Traders Resort to Stock Hugging as Naira Stutters
By Emeka Uzoatu
These are not the best of times for the many Nigerians engaged in the buying and selling of goods and services. A development that cannot be separated from the ongoing downturn of the general economic purview engulfing the nation and the world.
Regarding goods, it has slowly become an insurmountable debacle. Whether importers or manufacturers, traders are often left re-learning their trades. This is because the generally accepted norms of the engagement are being rewritten by abiding circumstances at every turn of the day.
O yes, with the recent developments in the country and its economy, most businesses are forced back to the drawing boards for survival. While many veterans in the enterprise are hoping to see the bad times come and go as always, many are left speechless. All the more so, as none appears to be in control of the downturn.
Normally goods used to be produced and procured for sale with appreciable markups with minimum sweat. Not any longer. Now traders are forced to keep recalculating by the hour to avoid underselling. If it’s not for the perennial flop of the local currency, other ancillaries like transportation and local taxes come into play.
Like Chukwuka Eze, an economist who retails motor spare parts at the market in Nkpor, Anambra State admits:
“My brother,” he explained as Nairaweb.ng came calling, “this one passeth all understanding. You buy from the importer now and sell; only to return hours later to find that the price has changed. At times you end up satisfying the customer at your expense. Initially we thought the importers we buy from are just playing smart, but we have since realised that it’s no cause of theirs.”
Like the likeable young man admits, he has since come to terms with the new development.
On his part, Ebuka Okoro is an importer in the nearby Onitsha Main Market. He has been the MD of Bukason Ventures for some thirty odd years running. A product of the revered Igbo apprentice mentorship scheme, he had started out small. And though he can now look back with some gloating, the new realignment has him reeling.
He aptly blames the present outcome on a series of factors beyond his immediate control. Topping the bill, as always, is the volatility of the local currency in the exchange market:
“I didn’t start this thing today,” he opened up. “At least from retailing for some twenty years, I have now been an importer for more than a decade. We import and sell according to the exchange rate. These days we do every calculation in U.S. dollars before converting to our local currency…”
Asked why, he fired on.
“No reason other than to avoid not affording to buy as much goods as you sold. If, for instance, I bought a thousand brake shoes, I must at least hope to buy the same quantity when making a fresh order. If I can’t do so, it means that my days in this market are numbered.”
Admittedly, both parties – wholesaler and retailer – agree that there are ways out of the snare. In explanations spiced with proverbs, they affirmed their survival strategies. While the one explained that it’s only a tree that stands in wait for those bent on cutting it down; the other explained that it’s a game running like hell that brings about the hunter’s best shot.
Chukwuka, in part, appears the least troubled in the situation. According to him, he keeps checking with the importers to make sure their prices have not changed before selling. Also, he has stopped granting undue credits to even his old-time customers. According to him, he now balances his accounts on a daily basis to avoid ‘had I known’.
Chief Okoro, on the other hand, does the same bidding. His customers from far and near are promptly reminded of price changes. Thanks to digital telephony, this is now achievable at little cost. Of course, via that way, they are also made aware that all transactions are now to be paid for in full before supply can be made.
Asked if it’ll not affect his general sales, the middle-aged man waxed philosophical:
“We are no longer in this to please our customers. Time was when we offered credit to meet targets. But not any longer. It’s a price we had to pay to grow. Now that we have evidently grown, we are better off with the goods in our custody. It’s a sign of the times.”
From information garnered around the country, the trend has forced changes to normal business modules. As had become the normal over the years, retailers used to obtain goods on credit from wholesalers with relative ease. So long as they paid off the outstanding liabilities upon a new order.
However, emerging circumstances have put a plug in the otherwise well-oiled wheel. With the advent of digital telephony into banking and the forced reduction of physical travel, goods are now mostly ordered online and waybilled. Thus, the arrival of new orders are oftentimes determined by the ability to settle earlier balances.
So, as it presently stands, all appears unwell on the business front. Entrepreneurs are mostly taken aback by the preponderant indices prevailing in the markets. Nevertheless, all parties are agreed that it’ll be better off when, and if, the Naira stabilises and the economy improves.
Emeka Uzoatu, a seasoned journalist and writer, is the editor of Nairaweb.ng. He writes the occasional column, Penny Wisdom.