LILIAN UKAGWU examines how the naira crisis and fuel scarcity have affected the country’s transportation sector
As a result of the naira price and fuel scarcity, many segments of the economy have been adversely affected. Transport has been one of the sectors hardly affected by the crisis. The price of petrol in some parts of Nigeria soared as high as N500 per litre for more than three months, causing many Nigerians to struggle to fuel their cars.
The naira crisis further compounded the challenge. The scarcity of the N200, N500 and N1,000 notes that were redesigned by the Central Bank of Nigeria made it very challenging for many to access cash to transport themselves around the country, adversely affecting transporters who having struggling with low patronage.
The naira and fuel crises combined to make it difficult for people to get to work and businesses battled to access fuel to run their operations. Many had to park their cars at home and looked for alternative means to move around. The few transporters who were able to get petrol charged exorbitant fares, making some businesses which involved haulage halt operations.
The Nigerian transportation sector is the backbone of the country’s economy. The sector is composed of public transportation, buses, trucks, and railways.
CBN naira policy
The Central Bank of Nigeria on October 26, 2022, announced its plan to redesign the three banknotes. The President, Major General Mohammadu Buhari(retd.), subsequently unveiled the redesigned N200, N500 and N1,000 notes on November 23, 2022, while the apex bank fixed a January 31 deadline for the validity of the old notes.
The CBN noted that the unveiled notes were part of measures to mop up excess cash in circulation, ransom payment for kidnapping, terrorism financing, counterfeiting, among others.
However, since the unveiling of the notes, the redesigned naira notes have been out of the reach of Nigerians. Commercial banks have to ration the cash they give over the counter and they battle with long queues. Most of their Automated Teller Machines have run out of cash since the CBN Governor, Godwin Emefiele announced the new policy.
It got so worse that irate youths started attacking bank branches, forcing them to shut down their operations or work for a half day. This worsened the cash crunch.
When the situation was becoming intense, the President had to order the reintroduction of the old N200 note still April 10.
The Nigerian transport sector is heavily cash dependent because it is largely informal, especially the passenger segment of the sector. So, the naira scarcity has had a significant impact on the sector.
Transport companies lament
A visit to the popular and busy Utako/Jabi Park in the Federal Capital Territory, Abuja by our correspondent showed that major of the ticketing halls of some of these big transport companies were deserted and could be compared with dead zones.
Those our correspondent spoke with at Bonny Way Motors said business had been very challenging due to the naira and fuel scarcity.
The Abuja Branch Manager of Bonny Way Motors, Boniface Abah, told our correspondent that the naira scarcity has had a negative effect on the transport company as they deal directly with the public, adding that whatever affects the public has a direct impact on the company.
He further noted that the passenger turnout has been very discouraging, which delays the movement of their buses.
“It is no longer a new thing. We are dealing with the public as you can see our transport is public transport. Anything that affects the masses affects us too. In terms of cash, when you go to the petrol station they request cash before you can buy petrol and there is no cash.
“Sometimes when we allow passengers to make transfers, some people will do that and we would not receive the money. Some we would receive immediately,” Abah asserted.
He explained that passenger turnout has been very low.
“This vehicle has been loading since yesterday. It cannot move because of the low passenger turnout. A vehicle that carries 59 passengers just has only 11. How can it go? The same thing with the waybill.
“Sometimes if passengers are not enough, we use waybill to support but now no waybill, no passenger, that is what kept the vehicle here till now,” he lamented.
Similarly, when our correspondent visited ABC Transport, one of the oldest road transport companies, that was a few metres away, it was in no way different.
ABC Transport, which usually loads first, second, third and even fourth buses between 6.00 am and 10.00 am, was still struggling to fill up its first bus at 10.00 am when our correspondent visited.
A member of staff of the company, who spoke on the condition of anonymity, said the situation of the naira scarcity has affected the passenger turnout of the company.
“The situation is really biting. It has actually affected business negatively in terms of passenger turnout. The patronage is very low now because many people are not able to access cash and the percentage of the society that does electronic banking is still relatively low. Somebody was talking about transfer and I asked how many people have internet-operated telephones or know how to operate mobile banking.
“So, all these are factors that have scaled down the degrees of patronage of our customers and by extension, affecting the staff because we do not also have the cash to run our daily businesses. For the few people that do transfers, the money goes directly to the company’s account, and the branches will have to wait for the head office to transfer money to the branches for daily operations. This is not easy and even when they eventually transfer, the money it takes time to reflect in the receiver’s account.
“Let’s talk about fueling when dispatching drivers, we give them cash to fuel their vehicles. Currently, we transfer money to their accounts and with all the network problems, some take two or three days to drop. Sometimes, a driver might have arrived in Lagos and the transferred money had not been credited into his account,” he noted.
An accountant at Chisco Transport, Elechi Orji, said the naira scarcity in the country has had a negative effect on their operators like other businesses.
He declared, “Since the cash crisis started, we have not been finding it so easy because the networks are bad. There is no way you can confirm a customer’s payment and even when they pay you will just accept that they have paid and transmit their payment receipts online or whatever means. Sometimes, the accountants at the head office will say the payments have not been credited into the company’s account for some days or weeks. So, it is mayhem in terms of accounting and passengers’ convenience.”
He further noted that the company has tried to manage the situation to the best of its ability by allowing customers to pay by whatever means they can instead of insisting on cash payment.
Despite Chisco Transport allowing its customers to make payments through alternative means, such as mobile transfer and Point-of-Sales devices, etc., the business has been low. During a visit to its park, our correspondent observed that some of the members of staff of the company were lying down in the early hours of the day, which was usually the peak time for business.
Similarly, at the God Is Good Motors and the Young Shall Grow motors, the ticketing halls were not busy. The few travellers seen there had to stay long at the counter to make payment because of the poor network.
NRC’s low patronage
The naira scarcity did not impact only road transporters. Train services, which are operated by the Nigerian Railway Corporation, is a sub-sector of the transport sector and was not left behind in the crisis.
When our correspondent visited the Idu train station in Abuja, it was observed that the issue of the naira scarcity was taking a toll on the passenger’s patronage.
Before now, the station car park was usually filled with cars by travellers who had parked them in other to pick them up when they return. During our visit last week, the car park had very few cars parked, signally that the train service was experiencing low patronage due to the cash crunch.
Speaking to our correspondent, a top official of the corporation, who spoke on the condition of anonymity, said the cash issue had seriously hit the sector. He said the station was gradually picking up after the attack on the train before the issue of naira scarcity disrupted the recovery and affected passenger patronage. He said most times the train moves with vacant seats.
Recall that on December 5, 2022, the Abuja-Kaduna train station resumed operations after eight months of suspension on the rail lines due to a terrorist attack.
On January 27, 2023, the Abuja-Kaduna train derailed which led to the suspension of operations for two days.
Many are hoping that with the presidential and National Assembly elections concluded, whoever emerges as the winner would have to make urgent efforts to address the naira scarcity that has crippled many businesses.
