There’s a popular Yoruba proverb: Eni tio ba ra Ankara, Ko ni je Semo, which means ‘the person that doesn’t buy asoebi, will not be served food.”
While the Central Bank of Nigeria (CBN) has put stringent monetary policies in place, the prices of goods and services are steadily rising throughout the country. It’s no secret that we Nigerians love to attend weddings, and spend whatever is required to put on exciting event. As such, asoebi is essentially ubiquitous but in light of rising prices, how is the rising cost of asoebi impacting the merchants who sell the cloth?
Since the fall in global oil price started in 2014, Nigeria, dependent on oil for about 75 percent of its revenue and 90 percent of foreign earnings, has been one of the hardest hit countries. The value of the country’s currency also depreciated to a 45-year low at N305/$1. Business owners who are directly involved in buying and selling goods are struggling to access foreign currency for their business transactions. Many lament that they spend more Naira to purchase the same quantity of goods they used to.
In Nigeria, the fabric business is one of the most lucrative businesses in the popular Lagos Balogun market. However, traders are complaining that currency restrictions have affected the price of goods.
“It is very difficult now for us to get foreign currency. We are handicapped and we don’t know what is happening, “ said Eucharia Ikengwa a dealer of the popular lace material at Balogun Market in Lagos Island.
A look at CBN restrictions so far
According to the CBN, in order to save the Naira the first restriction it put in place was limiting the usage of the Naira denominated cards overseas from $150,000 to $50,000 per person per annum. The CBN restricted access to foreign currency for the importation of certain goods. It also barred the use of Naira denominated corporate cards from cross border payments and announced that corporate cardholders should be encouraged to obtain foreign currency denominated cards. It went ahead to prohibit Deposit Money Banks (DMB) from accepting foreign currency cash deposits. Although the ban on accepting foreign currency has been lifted, Nigerians still struggle to get foreign currency from the banks. Furthermore, the CBN, stopped DMB from selling foreign currencies to Bureau de Change (BDC) which it said was due to limited foreign exchange.
BDCs are the major source where fabric business owners buy foreign currency, since they do not have access to getting it from the banks. Now, the merchants complain that the CBN restrictions have not allowed them travel out of the country to buy their goods. They also note that the cost of bringing goods into the country has gotten higher.
“As I am talking to you now I’m supposed to clear some of my goods today but because of the restriction I cannot. I used to spend N200, 000 to clear my goods but now I spend N500, 000 and the worst part of it is that we still sell these goods at the same price” said Eucharia.
The implementation of the currency restrictions, have also affected the Nigerian Customs Service (NCS), in charge of collecting duties on goods imported into the country.
The Area Command Controller of Apapa command, Comptroller Charles Edike told stakeholders during a meeting in November 2015 that the currency restrictions led to a decrease in the revenue of the command. The Apapa Command is the largest revenue collecting command of the Nigerian Customs Service (NCS).
“The command collected N23.8 billion in September of 2015 as against the N30.4 billion it collected in the corresponding period of 2014, representing about 22% loss of revenue. Importation is very low and this is a major reason why our revenue is low because we only collect duty on things imported but when there is no importation, we cannot collect revenue.” Edike said.
Here is how the currency restriction is affecting the price of fabric
Obinna Nwafor, 28, who has been in the business for over five years said that the currency restrictions have affected them negatively.
“Prior to the event of currency restrictions, we used to sell four yards of Ankara for N2, 700 but now it has increased to N3200. We now spend more naira to purchase the dollar for our transactions.”
“We calculate the exchange rate before fixing the price so that we don’t lose,” he said further.
Nwafor said the currency restriction has affected the price of ankara fabric in the market, while some other traders said their prices have not changed. They claim that the price of their goods are still the same because if they increase it people may not buy from them. They also said that traders who are selling off their goods because of the loans collected from the banks have also contributed to the unchanged price.
“We don’t know what to do. We are just selling because we have decided to help the family, if we decide to go back home and sit it’s going to be a problem for the family,” Said Eucharia who has been in the business for over five years.
“We just have to sell. Sometimes we even sell to buy fuel for our car, and buy other stuff,” said Funmilayo Ojo, a fabric trader.
This means that the popular Asoebi which cost price starts from N5,000 and above would now be sold for as high as N6,000. Wedding costs are set to increase, but since the demand is unwavering, it seems the merchants should be able to bounce back from what some describe as a temporary set back.