A pertinent question begging for an urgent answer in Nigeria now is why the naira has continued to decline in value over the years without a tangible, sustainable effort from the government and other economic experts to sustain the currency’s strength and make it flow among its equals.
It is worrisome how Nigeria, epithetized as the “giant of Africa” and, of course, the most populated African country, is faced with this lingering menace of currency fluctuations and instability without a significant workable remedy.
The exchange rate between the United States dollar and the Nigerian naira recently skyrocketed to almost 1900 naira, equivalent to 1 dollar, at the parallel market. Nigeria’s federal government declared war on currency speculation to ameliorate the crisis in the foreign exchange market.
The government issued a directive to the Office of the National Security Adviser (ONSA) and the Central Bank of Nigeria (CBN) to join forces to address the challenges posed to the national economy by speculative foreign exchange activities.
Consequently, in their renewed bid to safeguard Nigeria’s FX market and combat speculative activities, the government deployed the Nigeria Police, Economic and Financial Crimes Commission (EFCC), Nigeria Customs Service (NCS), and Nigerian Financial Intelligence Unit (NFIU) to fight the menace.
Did their efforts yield positive results? Perhaps it did, as the naira has slightly added a tiny muscle against the dollar as of February 26, 2024. His Excellency, President Ahmed Bola Tinubu, disclosed in a meeting the efforts and modalities being put in place to stabilize the currency. He, however, shifted the blame to what he described as “decades of mismanagement and underutilization of the country’s assets.”.
He said, “The federal government has set a goal to raise at least $10 billion to increase foreign exchange liquidity, a key ingredient to stabilize the naira and grow the economy. At the core of this is ensuring optimal management of the assets and investments of the federal government to unlock their revenue potential. This includes our bold and achievable plan to double the GDP growth rate and significantly increase the GDP base over the next eight years.”
The president stated that decades of mismanagement and underutilization had plagued the country’s assets spread across Nigeria and outside the borders, leading to revenue losses that have hindered economic growth.
In the federal government’s quest to find a lasting solution to the continued depreciation of the naira’s value, the president, Ahmed Bola Tinubu, hosted some Nigerian economic giants from the private business sector to deliberate on the way forward. Those in attendance included Aliko Dangote, chairperson of the Dangote Group of Companies; Abdulsamad Rabiu, chairman of the BUA Group; Tony Elumelu, chairperson of the United Bank of Africa (UBA); and Segun Ajayi-Kadir, director-general of the Manufacturers Association of Nigeria (MAN).
Mr. Rabiu, commenting on the outcome of the meeting, said “The downward slope of the naira’s rate to the dollar is inauthentic and commended the Central Bank of Nigeria’s (CBN) effort in addressing the challenge.
“We discussed how to bring the foreign exchange rate down because we all know that what is happening as regards the foreign exchange is artificial; it is manipulative, and thank God the CBN is doing quite a lot,” he said, adding that “now, the exchange rate has come down from N1800 to maybe 1600 and N1500 now, and as you all know, everything in Nigeria is indexed to the foreign exchange, especially when it comes to stuff that we import into the country.”
Meanwhile, Mr. Elumelu noted that he believed implementing the decisions arrived at at the meeting would propel the Nigerian economy “and help alleviate the poverty in the land, help create employment, and help put food on the table.”
From the foregoing, it is obvious that the government is putting modalities in place to stabilize the economy and, in turn, boast the strength of the Naira in the parallel market.
