Naira remains steady at 368/$1 at parallel market

.As MFBs lament effects of unstable FX

The Nigerian currency, Naira, remained unchanged at 368 to a dollar at the end of Thursday trading, the same rate traded on Wednesday and most of the week, just as the Microfinance Banks (MfBs) lamented the current economic recession and the lingering unstable or unpredictable foreign exchange trend as a great danger and huge obstacle to growth and sustenance of micro, small and medium enterprises in the country.

The local currency, had depreciated slightly on Wednesday, against the Euro at the unofficial forex market to close at 410 but firm yesterday to close at 409, while remained unchanged at 465 to a Pound sterling.

But the naira, dropped at the Investors & Exporters Foreign Exchange (I&E FX) window, yesterday opened at 366 and closed 363 against 361.67 closing rate the previous day.

Also, at the official market, the Naira, depreciated slightly to close at 305.85 against 305.80 traded on Wednesday.

Meanwhile, MfBs are bemoaning the current unpredictable foreign exchange trend as a great danger and huge obstacle to growth of SMEs in the country.

The banks, therefore, called on the Federal government to quickly introduce measures that will remove the wedge and allow free growth of micro, small and medium scale businesses.

Speaking on behalf of the Microfinance Bank operators, the chairman, NAMB, Enugu State Chapter, Mrs. Nnenna Maria Ekete, said, the forex unpredictable trend is hindering operators of micro and small scale businesses from approaching microfinance institutions for access to funds to do or sustain their businesses, thus adversely affecting the performance of the microfinance banks in Nigeria.
She noted that one major negative impact of economic recession and fluctuating forex on MSMEs was that operators and prospective operators in this sector of the economy hardly approach MfBs to access available funds meant for their businesses, out of the fear of possible consequences of obtaining credit facilities and not being able to repay later.

The multiplier negative impact of this, according to her, could be observed, for instance, in the substantial shortfall in the amount of funds’ disbursements recorded by many microfinance institutions in the first quarter of the year, as against what was the experience in the immediate financial year and the target in the first quarter of the current year.

Citing example of her bank, Ekete stressed, in the first quarter of 2016, her bank, UP MfB, disbursed a total micro credit fund of N247.7 million to active poor people for their micro and small scale businesses, but that in the first quarter of 2017, the bank could only disburse a total micro credit fund of N216.6 million, a shortfall of N31.1 million from that of the previous year and N44 million below the total of N260 million which the microfinance institution had projected to disburse in the first quarter of the current year.

According to her, “the recession and the unpredictable trend of the foreign exchange performance were responsible for the drop in disbursement because the real core customers were scared of borrowing to do business and at the end, not making any gain and being unable to repay the borrowed funds, a development that is now compelling microfinance banks to develop other products, such as engaging in permissible investments and other businesses, so as to remain in business and shield themselves from becoming distress.”