Financial Experts in Lagos Propose Strategies to Strengthen Nigeria's Naira Currency

During the 2024 Vanguard Economic Discourse held in Lagos, financial and capital market experts in Nigeria proposed several strategies to attract more foreign exchange and strengthen the naira. The experts' remarks come amid the naira's significant decline, which plummeted to a historic low of approximately N1900 to the dollar by February 2024.

Bismarck Rewane, Managing Director and CEO of Financial Derivatives, emphasized the need to increase dollar earnings to achieve substantial appreciation of the naira. He stated, "The central bank cannot print dollars, no matter how much it wants to. Instead, it must focus on earning dollars and maintaining an efficient and transparent market." Rewane also highlighted the importance of improving communication between operators, policymakers, and regulators.

Dele Oye, President of the Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), urged the Central Bank of Nigeria (CBN) to align with global practices in defending the naira. He suggested prioritizing bold, pro-business reforms to create a favorable investment climate, thereby boosting dollar inflows through increased foreign investment. Oye emphasized that to secure sustainable foreign investment, the government needs to implement reforms such as improving trade infrastructure, reducing tariffs, liberalizing key economic sectors, and streamlining regulatory processes.

The strengthening of Nigeria's naira currency has significant implications for the country's economy and its citizens' standard of living. If successful, it could lead to increased foreign investment, improved trade, and a more stable financial environment, benefiting the Nigerian people in the long run.

The naira showed some strength against the US dollar in both official and unofficial foreign exchange markets on the first trading day of June, appreciating to N1,476.12 per dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on June 3, 2024. Despite this, the Central Bank of Nigeria's policies have not been as successful in boosting the naira's value as many Nigerians had hoped.

Vice-President Kashim Shettima revealed that Nigeria spends $25 billion annually on importing petroleum products. However, he assured that this would change, citing the government's support for private sector-led oil refineries and the revamping of state-owned facilities. Shettima stated, "With the support our government is lending to our private sector-led oil refineries and rejuvenation of some of the state-owned facilities. The $25 billion we spend yearly importing petroleum and other refined products will soon be a thing of the past allowing the naira a much-deserved breath."

Additionally, Shettima mentioned that President Bola Tinubu has secured significant investments for the country, including $14 billion from India, $250 million from the Netherlands, $500 million for lithium development in Nasarawa state, and $500 million from Germany for renewables. He also highlighted the Siemens power sector projects, which are expected to positively impact energy sufficiency in the future.

Rewane and Oye's proposals highlight the need for Nigeria to focus on increasing dollar earnings and attracting foreign investment through bold reforms. The government must create a favorable investment climate, improve trade infrastructure, reduce tariffs, liberalize key economic sectors, and streamline regulatory processes to achieve sustainable economic growth and strengthen the naira.

Key Takeaways

• Nigeria's financial experts propose strategies to strengthen the naira amid historic low.
• Increase dollar earnings and improve communication to appreciate the naira.
• Implement pro-business reforms to attract foreign investment and boost dollar inflows.
• Nigeria spends $25 billion annually on importing petroleum products, but plans to change.
• Government secures significant investments, including $14 billion from India and $500 million from Germany.