By Kingsley Omonigho Johnson
The naira, Nigeria’s beleaguered currency, has been on a downward spiral and trajectory that seems to have no end.
When Muhammadu Buhari handed over power to Bola Ahmed Tinubu in May 2023, the official exchange rate of the naira to the US dollar was approximately 461.06 NGN to 1 USD.
As of today, the exchange rate of the Nigerian naira to the US dollar is approximately N1,616.46 to 1 USD.
The Central Bank of Nigeria continues to struggle with different fiscal and monetary policies to stabilize the naira, but nothing seems to be working.
This decline has become a daily reality for Nigerians, manifesting in a litany of economic woes that have made life increasingly difficult.
From skyrocketing prices to dwindling purchasing power, the naira’s depreciation has cast a long shadow over the nation.
The impact of the naira’s devaluation is most keenly felt in the everyday lives of ordinary Nigerians.
The cost of living has soared to unprecedented heights, making it a struggle for many to put food on the table.
Basic necessities like rice, beans, bread, and fuel have become luxury items, forcing families to make difficult choices about what they can afford.
The situation is particularly dire for those living in rural areas, where access to food, essential services, and transportation is limited.
To illustrate the dramatic increase in prices, let’s consider a few key commodities
First is rice, the people’s staple food. A 50kg bag of rice can cost anywhere from N80,000 to N100,000 or more, depending on the brand and region.
This represents a staggering increase from 10 years ago, when it could be purchased for around N7,000.
What about garri, another popular staple food? Garri has also seen a significant price hike.
A 50kg bag of garri typically ranges from N60,000 to N80,000, compared to around N4,000 a few years ago.
There is also Cement, another important commodity in Nigeria’ building and construction sector.
The construction industry has been particularly hard hit by the naira’s devaluation. The price of cement has skyrocketed, making it difficult for builders and homeowners to complete projects.
A bag of cement, which sold for around N1,500 a few years ago, now costs upwards of N9,500.
Finally, we must mention fuel. The cost of fuel has also risen dramatically.
A decade ago, a liter of petrol could be purchased for around N87. Today, it sells for over N1,000, representing a staggering increase of over 1000%.
This has made transportation more expensive for both individuals and businesses, further contributing to the rising cost of living.
The depreciation of the naira has also had a devastating effect on businesses.
The cost of importing raw materials and finished goods has increased significantly, leading to higher prices for consumers.
This has reduced demand for locally produced goods, resulting in job losses and economic stagnation.
Small businesses, in particular, have been hit hard, as they often lack the financial resources to weather the storm.
Many businesses have closed shops, while most foreign businesses have relocated to nearby countries like Ghana and even South Africa.
Inflation, the relentless rise in prices, has become a constant companion to Nigerians. As the naira weakens, the cost of imported goods increases, which is passed on to consumers in the form of higher prices.
This, in turn, leads to a rise in the general price level, making it even more difficult for people to make ends meet.
Again, people can no longer afford medicines, most of which are imported. Hospitals lack vital medicines, and people are dying daily from lack of proper Medicare.
The inflation rate in Nigeria has truly reached alarming levels, outpacing the ability of many to increase their incomes. People are just managing to survive or exist, as one observer puts it.
But the government has not been resting on its oars, to say the least.
It has implemented various measures to address the naira’s depreciation, including foreign exchange restrictions and the introduction of multiple exchange rates.
However, these policies have had mixed results and have often led to unintended consequences. They have not worked, or to be more grotesque, they have exacerbated the plights of Nigerians.
Still on forex, the scarcity of foreign exchange has made it difficult for businesses to import essential goods, while the multiple exchange rates have created confusion and encouraged speculation.
Round-tripping, a nagging forex albatross, continues to rear its ugly head as corrupt and unscrupulous players ply their trades unabated.
The depreciation of the naira is a complex issue with no easy solutions. It is a symptom of a larger economic malaise that is rooted in a number of factors, including corruption, inefficient governance, and a reliance on oil exports.
To address the problem, Nigeria needs to diversify its economy, improve its infrastructure, and reduce corruption.
The future of the naira remains uncertain. However, it is clear that the current situation is unsustainable.
The continued decline of the currency is truly having a devastating impact on the lives of millions of Nigerians.
Unless bold and decisive action is taken, the naira’s nosedive will continue to be a tragedy in slow motion.
For context, a nearby country like Benin Republic has fewer industries and depends on imports and trading. It is a lesser economy compared to Nigeria.
Yet the country’s currency has remained stable for years because of less government interference or absence of it.
In fact, its currency, the CFA, which was five times lesser than the naira a few years ago, is now more valuable than the naira, exchanging for 0.36 CFA franc (XOF) to one naira!
We must halt the slide of the naira by producing more and consuming less, by reviewing recent government policies and reverting to the status quo ante, and by pegging the exchange rate of the naira to halt the free fall.