Naira’s loss at the official and parallel markets upsets Tinubu, CBN’s $1 trillion GDP plan

The Governor of the Central Bank of Nigeria, Olayemi Cardoso, recently revealed that President Bola Tinubu’s seven-year economic plan for Nigeria is to achieve a $1 trillion economy.

The CBN governor said to achieve the ambitious goal, Nigerian banks must recapitalize to carry the dream and vision of a $1 trillion GDP economy.

Banks to recapitalize Cardoso did not disclose the amount the banks would require as their minimum capital base. Still, analysts speculate that the apex bank would require that the banks recapitalize to the tune of N trillion naira.

However, the Nigerian currency has been facing an uphill battle against the US dollar since June 14, 2023, when the Nigerian government announced the floating of the local currency.

Experts believe that Nigeria to achieve the dream of a $1 trillion economy, it needs to have a robust Forex reserve, a solid and competitive currency, and vibrant foreign exchange markets.

Naira depreciation casts doubts on recapitalization goals

On Monday, November 27, 2023, the naira capitulated against the dollar, depreciating by N19 to the dollar. The naira fell to N814.60 to a dollar on Monday, November 27, 2023, as against the N794.89 it traded on Friday, November 24, 2023.

At the parallel market, the naira also lost some ground against the US dollar, depreciating to N145 to a dollar on Monday, November 27, 2023, as the N140 traded on the streets on Saturday, November 25, 2023.

Expert points way forward

According to Tony Ijeh, an economist and banker, if the naira continues to fall against the US dollar the way it is, the dream of a $1 trillion economy would be a mirage.

“To have such a strong economy, Nigeria needs to rethink many strategies. We are an import-dependent country. That dream is dead on arrival if the government continues to import most of its necessities. An import-dependent economy cannot grow to become a $1 trillion economy. We need to start producing and exporting, even if it is to other African countries,” Ijeh said.

CBN discloses reason naira gained Over N100/$, says 31 banks paid to offset FX backlogs

Legit.ng reported that the Central Bank of Nigeria has made tranche payments to 31 banks to clear the Forex backlogs plaguing the FX market.

The bank also said it has set up foreign exchange mechanisms to address FX issues.

The governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, disclosed this on Friday, November 24, 2023, at the bankers' dinner in Lagos.