High exchange rate, forex scarcity bite hard on Nigerian businesses

Nigerians are not yet sure how President Muhammadu Buhari will contain the growing complaints of the high exchange rate against the dollar and restrictions on accessibility of the forex, as the development is severely hurting businesses.

The latest complaint was raised by David Venn, CEO, Spectranet 4G, in Lagos, who said the exchange rate of N300/$ was biting hard on businesses in Nigeria.

It is believed that some businesses cannot survive the high exchange rate and lack of accessibility to currency at official rate. “The official rate is about N200/$, but at that rate it is not available for businesses,” Venn complained.

Explaining the challenges companies face as a result of these high exchange rate and its restrictions, Venn said, for instance, “Spectranet 4G is limited in terms of expansion as it has been very difficult for the company to access foreign exchange at the official exchange rate to buy new equipment for expansion.

“If anything slows us down in terms of rolling out 4G internet services to other parts of the country, it is because of the high foreign exchange. The current exchange of naira is a barrier, as the costs will go to the end user.

“This is why people may complain that internet service is somewhat expensive. Secondly is access to the dollars. Even if we can afford to buy them at the high exchange rate, we can’t get the dollars to buy.”

The company has denominated some of its costs, including salaries in Nigeria, but the big issue is accessing dollars to buy equipment that are priced in dollars, Venn said.

Venn, who has spent about 40 years in telecoms sector, said the present high exchange rate would eventually lead to price inflation. “When I came a year ago it was N160 to a dollar but now at N200 official rate and about N300 at the parallel market, which is doubling the cost. This will obviously lead to price inflation of foreign purchased goods,” he said.

Venn, who explained the importance of 4G internet service in the country, believed that in a few more years, Nigerians would no longer have to pay for voice calls as the case was in the United Kingdom and other foreign countries, if there was improvement on broadband service in the country.

“In about three years, everyone would just be paying for data bundles because there are different apps such as Skype, Facetime, Viber and even Whatsapp that help consumers to communicate clearly,” he said, calculating that “with Whatsapp, SMS, revenue dropped will happen to voice calls. In the UK, there are bundles with unlimited voice calls and SMS. What consumers need to paid for is data bundle.”

Internet is evolving, Spectranet is putting the services at the hands of consumers to do whatever they want, he said. According to Venn, before now people used to shy away from video and pictures because they don’t want to overshoot their data bundle “but all that is changing now and that is where Spectranet is going. We are spreading across the country to offer more internet services to more Nigerians.”

Daniel Obi & Jumoke Akiyode