Purchasing Power Drops as Fuel, Currency Scarcity Take-turns on Consumption

Raheem Akingbolu in Lagos, Hammed Shittu in Ilorin and Gbenga Sodehinde in Ado Ekiti

Consumers across Nigeria are currently experiencing hardship as a result of fuel and currency scarcity in rural and urban areas, according to a survey carried out by THISDAY in some markets in the South West.  

The report revealed that the rate of consumption dropped with many consumers going only for essential needs.

THISDAY visit to Ile-Epo Oke Odo food market located in Alimosho area of Lagos, revealed unusual activities as the once bobbling market has become a shadow of its old self.  

Speaking with THISDAY, a trader, Abdulahi Ankar, who brings pepper and tomatoes in large quantities from the north for sale in the market, said the last two weeks have been very difficult for him and others who sell food items.

“As you can see, I deal in perishable goods that require quick turn over but the reverse has been the case in recent times. We are recording loss daily because our goods are spoiling due to low patronage. Food sellers who normally buy large quantities have reduced what they buy because they could not access currency, and they have no steady electricity supply to store such perishable items in their refrigerators. Those that have generators for alternative source of electricity supply, do not have access to petrol to power their generators. Many of us are apprehensive when it comes to accepting old currency because of the fear that we might not be able to change them as a result of the difficulties in the bank. At this point, we can only call on the government to help prevail on banks to ease the tension and create a level playing field for transactions. Unfortunately, a few consumers who were ready to adopt online transactions are also facing network challenges. For us here, it’s a double jeopardy,” Ankar said.  

In Ilorin and most part of Kwara State, many shop owners have put them under lock and key until Friday, February 10, which is the extension date for changing  new naira notes. Last week in Gwaria and Kiama, both in the northern senatorial district, a report said the residents could not even buy food to eat as many shop owners closed their shops while those who didn’t close, insisted on collecting the new notes. At the peak of the crisis, the Saaki of Gwaria, Muhammadu Soliu, had to wield the big stick by issuing a warning that anybody who refuses to collect old naira notes should be brought to his palace.

The report from Ado Ekiti, capital of Ekiti State, is not good either as consumers were said to have put on hold the purchase of luxury things and patronage of leisure spots.

A top player in the hospitality sector in the town, and Chairman of KSSD Hotels Group, Dare Oluwatayo, told THISDAY that the ripple effect of fuel and currency scarcity is telling on his businesses and those of other colleagues in the sector.

He said: “Before the currency problem surfaced, we had been battling the challenge of making ends meet in the midst of a hike in price of fuel. For instance, the price of diesel is not friendly and we must strive to give customers maximum satisfaction. The question is; how do you make profit when the patronage has dropped and you have spent so much on maintenance?”  

Reacting to the issue, the convener Consumers Value Awards, Mr. Akonte Ekine blamed the situation on poor execution of the new naira note policy.  “It is poor planning and a disaster to the consumers. I was in a bank today and I saw how people are agonising.  It is a sad and bad experience where we can’t access our money and the infrastructure for the technology is not even available to enable transactions. It is a shame on the system when you look at it. Nigeria is now a nation with materials but lack management capability to even produce.  There is no blessing but the shame of a nation. Look at the situation where a labourer earns like N3,000 a day and yet he is unable to get it to use,” Ekine said.

Also speaking, the author of Pitch, a Brand and Marketing book, Mr. Ikem Okuhu said the whole imbroglio had already affected the entire market value chain.  “Once purchasing power drops, it affects the viability of the market because when people are not buying, it means brands are not selling. This leads to piled up inventory and a contraction of the market.

The life of an economy is measured by the viability of demand and supply. In this case, demand has locked up and it is even more painful because the cost of inputs has kept going high because of the high dollar prices. So, while producers are recording higher costs, consumers cannot even access the money to complete transactions. It is a burden that appears to show the government wasn’t ready for this policy shift. It is therefore not a blessing because it has locked the economic value chain, from production to logistics,” he stated.