The problem with the Naira is complex and complicated for everyone, including those in the Nigerian presidency and the Central Bank of Nigeria. And it is not because they don’t understand it, but mainly because the solutions are mired in an intricate political economy.
The sources of the problem with the Naira are many. Nigeria does not have a coherent export promotion strategy. If it does most people don’t know it. In the economies that are indeed export-oriented like Singapore, Hong Kong, Vietnam and even Seychelles, exports account for well over 80 percent of GDP.
In Nigeria even as an oil exporting nation, export trade as a percent of GDP is around 14 percent and in addition, the economy is not sophisticated enough. It may be diversified, but you can’t go to Eagle Square at the center of Abuja to argue pompously that it is very sophisticated. The types and quality of a great many of the nation’s tradable goods appear to still require improvements, which I know can be achieved with commitment, clarity and intentionality.
Foreign direct and even portfolio investors seem to no longer see Nigeria as a secure destination for their funds, due to many reasons, including fragility in the economy and uncertainty with the exchange rate and human insecurity related to fears of terrorism, banditry and kidnapping. Since the problem with the Naira is in the political economy, the nation may do well to wait until 2023 after the presidential elections. Hopefully a decision to act will not have been forced upon the nation before then.