Panoramic View of Naira Scarcity on Petty Traders
People who run micro and tiny enterprises with low money and resources are known as petty merchants or small-scale entrepreneurs. They play an essential role in the Nigerian economy, helping to create jobs, alleviate poverty, and provide income for the country’s urban and rural underprivileged. Since micro traders typically do business in cash, a Naira shortage might have far-reaching effects. The lack of readily available funds might make it difficult, if not impossible, for these merchants to continue operating.
Petty traders feel the impacts of Naira shortage in several ways, one of which is inflation, which drives up the cost of commodities. Because of this, merchants may find themselves raising prices to stay competitive with larger corporations. The subsequent drop in company revenue and profit might lead to the closure of certain companies and the loss of some jobs.
The government’s unfavorable policies might also lead to a shortage of Naira. To stabilize the Naira for instance, the Central Bank of Nigeria (CBN) used a number of monetary measures to restrict the inflow of foreign cash. But this has unintended consequences for small company owners who needed access to foreign currency.
Due to a shortage of Naira, small business owners may be forced to turn to alternative funding at exorbitant interest rates. Some traders, for instance, could borrow money from people they know or even from moneylenders. Since the interest on these loans might be rather expensive and cut into their profits, this results in even more debt. Furthermore, the shortage of naira may cause consumers to purchase less products and services. This is because people may not have enough money to go about their normal activities, since their purchasing power has decreased.
Petty traders’ sales would fall as a result of this decline in demand, leading to a shortage of goods and lower prices for consumers.
Finally, the micro traders of Nigeria may feel the effects of the dwindling supply of naira in circulation the most. Inflation, job loss, higher debt loads, lower earnings, and lower product demand are only some of the potential outcomes of this effect. For this reason, it is crucial for the Nigerian government and the CBN to implement policies that boost naira circulation and cut inflation.