Despite all efforts by the Central Bank of Nigeria (CBN) to strengthen the Naira against the Dollar, Nigeria’s Naira continues to face a relentless decline, prompting financial experts to emphasise the need for accelerated productivity as the key to strengthening it.

It would be recalled that the value of the Naira has dropped steadily since June 2023, when the domestic currency began to decline at a rate of N471.67 per dollar due to forex changes.

The official FMDQ market value of the Naira on Tuesday, November 7, 2023, in Zone 4 Abuja, was 874.71 per US dollar. On Wednesday, November 8, it closed at 996.75 per dollar, down 122.01 Naira from the previous Wednesday.

New Telegraph recalls that when the Naira traded at N993.82 per dollar on October 30, this represented a notable devaluation on the official currency window.

Apart from the official market, the parallel market also experienced a decrease in value, with the Naira falling from 1100 Naira on Wednesday to 1140 Naira per Dollar.

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The selling cost for a dollar stayed at N1140, but a Bureau de Change operator saw a surge in the buying rate of dollars to N1400 on Thursday from N1100 on Wednesday.

Friday, November 10th, saw these rates stay unchanged. Because of the government’s policy to strengthen the Naira, the gap between official and parallel market rates has declined by 15% to N179 with N996.75 per dollar, despite a high turnover of $228.54 million and better liquidity. Despite this, pressure on the Naira is still significant.

The CBN attempted to boost the Naira last week by paying off foreign exchange backlogs to commercial banks and airlines, which resulted in this decline.

In light of this, experts argue that a significant boost in productivity is crucial for the Naira’s stability and growth. By enhancing productivity across various sectors of the economy, Nigeria can potentially increase its export capacity, attract foreign investments, and ultimately strengthen its currency.

Addressing the ongoing challenges faced by the Naira requires a comprehensive approach that goes beyond monetary policy interventions. It necessitates a concerted effort to enhance productivity through the implementation of policies that promote innovation, efficiency, and competitiveness.

According to Mr Okechukwu Unegbu, a financial expert, only accelerated productivity will stabilise and strengthen the Naira.

Unegbu, a past president of the Chattered Institute of Bankers of Nigeria (CIBN), said that the Naira is in a pitiable situation and requires commitment by the government to salvage it.

“The crude oil market is on a downward trend; our bonny light is not doing well in the international market and we have very little window to manoeuvre because the Naira and our productivity do not align.

“There is no economic theory that can change the situation. The only way to bridge balance of payments deficits is to increase productivity,” he said.

A Professor of Capital Markets at the Nasarawa State University, Keffi, Uche Uwaleke, said that the economic fundamentals required to support a naira float are still weak, especially about sources of forex.

According to Uwaleke, who is the Director of the Institute of Capital Market Studies at the university, the unification of exchange rates as done by President Bola Tinubu, should not be a one-step process.

“It should be implemented over a period of time, however, short it may be. Empirical evidence suggests that reforms are more successful when they are sequenced and implemented in phases.

“So, while fiscal and monetary policy reforms are welcome, absolute care should be taken to strike the right balance and minimise their unintended consequences,” he said.

Uwaleke said that the recent, second-quarter real Gross Domestic Product (GDP) performance was also disturbing.

“Growth was driven by the Non-oil sector. The oil sector ranked considerably on account of the reduction in crude oil production

“The Non-oil sector performance was powered by the Services sector (4.42 per cent), especially by telecoms, trade and financial services.

“In my view, this identified growth pattern, weighted in favour of the services sector, is not healthy for a developing economy such as ours.

“Economic growth does not appear inclusive reflecting in rising unemployment and poverty levels, which the new NBS methodology attempts to mask,” he said.

He said that it is time to reset the faulty economic structure, leveraging technology in favour of productive sectors like industry and agriculture.