Nigerian public have completely lost faith in their currency naira (N). Ask an average Nigerian a currency of choice, naira will not be mentioned. The rejection of naira is so bad that even during PDP and APC primary elections the delegates were accepting bribes in foreign currency especially in US dollars.
The greatest influence on the viability of any currency is the faith the people have in it. Money is basically a medium of exchange. The more people believe in the currency, the more the currency thrives.
What caused the lost of faith in Naira? Nigerians are not blind; they still have senses of sight and feel. They perceived rightly that their leaders are mismanaging the economy and naira.
Naira value is nose-diving precipitously because Central Bank of Nigeria (CBN) mechanism for controlling naira is almost ineffective in the absence of strong economy and competent executive managers. The monetary policy is overused and overstretched. It has become inelastic and ineffective.
Momentarily, CBN the country reserve bank was offering 450-465 Naira per dollar, while at parallel market (black market) Naira was trading above 615 a dollar. In addition, there is shortage of dollar for marketers. The business community needs foreign exchange to buy raw materials for their manufacturing industries.
To improve the situation of Naira, CBN lunched a scheme to increase dollar inflow and to retain accumulated dollar. But it failed.
“The Central Bank of Nigeria (CBN)’s attempt to incentivize the country’s forex market through the so-called “Naira for Dollar” scheme has failed. This is evidenced by the local currency’s plunge of more than 25% since the launch of the incentive scheme in March 2021.”
“The CBN’s scheme that encourages recipients of cross-border remittances to cash out via formal channels failed to incentivize the forex market and has therefore not achieved the bank’s goal of halting the naira’s depreciation.”
Nigeria economic woe continues, the inflation rate at 17.7 percent is putting pressure on Naira. The price of foodstuff is escalating, beyond the reach of over 80 percent of Nigerians.
The future of Naira is bleak. Nigeria used 98 percent of her revenue to service her debts. By 2023 Nigeria may likely default on her debt servicing as her anticipated generated revenue dips below the national debt. Nigeria debt is expected to reach N45 trillion by the end of 2022, together with above 33 percent unemployment rate.