How Corrupt Exchange Rate Is Killing Nigerian Businesses

You may have heard how some business men from a certain block walk into CBN and come out with dollar at subsidized rate. They are importers like you. You share the same market with them.

Now let us look at how this corrupt exchange rate regime affects your business.

You want to import cement and sourced your dollar at black-market. You bought dollar at N367/$. Another cement importer with favor from the government walked into CBN and got dollar handed down to him at subsidized rate of N204/$.

Both of you set out to bring in 1 million bags of cement each. By the time the goods arrived the country, when your landing cost is N2,158.82 per bag, his own landing cost will be N1,200 per bag. And that is assuming he did not get an import waiver from the government too. Otherwise, his landing cost would be much lower.

So if he decides to supply his cement at your own landing cost, he would have made N95 million profit, while you have zero profit.

But you cannot supply at your landing cost else you go out of business. You need profit. First, to be able to pay bank interest rate on the loan you collected. You have other bills to settle – warehouse rent, staff salaries, operational cost, maintenance cost …

Then if this government-favored importer considers you a threat and decides to manage you, he can easily bring your business down by flooding the market with cement price lower than your landing cost. At that point you are extinguished. You can’t sell. Or you are forced to sell at his price. Either way, you lose your money and sink into debt. Business ends!

Illustration above is one out a thousand and one ways a ruling government can frustrate you out of business.

Corruption in exchange rate, rife in this government, can stifle life out of your business.

So this is a reason why you MUST actively participate in electoral process. You are involved. You have a stake.

Now go get a voter’s card and be part of the next election. Not doing so, you risk another bad market.

If any hostile regime wants you out of import business, believe me, no one can help you. Only God can.