Why the Naira Is in Free Fall: Insights from Former Finance Minister Aganga
Former Minister of Finance, Olusegun Aganga, addressed the issue of Nigeria’s weakening currency, the naira, during the 3rd Adeola Odutola lecture at the 51st Annual General Meeting of the Manufacturers Association of Nigeria. Aganga emphasized that the naira’s continued weakness is intrinsically linked to the country’s heavy reliance on imports. He stressed that for the naira to regain its strength, Nigeria must shift its focus towards local production, particularly for export purposes.
As reported by The PUNCH, the naira has experienced a significant decline, plummeting from approximately 450/dollar to an average of 760/dollar after President Bola Tinubu’s exchange rate reforms. On Thursday, the local currency hit a new low of 1045/dollar in the parallel market.
Aganga, while addressing the alarming depreciation of the naira, questioned the rationale behind expending substantial sums to defend the currency when its value continues to deteriorate. Instead, he proposed diverting those resources into supporting genuine manufacturers and exporters of high-value products, which can generate foreign income for Nigeria.
The former Minister advocated for the government to accord the industrial sector national priority status, underpinned by comprehensive plans, policies, and financial investments. He underscored the contrast between the considerable funds allocated to subsidies, bailouts, and initiatives like the Agric Anchor Borrowers Programme and refineries, and the potential benefits of strategically channeling resources into the industrial sector, where returns on investment can be substantial and advantageous for both the economy and the nation.