The Nigerian naira is at its lowest rate in recent times. The rate at which the naira fell is unprecedented.
The currency had fallen in value when compared to a host of other currencies across the globe. For example, the naira is not up to N505 against the GB Pound. Also, the currency is up to N465 against the US dollars. Even Ghanaian Cedis is far more valuable than the naira. The same can be said about a number of African currencies.
It must be mentioned that this depreciation in value of the Nigerian currency did not start today. As at the time when Nigerian gained indolence from Great Britain in 1960, Nigeria currency was equivalent to GB Pound, which means Nigeria currency had more value than that of the United States.
However, poor economic management and series of military rules added to deep seated corruption had led to a free fall in value of the naira against other currencies. While the fall in value had been gradual in the past, it was drastic this time around.
In the 70’s, N1 had the same value as $2. The same trend was maintained in the 80’s. In the 90’s on the other hand, value of the naira fell to N10 per dollar. However, the value depreciated further by year 2000 to the extent that $1 was exchanged for more than N100.
As At Today Find Rand to Naira Exchange Rate Below
Nigeria was far ahead of South Africa in currency value and in economy less than 2 years ago. However, the reverse is the case today. As at today, South African economy is rated above Nigerian economy. Expectedly, South African currency too has appreciated beyond Nigeria currency.
Several reasons are responsible for this and these reasons are discussed in detail below.
Also Read: Cedi to Naira Exchange Rate Today
For one, Nigerians love to import virtually everything they use, even toothpick. This desire for imported product put so much pressure on the naira, since this increases demand for foreign exchange. We import goods from virtually all countries of the world, including South Africa.
Our population increase by the year and our demand for imported goods also increases proportionally. This is one of the several factors that are militating against the naira against other world currencies including the South African Rand.
The rate of depreciation in the parallel market is steadfast to say the fact. The gap between the black market rate and the official rate is high and this is one issue of great concern. It only indicates how very poor the naira is performing in recent times.
This imbalance is not helpful for the Nigerian economy in the least. The CBN had however made efforts to checkmate this trend by devaluing the naira a number of times.
Unfortunately, the same thing kept on happening despite all efforts to tighten things up. The fear is that the naira may continue to fall steadily even in the future if drastic actions are not taken by the government.
Check below for some of the factors militating against the naira in present days.
Nigeria does not have adequate infrastructure on ground to boost the country’s economy. There is no infrastructure to promote manufacturing. This means Nigerians will have to depend on imported manufactured goods and this will further pressurize the naira and cause it to fall further against other world currencies including the Rand.
Those who ever attempt to even manufacture anything in Nigeria have to import their raw materials that they use in manufacturing. They have to source for foreign exchange to do that and this further pressurizes the naira.
Nigeria has one of the worst transportation networks and facilities in the world. This also does not promote local production. The inadequate power supply is yet another infrastructural problem plaguing the Nigerian economy and culminating into loss of value of the naira.
Unfortunately, there is no hope in sight yet that Nigerians will experience consistent power supply in the future. The government does not seem to be serious about providing consistent power supply at all.
These conditions force Nigerians to resort to importation of various items, like turkey, toothpick, rice and the likes.
If Nigerian is ever going to be free from the shackles of poor economy, then there is need to put infrastructures on ground. Infrastructural development will encourage home grown manufacturing and will lessen the burden on the naira, thereby leading to its appreciation in value.
The Nigerian Forex market is filled with middlemen that profit from unwholesome practices. For example, there is the official rate for foreign currencies and there is the black market rate.
The black market rate is higher and many Nigerians would prefer to sell their foreign currencies at black market than at CBN. Some even obtained foreign currencies from the CBN and sell on the black market to make profit. Despite dollar scarcity, some Nigerians that have connections in CBN are still able to obtain dollars and other foreign currencies and they resell them on the black market for huge profit.
These individuals are ready to use their connection to ensure the naira continues to fall against other foreign currencies so that they can make more profit. Though the CBN seem to be working towards steaming this tide, but it is unfortunate that such efforts are not yielding meaningful result.
Nigeria’s economy is unstable and this is a minus for the value of the naira. Aside economic instability, there is also social and political instability. These will drive foreign investors away and will reduce amount of foreign currencies flowing into the country. As a result, more pressure will be on the naira and it will keep on falling against other foreign currencies.
Rival tribes keep on chasing, leading to chaos and sending message of insecurity about Nigeria to the outside world. The government too seems not to know exactly what to do about the Nigerian economy.
The way the government manages the affairs of the country too is far from being encouraging, both to Nigerians and foreigners alike. These and many more are the factors militating against Nigeria and its economy.
All hope is not lost anyway. The government needs to take steps to ensure meaningful change sees the light of day.