Nigerian Naira and the Economic Urgency for Nigeria to Transform

From  1973 to 2015, US$1 exchanged at worst for N200. But between 2015 and 2024, it got up to N1,600/$.  The implications are huge for any business in Nigeria. Of course, the citizens, especially the savers, have lost enormous purchasing power. Pension and retirement accounts have lost massive “purchasing” value. If you retired as a school headmaster in 2012, and were to be paid N4 million, if they did not pay it by 2015, and you are getting it now, you have effectively lost more than 60% of that money.

As that happens, the Nigerian manufacturer loses grounds even as competition heats up across the borders. The largest textile factory in West Africa is being established in Benin Republic (i.e. Cotonou); that country has about 14m people. By the time they are done, the small remaining textile factories in Nigeria will close because there is no way to compete.  The ECOWAS quasi rule of origin clause which offers free movements of goods in ECOWAS largely tariff free is not enforced by Nigeria as expected.

Today, the BUSIEST port in West Africa is Togo’s Port of Lome. They laugh at Nigeria because Togo now runs a bigger port than Nigeria since Nigerian importers use Lome port due to its top-grade facilities (get things cleared fast). So, they charge Nigerian importers international duties while Nigeria charges those people largely free ECOWAS duties. Togo has less than 9m people.

So, besides looking at China, the United States, etc, even our neighbours have solved Nigeria. Also, the trio of Mali, Niger and Burkina Faso have taken their businesses to Morocco and Algeria; you can import things via  Western Sahara/Mauritania, and Algeria, into those three countries. Like that, they have stopped trading with Nigeria and the implications are huge! 

Get this: the CFA Franc (currency they use in Cotonou’s Benin Republic and most Francophone countries) has gained 10x against the Naira in the last nine years. In 2015, 1 CFA franc in Cotonou would have given you N0.25 (or 25 kobo); today, you will get N2.50. If you run the numbers, that is a 10X appreciation over the Naira in less than ten years! 

So, instead of being fixated with China and the US, Nigeria may need to focus on how to compete regionally as our neighbours are outsmarting us.

West African currency, ECO, will Not Improve Intra-Trade in West Africa Without Foundational Infrastructures

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