I know that Naira is now well above N1000/$ in the black market. Lack of policy clarity is the reason the Naira is still struggling. You may not believe this but it is the fact, as I have written here: Nigeria went into massive de-industrialization at the onset of the poorly implemented border closure. That policy decimated industrial output in Nigeria by more than 20%.
Many small producers in Lagos, Aba which produce for Benin Republic, Cameroon, etc collapsed as a result of that poison-pill-like policy. When we closed the borders, many closed their shops! Yes, when we closed the borders, many closed their shops! (A Nigeria’s former minister noted how this has played in the last few years)
Nigeria’s Minister of Budget and National Planning, Atiku Bagudu, has openly acknowledged that the country is grappling with a severe financial crisis.
He stated that the government is presently just managing to pay salaries while dealing with a slow economic growth rate, a rapidly increasing population, surging unemployment, and high inflation.
But in the next few weeks and months, Nigerian Naira will likely get help. I expect oil prices to rise more, and if that happens with higher production output, Nigeria’s external reserves will improve. Typically, when that happens, Naira strengthens, ceteris paribus.
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That postulation is anchored on one thing: if Israel moves on with a ground invasion in Gaza, other players could join the conflict. As that happens, the oil market will be rattled, with nations like Nigeria benefiting since anything which affects the Strait of Hormuz will trigger oil crises around nations.
Yet, the question remains: the Naira may appreciate under that turbulence, but what will make it have a sustained strength? That is where re-industrializing Nigeria matters, even at the light manufacturing level, understanding that industries today include the old type and the modern type (startups and digital firms).
Former Minister of Finance and Trade, Industry and Investment, Mr Olusegun Aganga has stated that Nigeria has been de-industrializing for the past 8 years since 2015. ..In his words,
“The best year for the industry was between 2011 and 2014. That was when there was active collaboration between MAN and the government.
The numbers will tell you that Nigeria has been de-industrialising since 2015, not improving”
“The numbers will also tell you that when government promotes and supports industrialisation, the industry responds positively, and we all benefit as a country”
[…]
“The lack of electricity alone adds about 20% to 30% of the production cost and of course, the recent increase in fuel subsidy has further increased the cost of production.”
“The problem has persisted due to the poor implementation of various infrastructure development plans”
[…]
“Apart from a very low manufacturing base, the major problem of Nigeria’s export of non-oil commodities is standards.
The summary: be careful as you play the Naira because one bomb could re-align imbalances which will help the Naira to appreciate in value. And it does not have to depend on what the Central Bank of Nigeria is doing or not doing. We just need to have a working bank account in America with the oil flowing in the Niger Delta.
Comment on Feed
Comment: I think I’m one of those who see Nigeria as a very difficult economy to predict given the forces at play. The Nigerian economy for some strange reasons have some other artificial factors which may prevent it from obeying the natural laws of demand and supply .
An increase in global oil price and more production output from our fields may still not revive the economy. Nigeria is a strange turf .
My Response: “An increase in global oil price and more production output from our fields may still not revive the economy.” – check data, Naira has always appreciated whenever oil goes north. What happens is that Nigeria has money in the American banks to fight for Naira. It has nothing to do with our efforts in Nigeria.
Comment 2: Nigeria is yet to start building from strength, thus the many reactionary policies, including economic policies. Without an ‘intelligent and proactive’ long term economic development plan that will outlive and outlast any one administration, I am afraid, we are not going anywhere, yet. The continued devaluation of the Naira, in my opinion, is a response to our inability to create and exchange economic value locally and abroad. And, should we maintain this trajectory, it may only get worse.
We are importing our consumption and exporting all our production (and with the increasing japa epidemic – our human capital too), to the extent that most of the resources powering the most vibrant SMEs in the country are foreign.
For as long as local factors of production do not contribute to producing for our consumption and export, we just dey play!
We HOPE too much. If personal economic growth does not respond to hope, but value exchange, how much more a National economy?
Nigeria is Broke, the Government is Just Managing to Pay Salaries – Budget Minister
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So, the play to determine if naira will fall further or pause is to have a working bank account in the US and then wait for bombs to start dropping in the Middle East? Is this a policy, dream, tale or joke?
The most wonderful thing about the Naira is that it’s also a Nigerian. Naira knows all the gimmicks, tricks, delusions, frauds, corruption, and it also understands all the local languages. So as Nigerians scheme via hope, prayers, praises, deceits, the Naira is equally scheming, letting you people know that it’s one of you.
What kind of human species are Nigerians? It gets stranger by the day, and the stranger it gets, the more the explanations and pathways into further mediocrity and destitution.
You people have been announcing billions of dollars in agreement and partnerships with various entities and institutions, why is Naira not singing along and rejoicing? Because it knows all of you and your gimmicks, Naira is very experienced in the workings of the Nigerian system right now, and it’s determined not to carry last in the play.
By next weekend you will advance and predict the way forward, and another N100 would have been added to today’s rate.
The game is the game.
Professor Ndubuisi, don’t forget that the Buhari administration mortgaged your oil. Even if the oil price goes north now, your country is still using her proceeds to pay off debts. So no improvement on Nigeria’s external reserve in the nearest future