Currency devaluation is often marketed as a silver bullet, an economic fix that boosts exports, attracts investment, and enhances competitiveness. It’s a theory rooted in the logic of market economics: Make your currency cheaper, and your goods become more attractive abroad.
But in Nigeria, that story collapses under the weight of reality.
From June 2023 to May 2025, the naira has depreciated by over 230 percent against the US dollar, plunging from N471/$1 to more than N1,555/$1 on official markets. The shift, spurred by reforms from President Bola Tinubu’s administration to unify the exchange rate, was intended to correct distortions and signal market openness. Yet the results have been anything but encouraging.
But instead of helping Nigeria sell more goods abroad, the naira’s fall has only made life harder. The cost of bringing things into the country has jumped, while the goods Nigeria sells apart from oil haven’t grown much.
According to the National Bureau of Statistics (NBS), Nigeria’s total exports rose to N19.17 trillion in early 2024, but oil alone made up more than 80 percent of that. Non-oil exports were just N3.68 trillion, showing that the country still depends mostly on crude oil.
Meanwhile, the cost of imports went up nearly 40 percent in just one quarter mainly because fuel, machines, and important chemicals are now more expensive. So even though Nigeria earned more from exports, it was mostly thanks to oil, not because the country is making and selling more products.
So, why hasn’t devaluation worked? The reason is simple: Nigeria doesn’t produce enough. Unlike countries like China or Vietnam that have strong factories and export a wide range of products, Nigeria mostly imports what it needs and sells raw materials like crude oil and cocoa, which don’t benefit much from a weaker currency.
For Nigerians, the fallout has been severe. Food inflation has accelerated, with staple prices doubling in less than a year. A bag of rice that cost N35,000 in mid-2023 now sells for over N80,000 in Lagos. Cooking gas prices have nearly doubled. Bread has become a luxury for many.
The World Bank estimates that around 87 million Nigerians live in extreme poverty. The devaluation has pushed many more toward the brink, forcing households to ration food, abandon protein, and return to foraging for cassava peels and maize husks, meals long associated with hardship.
Proponents of devaluation argue that a weaker naira can attract foreign direct investment (FDI) and reduce pressure on foreign reserves. In reality, the numbers tell a more complicated story.
According to data from the Central Bank of Nigeria (CBN) and UNCTAD, Nigeria’s FDI rose from $895 million in 2022 to about $1.87 billion in 2023, before slipping again to $1.08 billion in 2024. While these figures reflect some recovery after years of volatility, they remain modest and largely unrelated to the currency’s depreciation.
“Devaluing a currency in a non-industrialised economy only worsens living conditions,” said Chris Nemedia, former executive director of research at the CBN. “Since devaluation began, the average Nigerian’s standard of living has declined, in spite of the country’s vast resources.”
Recent advice from UK-based Chatham House urging Nigeria to maintain a weak currency to boost competitiveness has sparked criticism among local economists and business leaders.
“This prescription doesn’t reflect Nigeria’s current economic realities,” said Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise. “We have moved beyond the era of overvaluation. The exchange rate now reflects market dynamics. What we need is stability, not further depreciation.”
Yusuf added that the government’s reforms have narrowed the gap between official and parallel market rates, a sign of improved transparency. “We must now consolidate the gains, not erode them with continuous devaluation.”
Moses Igbrude, national coordinator of the Independent Shareholders Association of Nigeria (ISAN), dismissed the Chatham House suggestion as ‘self-serving.’ According to him, “No foreign interest will build our economy for us. Our economy is based on raw commodity exports, not manufacturing. Devaluation offers little benefit and much harm.”
Devaluation, in its current context, functions more as a poverty accelerator than a competitiveness booster. Multinationals and dollar earners benefit, but for small businesses and workers paid in naira, the crash has meant layoffs, closures, and eroded purchasing power.
Salaries remain largely static. Inflation is wiping out savings. Small and medium-sized enterprises, already strained by erratic power supply, poor logistics, and insecurity, are unable to pass on higher input costs to customers, leading many to shutter operations.
Experts agree that Nigeria needs structural reforms, not short-term monetary fixes. “We must invest in infrastructure, reduce insecurity, and build the capacity to produce at home,” said Nemedia. “Only then can currency policies begin to yield the intended results.”
Devaluation, when deployed in the wrong context, becomes a blunt instrument, one that taxes the poor, distorts prices, and hollows out the middle class. For Nigeria, the path to competitiveness lies not in cheapening the naira but in building an economy that can produce, compete, and grow on its own terms.
Until then, every currency slide is less a step towards prosperity than a deeper fall into inequality and stagnation.
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