According to Stanbic IBTC Bank’s February Purchasing Managers’ Index data, the ongoing naira scarcity caused by the Central Bank of Nigeria’s (CBN) currency redesign may cripple several businesses in the first quarter of the year.
Nigerians were confronted with the dual challenges of fuel and naira scarcity in February.
The report read in part, “The headline PMI dropped below the 50.0 no-change mark in February, posting 44.7 from 53.5 in January. Business conditions deteriorated markedly, ending a 31-month sequence of expansion.
“The decline in operating conditions was the sharpest since the survey began in January 2014, excluding the opening wave of the COVID-19 pandemic in the second quarter of 2020.
“The most severe impacts of cash shortages were seen with regards to output and new orders, which both fell substantially as customers were often unable to secure the funds to commit to spending.
It added that “The decline in new orders was the first since June 2020, while the fall in output ended a seven-month sequence of growth. In both cases, the reductions were the most pronounced in the survey’s history, apart from during the opening wave of the COVID-19 pandemic.
“With new orders and output falling, companies reduced their input buying and staffing levels accordingly. The declines were the first in 32 and 25 months respectively. The decrease in purchasing reflected not only a drop in customer demand but also difficulties for companies to find the funds to pay for items.”
According to the report, a lack of cash also increased the cost of fuel and the operational costs of businesses and organizations.
“Higher raw material costs and currency weakness were also factors pushing up purchase prices.
“The rate of inflation was the softest since June 2020, but marked nonetheless and stronger than the series average. Staff costs also rose again in February, but at a modest pace,” the report added.
