How Naira Scarcity is affecting both employers and employees in Nigeria

One of the challenges in Nigeria for employers and employees is the Naira scarcity in the country due to the new naira design. It has been over weeks since the new naira note has not been in circulation, and it has made people encounter different challenges transacting and living a comfortable life daily. Also, another issue that came onboard was fuel scarcity, which made it a double challenge for employers and employees in Nigeria. We have heard many reports of people sleeping in the banks, displaying their frustrations, all because they want to access the money they worked for. Our focus will be on How Naira Scarcity is affecting both employers and employees in Nigeria.

What caused the Naira Scarcity in Nigeria?

In November 2022, the Central Bank of Nigeria released the designs of the newly designed Naira notes of the 200, 500, and 1000 denominations. The unveiling was done by President Major General Muhammadu Buhari (retd.). After the unveiling, the CBN president said the deadline for circulating the old notes remains January 31st of, 2023.

Since the release of the redesigned new naira notes, it was reported to be in circulation on the deadline date and made life uncomfortable for Nigerians. After so many attempts to make it easy on Nigerians, the new notes were still not in circulation, and it caused riots, protests in some states, and even loss of lives.

Due to the limited money circulation, the POS operators started collecting a high fee for every transaction, as it was said that they also buy the money and are also entitled to their profits. Even then, the challenges continued because only some POS points had money to give out. 

The major challenge for the naira scarcity was because of the redesigned notes of 200, 500, and 1000 denominations. Also, there has been hoarding of cash, leading to hardship with the Naira. We have seen this scarcity affect both employers and employees across the country.

How has the Naira scarcity affected employers and employees in Nigeria?

The effect of the Naira scarcity has eaten deep into different sectors, affecting employers and employees. This is because the legal tender for transactions must be fully circulated.

Employers and startups need help to transact with prospective clients due to the scarcity of the Naira, which makes some people go against transfers because they are also scared of where they can get the money in the long run. 

The employees can't lay hold on cash, making transportation difficult for some people to get to their place of work. Aside from this, some of them need help to transact with the local seller to obtain goods and even pay for services. The scarcity of the Nigerian currency, the Naira, has significantly impacted both employers and employees in Nigeria. Some of the effects include:

Reduced purchasing power: The scarcity of the Naira has led to a decrease in the purchasing power of both employers and employees. This means employers have less money to invest in their businesses, while employees have less disposable income to spend on their needs.

The increased cost of living: The scarcity of the Naira has also increased the cost of living in Nigeria. Prices of goods and services have gone up, making it harder for people to afford the things they need.

Unemployment: Due to the scarcity of the Naira, many businesses have been forced to shut down or downsize, leading to job losses. This has made it difficult for employees to find work and has contributed to the high unemployment rate in Nigeria.

Reduced investments: The scarcity of the Naira has made it difficult for businesses to invest in new projects and expand their operations. This has slowed down economic growth and development in the country.

In summary, the scarcity of the Naira has hurt both employers and employees in Nigeria, leading to reduced purchasing power, increased cost of living, unemployment, and reduced investments.

Let us leave the general knowledge of how naira scarcity has affected employers and employees; let us focus on the parties separately.

How has the Naira scarcity affected employers?

The continuous scarcity of the Naira due to the redesign and the petrol scarcity is eating up significantly in Nigeria. It dramatically affects several businesses, especially in the informal sector. 

According to a report from Business Day, it was said that analysts had estimated a 20% drop in sales of consumer goods and 30% for cement manufacturers due to the scarcity of fuel and new naira notes.

It was further said that the scarcity had left critical sectors such as trade and agriculture vulnerable because they contribute so much to the country's Gross Domestic Product (GDP). Aside from the two industries mentioned, the crippling of business transactions would also knock on the manufacturing value chain and the services sector.

The scarcity of new notes will hurt different businesses and startups, especially those heavily cash reliant. The petrol shortage, which has been rising since the 4th quarter of 2022, has seen its price increase from N170 to N300 per liter. This has made many filling stations have so many queues and has increased transportation fares and food prices across the country.

How has the Naira scarcity affected employees?

The employees in Nigeria are included in the effect of the naira and petrol scarcity as they even seem to be at the most receiving end. This is because they are the ones to face the customers who are frustrated by the shortages.

The set of employees thoroughly affected during this period is the bankers, who are met with both patient and impatient customers. There was a report that some bankers had to start climbing fences to escape from angry customers.

There have been so many attacks on employees in different places, and the fuel issue has made many stranded, as they can't get cash even to transport themselves in the already inflated transportation price. Even with this, they are still meant to be at work as early as possible.

Also, due to this scarcity of money, most employees find it challenging to feed, as only some local sellers will embrace the cashless policy to sell their goods and even get some services done.

The major way employees are affected by the new naira note scarcity is securities due to attacks from the masses, and high prices to purchase goods and pay for services, among many others.

What are people saying about scarcity?

We got reports from some people as reported by Business Day, and we shall be checking some of them:

One Obinna Okereke, a barber based in Lagos, said that the scarcity of petrol and new naira notes had reduced the rate at which he gets customers.

"Point of Sales (PoS) operators in my area are charging an extra fee of N200 for N1,000, plus petrol is sold for N300 per liter at filling stations. I bought petrol for N300 from an Oando filling station in the Fin Niger area of Lagos State today," he said. He also said people are not willing to transfer N500 for barbing their hair; they would prefer to keep it because of scarcity.

Elizabeth Olarinde, who is a fashion Designer from Abuja, also lamented and said;

"I have been buying black market, but it's too expensive and tampered with, and filling stations are not selling fuel in jerry cans. Some that charge N500 while selling it secretly, now I'm gradually losing customers because I have to increase prices and sometimes disappoint my customers," she complained.

Uzoma Queenpraise, who is a CEO of a kitchen called Nrindioma Kitchen, gave her displeasure about the continuous scarcity said:

I spend more money buying my food ingredients from the market. Yesterday, I paid N700 extra to get N15,000 from a PoS merchant because market women don't usually take transfers, so getting food ingredients for my business is a struggle."

Temitope Omosuyi, who is an Investment strategy manager at Afrinvest Limited, said:

It is going to have a significant impact on inflation. We were already expecting a major deceleration in inflation, but the scarcity could keep it elevated longer, causing the actual economic performance of the country to underperform."

Conclusion on how Naira scarcity has affected Employers and Employees

The naira scarcity has so many adverse effects on employers and employees because the highest denominations of the legal tender are not in circulation. As much as the Federal government and the Central Bank of Nigeria are doing everything to bring things to normalcy, it remains challenging for Nigerians.

Lastly, according to the National Bureau of Statistics, Nigeria's inflation rate has slowed for the first time in 11 months to 21.34% as of December 2022 from 21.47% in the previous month.

We hope all this scarcity ends soon, so that everything can become normal again, and give a boost to the economy instead of the down slump as given in the statistics of National Bureau Statistics.