“Removal of fuel subsidy (which cost $10 billion in 2022), and the collapse of multiple FX windows into a single I&E window, which caused naira to depreciate by 98 percent between May and December 2023, among other monetary policy efforts, were key programmes executed to spur growth and regain investors’ confidence” – PwC – ‘Nigeria’s Economic Outlook: Seven Trends That Will Shape Nigerian Economy in 2024’.
Good People, the next 6 months will be extremely important for Nigeria. A lost decade is possible if we do not get things right. While I have written that floating the Naira with no strategic plan on USD supply in Naira is a major mistake, I am very optimistic that the Naira will recover if we get to work.
Yes, Nigeria has great tools to recover quickly but we have to change the order of business. Merit-based system, Honesty in leadership, Pragmatism on our policies over political liturgies, and Unlocking the value of rural Nigeria, will deliver a new Nation.
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One of the worst economic policies in Nigeria since 1999 is the current floating of the Naira. That decision has a score of “F” from me, because despite what any person could tell you, from the IMF to the Central Bank of Nigeria, economics is “science” played by the people. And science operates on principles.
In the natural philosophy domains like engineering, those principles are self-evident: you cannot throw a beam during construction without supporting systems. In social science like economics, you cannot float a currency without FIRST ensuring that you can create parity on demand and supply.
Yes, if demand continues to rise for US dollars in Nigeria and you have no means to improve the Supply of US dollars, you have disarmed the Naira, because market forces will weaken its positioning. This is economics 101; every WAEC Economics textbook always begins with Prof Lord Robbins definition of economics where he posited on the relationship between the “end and scarce means”.
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