A few days ago, the central bank of Nigeria abolished the Retail and wholesale Dutch auction system of sales of dollar and a pharmacist importer called me to help explain to him what this means and how it would affect his business.
I want to share my explanation to him with most pharmaceutical importers. I have seen a lot of pharmaceutical companies making horrible decisions with understanding the implication of all the flurry of actions by the Central bank of Nigeria on their businesses.
What the Central bank of Nigeria is saying by abolishing RDAS and WDAS is that henceforth, importers can no longer buy US dollars from the Central bank of Nigeria.
Importers can only buy the foreign exchange needs from the interbank market and the parallel market. The interbank market means the system where banks sell money to each other when they can not get what they need from the Central Bank of Nigeria.
What this means is that the Central bank of Nigeria has unofficial devalued the Naira again and that the rate of the naira is to be determined by the market forces. It means that as an importer, you can no longer predict how much you can buy the dollar you need when you need it.
It means that most pharmaceutical companies who do not understand what these decisions by Central bank of Nigeria mean will not be able to restock their goods once they run out of their current stock.
Any importer who is not calculating his cost of goods at current dollar prize plus 10 WILL GO OUT OF BUSINESS. Any importer who by now has not increased the price of his products is just presently building the coffin with which to bury his business.
You cannot be selling your product at the price you set when the dollar was at 180 when the dollar is currently selling for above 213 even at the interbank market.
If you are hoping the the central bank of Nigeria will restart the RDAS and WDAS to start selling dollars to importers, then you need to take some of the antidepressants that you have because you have just primed your life for depression and anxiety.
picture credit – Central Bank of Nigeria