

When our correspondent went round some of the small and medium enterprises in Kano, many of those still in business have reduced their members of staff while some adopted shifting to reduce cost.

During a visit to a rubber recycling company, Magashi Enterprises, the manager, Jamilu Mukhtar Magashi, said he had been battling with cash issues to buy waste from scavengers, which is his major raw material.

He said the scarcity of new naira notes, as well as the CBN’s non-compliance to the Supreme Court ruling on the old notes had affected his business seriously as “the boys are no longer coming to sell their rubbers and nylons for recycling.” He said 95 per cent of them did not have bank accounts, and he didn’t get cash regularly.

“My company heavily relies on scavengers, who bring the rubbers and nylons and we buy in kilograms. Although there are middlemen who buy from them and send to us, some of them sell directly to us. This has really affected us in many ways.

“In a day, we used to produce 30 dozens of buckets, spoons, basins and so on, but now, we hardly operate three times a day. The market has also reduced,” he lamented.

He said dealers who bought from scavengers and sold to them were also facing the same challenges; as such, they could spend one week without getting up to one small truck. He added that some of his business associates were closing.

Another company that produces sachet water nylons said the situation forced them to reduce their work strength.

Speaking to our correspondent, the sales manager of the company, Habibu Imam said, “Since the beginning of this policy, our sales have reduced drastically. We normally deal with cash in buying and selling, but they are not available now. Our customers have reduced. They will send transfers but we can’t release goods to them until we can confirm the receipt of the money. The process is delaying our activities.”

Another company which produces sachet water, BBY Table Water, also decried the difficulties associated with the new policy, saying it has affected their way of running smooth business.

“At the beginning it affected our sales, but now, people are becoming familiar with the process. But network from our banks is another issue that is delaying the process. That is why we have to receive an alert before we can release our goods for you,” Muhammad Nasir Idris, the accountant of the company said.

An owner of a car-washing business, Labaran Muhammad, who has over 15 people under him, with three branches, said, “Nowadays people will ask for an account number, just to send N200. How do you think we can survive? Some people will collect the account with a promise that they will send it, but they won’t.

“We are seriously affected. Before the cashless policy, one of my boys could make up to N5,000 in a day, but now, it is difficult to get N1,000,” he said.

Also, small scale businesses in Rivers State are also not finding it easy to cope with the present cashless challenges, Daily Trust on Sunday learnt.

Many of the small scale business operators who spoke with our correspondent said the present cashless challenge was affecting their businesses.

Mostly affected are pretty traders who do not have bank accounts, while those that have accounts are worried over transaction decline from bank channels.

A provision store seller in Port Harcourt, Matthew Ike, said he had lost many of his customers because of cashless challenge.

“The cashless challenge is affecting our business. I have lost many of my customers because of their inability to access cash. Our daily sales have reduced because many people have no cash to buy their daily needs. Some don’t have bank accounts but depend on daily informal sector of business to survive. How do you cope with such persons? How many of us can afford PoS machines to transact business. What about those that does not have ATM cards to transact their businesses? It is not easy; businesses are really going down,” he said.

 CSOs tackle FG

Civil Societies (CSOs) and Senior lawyers have described as contempt of court the reluctance of the federal government to obey the order of the Supreme Court, declaring old Naira notes of N200, N500 and N1,000 as legal tenders.

Recall that a seven-member panel of the apex court that delivered the judgement on March 3, described the failure of President Muhammadu Buhari to obey the order restraining the FG from implementing the deadline on old naira notes as a demonstration of autocracy. However, more than seven days after giving judgment on the substantive suit, the FG has not shown any commitment to obey its order.