By Pius Ade Babaleye Pab
The Naira, Nigeria’s currency, has faced turbulent times over the years, with past administrations expending a staggering $388 billion in an effort to defend its value. Despite these massive expenditures, the Naira depreciated significantly, raising concerns about the sustainability of such monetary policies.
From 1999 to 2023, four administrations embarked on costly currency defense strategies:
Olusegun Obasanjo spent approximately $60 billion over 8 years.
Umaru Musa Yar’Adua spent $58 billion in just 3 years.
Goodluck Jonathan spent $145 billion in 5 years.
Muhammadu Buhari spent $125 billion in 8 years.
These figures, sourced from Nairametrics, highlight a combined expenditure of $388 billion. Yet, this monumental cost did little to stabilize the Naira, which declined from ₦22 to ₦460 in the official window and from ₦80 to ₦780 in the black market—a loss of over 2,100% in value.
Why Tinubu’s Approach Stands Out
President Bola Ahmed Tinubu’s administration is charting a new course, breaking away from the currency defense practices of the past. Tinubu has chosen to float the Naira—a policy that allows the exchange rate to be determined by market forces rather than being artificially controlled by the Central Bank.
This decision is revolutionary for Nigeria and aligns with global best practices. Developed nations have long embraced currency flotation as a strategy for achieving economic stability and growth. In contrast, many developing nations, including Nigeria, have clung to currency defense policies, often at a great cost to their economies.
Tinubu’s approach recognizes a fundamental economic principle: defending a currency is unsustainable without sufficient foreign reserves. For years, Nigeria drained its external reserves to defend the Naira, leaving little room for investments in infrastructure, education, healthcare, and other critical sectors.
The Long-Term Vision
While currency flotation may cause initial discomfort, especially in a country accustomed to artificially pegged exchange rates, the long-term benefits far outweigh the short-term challenges. If past leaders had adopted this forward-thinking strategy, Nigeria’s external reserves could have accumulated hundreds of billions of dollars. These funds could have been used to spur massive development across all sectors of the economy.
By floating the Naira, Tinubu is laying a solid foundation for future economic growth. This policy will:
- Encourage Foreign Investment:
A market-driven exchange rate assures investors of transparency, attracting much-needed foreign capital. - Boost Export Competitiveness:
A realistic exchange rate makes Nigerian goods and services more competitive on the global market. - Enhance Reserve Accumulation:
With reduced pressure to defend the Naira, external reserves can be preserved and used for strategic national development.
A Bold Step Towards Economic Transformation
Tinubu’s bold decision to float the Naira reflects his commitment to building a resilient economy. It is a policy rooted in pragmatism and a vision for long-term prosperity. If supported, this move could transform Nigeria’s economic landscape, creating a legacy that future generations will celebrate.
As the saying goes, “If you want to be the best, think like the best.” Tinubu’s decision to embrace global best practices positions Nigeria on the path to becoming a leading economy. The journey may be challenging, but the destination promises a brighter future for Nigeria and its citizens.
By standing solidly with Tinubu today, Nigerians are investing in a future of economic stability and prosperity. Let us support this transformative policy and work together to build a nation we can all be proud of.
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