To prevent business collapse arising from the lingering foreign exchange (FX) challenges, operators have stressed the need for the government to provide fiscal incentives to sectors that attract FX into the country.

A backlog of unfulfilled FX promises and pro-market reform had delivered a tumultuous year for the naira in 2023, leading to a loss of about 50 per cent of the value of the currency.

Analysts predicted that the naira downward momentum is likely to continue through much of 2024. Operators said there is an urgent need for the country to ease FX supply constraints, strengthen its weak foreign reserve and stabilise the exchange rate to avert impending job loss and company collapse that may arise from the ugly trend in 2024, especially small businesses.

The local currency depreciated 4.72 per cent to close at N878.57 to a dollar at the close of business on Tuesday. This represents an N39.62 loss or a 4.72 per cent decrease in the local currency compared to the N838.95 it closed the previous day.

Head of Research, FSL Securities, Victor Chiazor, said looking at the trend, businesses and organisations in need of foreign exchange to operate within Nigeria have continued to find it difficult to run their businesses given scarcity and high volatility of FX.

Chiazor suggested that government should invest in the right infrastructure to support the manufacturing sector besides strengthening its local currency,

In addition, he said major investments and clean-up in the oil sector is required, while incentives that would help sectors that attract FX into the country to meet international standards should be provided.

“Reorganisation of the Nigerian ports to increase service delivery and reduce bottlenecks around exporting goods from Nigeria among other issues will need to be expressly addressed by the government if it intends to increase the flow of FX to the country and stabilise the exchange rate,” he said.

President of the New Dimension Shareholders Association of Nigeria, Patrick Ajudua, said since FX issues are at the heart of the survival of most companies, particularly manufacturing industries, there is an urgent need for the government to take immediate steps to stabilise the market.

“We need to stop this continuous depreciation of naira, this does not aid economic planning. Rather, it erodes the purchasing power of consumers and, of course, makes sellers incur losses. This is the main reason multinationals and other listed firms are leaving the country.

“You can imagine a situation where foreign airlines are unable to access dollars for their operation, a situation where companies are unable to pay foreign creditors for raw materials supplied. It is made matters worse when we understand that the sum of $7 billion is outstanding unremitted dollars.

“Also of concern is the consistent depreciation of the dollar against the naira. No government will allow its currency to float without regulatory intervention. We are not exporting goods to earn foreign exchange nor do we have a diversified economic base with which to fall upon,” he said.

President of the Independence Shareholders Association of Nigeria, Moses Igbrude, said improving the performance of logistics helps developing economies engage more deeply in foreign trade and exports.

However, he decried a situation where Nigeria is said to be losing an estimated $15 billion annually due to congestion and other maritime-related issues at the nation’s seaport.

He suggested that policy reforms aimed at providing incentives for exporters should be strengthened while bottlenecks and unnecessary logistics that impede the free movement of goods and cause revenue losses at the ports should be eliminated.