It is really tragic how the Nigerian currency keeps losing to the US dollar. The two currencies have been in an epic battle that goes way back early 2000’s (back in the 90’s a dollar traded at N10). Since the second Republic under the administration of President Olusegun Obasanjo, the performance of naira has been nothing to write home about.
On several occasions the Central Bank of Nigeria Has Devalued the Naira, all of which has proven abortive. Due to the unbalance of import to exported goods, the demand for dollar is always on the rise, which generally causes a continued depreciation of the naira.
However our list outlines 5 reasons the naira will continue to lose against dollar unless the federal government make effective moves.
Fraudulent practices of middlemen
A lot of unwholesome practices have been going on among the secondary buyers of dollar. These middlemen (bureau de changers) buy at the official rate and sell at a ridiculously inflated price. This has caused the gap between the official market and the parallel market to keep widening, resulting in the weakness of the naira. The CBN should look into the matter and make necessary move to sanction these people.
Nigerians Preference For Imported Goods
Despite awareness and publicity to sway Nigerians towards buying locally made goods, people still prefer to import products. The federal government should make move towards placing a concrete ban on import of some goods. Nigerians import goods as little as palm slippers, bags even our native attire.
Negative Projections Of Nigeria To Foreign Investors
Nigeria is known and associated with many bad things globally no thanks to the negative predictions and projections by Naysayers. Both international and local media organizations are always quick to blow out of proportion, every incident that occurs in the country. Take for example the recent forecast by the IMF about the economy (IMF believes before the end of 2016, the Nigerian economy will decline to minus 1.8%). Such forecast will only scare away foreign investors. The exaggerations and negativity must stop.
Poor Infrastructure and Maintenance Culture
Naturally Nigeria lacks the proper infrastructure to locally produce goods. As it stands, we cannot even refine our own crude oil. Also the few infrastructure put in place by previous administration has not been properly managed or maintained by the successor.
We really cannot over emphasize the need for Nigeria to be stable economically, socially and politically. General stability will definitely facilitate currency stability. Foreigners will continue to boycott Nigeria for other African Nations because of the continuous religious clash, tribal ðnic crisis and witch hunt.
The aforementioned issues require a strong and long term solution for the naira to stop the lingering depreciation against dollar, Pounds and Euro.