Victor EzejaStakeholders and economic experts have continued to express concerns about the persistent depreciation of the value of Nigerian currency, the naira.
Chief Economist and partner with SPM Professionals, Mr Paul Alaje, expressed worry that with current trajectory of naira’s value fall against foreign currencies like dollar and pounds, Nigeria may become like Zimbabwe if a drastic measure is not taken to reverse it.
According to data obtained from the Nigerian Autonomous Foreign Exchange Market (NAFEM), Naira at the close of trading on Monday, 29 January 2024 recorded a new low of N1,348.63 per dollar at the official market, with an intra-day high of N1,414.94 and a low of N701.00.
The free fall of the Naira continued at the black market as the United States Dollar exchanged for N1506/$1 on Monday, against the N1,410 recorded at the close of trading on Friday.
The depreciation has continued unabated despite the foreign exchange reform such as the floating of the naira last year. The unification of the two windows of exchange (official and parallel markets) by the Federal Government in June 2023 pushed the rate to over N800 per dollar leading to a loss of about 200 percent value.
These occur despite efforts by the Central Bank of Nigeria (CBN) and the Ministry of Finance to halt free fall of the naira.
CBN’s acting Director of Corporate Communications, Mrs Hakama Sidi Ali, in a statement, on Monday, disclosed that the apex bank has disbursed $500 million to various sectors to address the backlog of verified foreign exchange (forex) transactions.
Reacting to the latest forex numbers, Alaje, in a statement via his X handle, on Tuesday, said: “Do Nigeria want to be like Zimbabwe? If you have a $100 bill, you’re a millionaire in Zimbabwe. Is this what we want?” he queried.
Zimbabwe, a country in Southern Africa, has witnessed an economic decline since the 1990s but became severe beginning in the year 2000 resulting in a desperate situation due to widespread poverty and massive unemployment.
According to analysts, the country’s participation in the 1998 to 2002 war in the Democratic Republic of the Congo war drained hundreds of millions of dollars from Zimbabwe’s coffers and eventually resulted in hyperinflation in the country. It got to a point where the government allowed the citizens to increasingly use foreign currency such as the US dollar, in daily exchanges, as local shops stated the prices of few goods in Zimbabwe dollars because they needed foreign currency to import foreign goods.
Analysts blamed the outcome on the Economic Structural Adjustment Programme (ESAP) embarked on by then President Robert Mugabe which had serious negative effects on Zimbabwe’s economy as there was a sharp drop in food production and in all other sectors leading to high dependence on importation.
READ ALSO: Naira Depreciates To Record Low Of N1,348/$1 At Official Market
The economic expert warned that if Nigeria does not take practical steps to boost agricultural production and manufacturing, it may sink into a deeper economic crisis.
“If we don’t produce, manufacture, and establish plantations, we may witness a long economic quagmire. We need to be drastic on the parallel market. It appears some people are hoarding the dollar,” Alaje stated.
His comment reechoes the sentiments expressed by other economist analysts about low production capacity being a major factor behind Nigeria’s foreign exchange crisis.
READ ALSO: 5 Measures To Stabilize Naira As Value Sinks To New Low Of N1,400/$1
According to the National Bureau of Statistics data, Nigeria’s headline inflation for December 2023 was 28.92 per cent from 21.82 percent in January of the same year.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
