Africa (Commonwealth Union) _ Nigerians have been reflecting on the recent economic measures taken by President Bola Tinubu to stabilize the country’s economy by allowing market forces to determine the currency exchange rate.
The Central Bank of Nigeria’s announcement on Wednesday to end the distorted foreign exchange rate resulted in a significant drop in the value of the naira currency, reaching 755 per U.S. dollar. However, it has since shown some signs of recovery.
This move reflects the changes promised by President Tinubu to strengthen the struggling economy. While some like Samuel Badejo, a banker and resident, view the changes positively, they remain cautious and want to see the results over the first 100 days of Tinubu’s administration.
For years, Nigeria has operated with multiple exchange rates for the naira, with the official rate set by the central bank and a higher unofficial rate determining the price of imported goods priced in dollars. The new policy will allow market forces to determine the exchange rate, which analysts believe will attract more investment and stabilize an economy affected by high inflation and record unemployment. However, it may also lead to higher prices for imported goods, impacting a country heavily reliant on imports.
Sam Chidoka, CEO of Kairos Capital, also noted that government debt is expected to rise due to borrowings in U.S. dollars, increasing the “total debt to GDP” ratio.
The multiple exchange rates have caused difficulties for foreign investors who were forced to sell their currencies to the central bank at the official rate, limiting their access to foreign funds amidst a severe dollar shortage. This situation has affected foreign businesses, including international airlines with trapped revenues of $450 million as of June last year.
President Tinubu has emphasized his commitment to a stronger and more stable naira, based on a vibrant and productive real economy. Since taking office, he has suspended the central bank governor, Godwin Emefiele, who was criticized for introducing new currency notes that led to a cash shortage. Tinubu has also halted gasoline subsidies, leading to higher fuel prices for transportation and power generation.
The currency devaluation is expected to raise prices for imports, including food, due to the significantly higher foreign exchange rate.
In addition, Tinubu recently inaugurated an economic team chaired by Vice President Kashim Shettima to advise him on economic affairs, while also suspending the chairman of Nigeria’s Economic and Financial Crimes Commission, Abdulrasheed Bawa, for alleged abuse of office.
Overall, Nigerians see these changes as Tinubu’s attempt to remove incompetent officials from their positions and work towards a better Nigeria, according to Prudent Odeh, a resident and travel consultant.
