Currency Depreciation: Trans-border traders reject Naira

Following the decline of the Nigerian Naira in recent months, trans-border traders have begun to reject the local currency in the West African market zone, causing significant setbacks.

According to research, traders on both sides of the Seme border now either the CFA or the national currency of the non-francophone nations.

Due to the significant amount of trade that existed between those nations and Nigeria, the naira previously dominated the sub-region as the primary currency that was accepted as a means of exchange by traders across borders.

Within each nation’s unofficial payment systems, the Nigerian Naira was treated as convertible.

Research however showed that the Naira started to lose that standing in February and reached the point of complete rejection in March 2024.

Nigerians were among the traders whom Vanguard spoke with. They bemoaned the fact that owning Naira has grown extremely risky due to the currency’s continuous decline, which began last year and reached its worst rate of depreciation last month.

According to official reports, the value of the Naira fell rapidly in 2023, falling to N1/0.9CFA in the second quarter and N1/0.8CFA in the third, from its trading level of above N1/1.5CFA in the first quarter.

Following a period of relative stability throughout the fourth quarter of 2023, it opened in January 2024 at N1/ 0.66067CFA.
But after a second wave of depreciation in February, the sub-regional fortune fell sharply to N1/0.38308CFA, and last week it reached a new low of N1/0.37595CFA.

Even though there has been a tiny improvement over the past few days, the traders are already insuring against additional devaluation.

The Naira is still far from what it was a few years ago in the subregion, though. The cost of commodities imported into Nigeria through the economies of West Africa is being negatively impacted by the trend. As a result, traders are reporting a slowdown in commercial activity in both the Nigerian and Beninian border towns.

The majority of the money changers, or bureau de change, in the border markets in Benin and Nigeria that I visited did not have Nigerian currency on display like they did the previous year.

Even cross-border transporters and bike riders, known as Okada in Nigeria, refused to accept payment in Naira, claiming that they would have lost a portion of their earnings by the time they returned to change Naira to CFA. As a result, they declared that holding CFA was safer.

Ibrahim Yakubu, a bike rider, insisted on receiving payment in CFA rather than Naira when he brought our journalist from the Seme border to the “Misebo” market, which is roughly 45 kilometers away.

Yakubu also mentioned how strong the Naira was previously and how widely accepted it was as payment for goods and services.

Money changer Taiye Ekiti attributed the depreciation of the Naira in Benin Republic and other countries, such as Togo and Ghana, to the cost of the US dollar. He further stated that bureau de change employees are no more powerful than other businesspeople in this regard.

Mr. Achi Collins, a Nigerian dealer who specializes in fairly used apparel, stated that most traders no longer accept Naira, stating that “that is how much the Naira has lost value over time.”

Collins added that the majority of traders would advise their clients to convert their cash to CFA before accepting it as payment for items.

He did, however, add that there might be a few vendors in the Seme border town who still take Naira as payment, though their goods would be more expensive.

Additionally, he mentioned that Naira is not accepted in Benin Republic cities due to its value in relation to the CFA’s strengthening.

He further stated: “If you want to buy something here you will go and change your Naira to CFA before you buy whatever you want.’’

Naira was previously accepted all the way along the west coast to Senegal and the Ivory Coast. In many West African nations, traders freely spent Naira. Naira was spent in the marketplaces of Benin Republic, Togo, Ghana, Senegal, and Ivory Coast by Nigerian sports journalists covering sporting events in these nations. The naira was then more powerful than the CFA. Those times are long gone. These nations no longer accept the naira.