Harmonising foreign exchange markets saves Nigeria $16.8 billion yearly, says policy group
By Aboki Forex —
A policy group, the Independent Media and Policy Initiative (IMPI), has said the current administration's decision to harmonise multiple foreign exchange markets is saving Nigeria at least $16.8 billion every year.
In a statement signed by its Chairman, Dr Omoniyi Akinsiju, the group argued that before the harmonisation, Nigeria spent an average of $16.8 billion annually defending the naira. That spending has now stopped.
IMPI disclosed that Nigeria spent a total of $388 billion defending the naira over the 23 years of civil rule before President Bola Tinubu took office and unified the exchange rates.
The group said its research showed that despite this massive spending, the naira kept falling against the dollar throughout that period.
“Nigeria’s foreign exchange ecosystem is now celebrated worldwide for its predictability and stability, directly due to the policy of harmonising foreign exchange windows,” the group said.
“Before the Tinubu administration made that decision, Nigeria had made the defence of the local currency a state policy. Yet the naira continued to depreciate against the dollar, no matter how much was spent defending it.”
According to IMPI, the Obasanjo administration spent about $60 billion defending the naira over eight years. The Yar’Adua administration spent $58 billion in three years. The Jonathan administration spent $145 billion over five years, the highest recorded. The Buhari administration spent $125 billion over eight years.
“This wasted $388 billion should have been accounted for in the nation’s external reserves and deployed directly to build the economy rather than being filtered away,” the group said.
Despite the dollar spent defending the naira, the exchange rate remained volatile. The naira crashed from N22 in May 1999 to N460 in May 2023 at the official window, a 2,100 percent loss. At the black market, it fell from N80 to N780 over the same period.