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On June 14, 2023, Nigeria officially floated the naira; in other words, the value of the naira is determined by the market forces (demand and supply). However, since then, the naira has been fighting for its life, and we have seen a depreciation of its value and fluctuations in exchange rates.
In this post, we’ll look at some effects these fluctuations have had on Nigerian freelancers and give some tips on how to cushion these effects. But firstly, what are some of the reasons behind the volatile exchange rates in Nigeria?
As expected, the recent fluctuations in the exchange rate have caused the cost of living and manufacturing costs to rise; international students are not excluded, as they have to deal with higher tuition fees and living expenses.
Freelancers and remote workers who work for international brands are also affected; we spoke with some of them, and they shared their thoughts on the situation.
One of the impacts of the fluctuating exchange rates is that some freelancers who agreed to be paid in dollars lose money when converting their earnings to naira. This is a situation Bisola, a freelance product designer, can relate to. She recently negotiated a project and payment when the exchange rate was ₦1100/$, but now the dollar-to-naira rate fluctuates between ₦900 and ₦950/$. The naira is expected to continue to gain in the coming weeks, which consequently means that when Bisola converts her earnings, she’ll receive less than she’d have if the naira were stable.
The volatility of the exchange rate makes it difficult for freelancers to predict precisely how much they’ll earn for their work, which can lead them to raise their prices to cushion against unexpected differences in the exchange rates. And doing this might make them less competitive in the global marketplace.
To manage the ongoing fluctuations in the exchange rates, Feyi, who’s a remote product designer, keeps most of her money in USD to avoid loss and only converts to naira when the exchange market appears to be stable or when she needs naira. She also shares that due to the economic state, especially with the high cost of living, she prefers international clients who can be charged in USD.
However, on the other hand, Zainab, a content editor, has taken advantage of the volatile exchange rate to increase her earnings. But she realizes that it isn’t sustainable because despite earning in dollars, she spends naira, and as Feyi mentioned, there’s an increase in the cost of living.
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