33 Years Of Disastrous Devaluation Of Naira In Nigeria (1986-2026)
BY INWALOMHE DONALD
NIGERIA has implemented disastrous devaluation of Naira for more than 30 years. Since the naira was introduced in 1973, replacing the pound as Nigeria’s currency, its value against the dollar has steadily declined, largely due to the economic priorities of different governments. At first, 1USD was worth 68 kobo. The devaluation of the Nigerian Naira over the last three decades represents a disastrous historic shift from relative parity with the US Dollar in the 1980s to a heavily depreciated and flexible market rate. By 2026, up to 141 million Nigerians are projected to live in poverty, representing roughly 62% of the population due to devaluation and economic policies.
This absolute number has steadily increased over the decades, rising from approximately 35 million in 1985, to 89 million in 2016, and 133 million in the 2022 Multidimensional Poverty Index. 1986–1996: Following the introduction of the Structural Adjustment Programme (SAP) in 1986, poverty steadily rose. By 1996, roughly 67 million Nigerians (about 65% of the population) were living in poverty. 2000–2010:Despite periods of national GDP growth, the absolute number of impoverished citizens grew to over 68 million by 2004. By 2010, theBBC News reported that 60.9% of the population lived in absolute poverty. 2016–2020: The economic recessions pushed the poverty threshold higher, leaving 89 million Nigerians below the poverty line by 2016
A timeline of the devaluation over the last few decades:
1986 (SAP Implementation): The turning point of the Naira began under General Ibrahim Babangida with the introduction of the Second-Tier Foreign Exchange Market (SFEM) and the Structural Adjustment Programme (SAP). This policy effectively ended the peg that previously valued the Naira stronger than the US Dollar.
1999–2015: Throughout the return to democracy and the oil boom era, the currency experienced gradual depreciation, moving steadily from roughly ₦22 to the dollar at the start of the Fourth Republic to about ₦150-₦199 to the dollar by the end of the Goodluck Jonathan administration.
2016–2022: Plunging global oil prices and pressure on external reserves forced the Central Bank of Nigeria (CBN) to abandon a rigid peg, leading to successive devaluations and the creation of multiple exchange windows. The official rate drifted past ₦450 to the dollar by 2023.
June 2023 (Market Liberalization): The newly elected administration of President Bola Tinubu unified the country’s multiple exchange rate windows into a floating, market-driven system. This caused the Naira to depreciate sharply to find its real value, fluctuating between ₦1,200 and nearly ₦1,900 to the dollar at its lowest points before further government interventions
Currency devaluation and the removal of the fuel subsidy have severely damaged the Nigerian economy; they have equally undeniably triggered an unprecedented cost-of-living crisis, massive inflationary pressure, and extreme hardship for millions of Nigerians. These twin policies, implemented to correct structural distortions and boost long-term government revenue, created severe short-term economic shocks. There is no developing economy like Nigeria that can survive these twin policies at the same period. The devaluation has pushed more than 144 million of Nigerians into extreme poverty.
I must criticize the Bola Tinubu administration for removing the fuel subsidy and floating the naira at the same time, because both decisions have brought the country to its knees. There is no developing economy like Nigeria that can survive the two policies. President Tinubu has borrowed more money even after the removal of fuel subsidy. President Tinubu has taken more loans without the execution of capital projects of 2024-2025 budgets. The only section of the budget that President Tinubu understands today is the borrowing plan. He has ignored the capital expenditure and focused on the recurrent expenditure of 2024-2025 and 2025-2026budgets. President Tinubu has lost track of capital expenditure of the budgets since 2023 that can grow the economy.
President Tinubu does not understand that the devaluation of currency is not the sole solution of Exchange rates instability in poor and developing countries like Nigeria which are primarily driven by their reliance on primary commodity exports, high vulnerability to global market shocks, heavy external debt, and the need to manage foreign reserves. Unlike wealthy nations with diversified economies, these factors cause their currencies to fluctuate based on a few specific variables: The currency used in the Niger Republic which economically depends on Nigeria is significantly stronger than the Nigerian Naira. Niger uses the West African CFA Franc, which trades at more than double the value of the Naira.
Naira devaluation was part of structural adjustment programme (SAP) which is now a mandatory devaluation which was forced on Nigeria by IMF/World Bank under the pretext that the nation is under the pressure of scarcity of foreign currencies. Germany was the first nation to be forced to adopt the German SAP in the period 1919-1923. The World Bank and IMF did not exist then. Germany as the leader of the Axis powers lost World War I to the Western Allied powers.
The Nigerian SAP has sapped and disgraced Nigerian for 38 years. The Convertibility of a currency is not achieved through mandatory devaluation. A convertible currency is one owned by a productive nation. It is the currency of an economy which produces a non-negligible proportion of the total quantity of goods produced in the world in a year. Production has been dropping since 1986. So, unemployment has been increasing, true inflation, poverty and insecurity has been increasing. SAP was introduced to humiliate Nigeria and other African nations.
While the naira’s devaluation has severely impacted the Nigerian economy—triggering record-high inflation, shrinking purchasing power, and increasing operating costs for local businesses—labeling it an outright “destruction” is a subject of ongoing debate among economists. Devaluation has introduced devastating blows to Nigerian economy.
The price increases followed the 25 May, 2023 devaluation of the naira, from N379/$1 to N410.25/$1. By 12 June, the naira was exchanging at N502/$1 on the parallel market, where the majority of Nigerians purchase their foreign exchange.
All development programmes implemented by Nigeria since independence has always been conceived in Britain and America. Nigeria began with National Plans 1960-1985, then the Structural Adjustment Programme(SAP)1986-now. The programmes conceived in the West for Africa usually lack growth-promoting elements. They always promote unemployment, poverty and abstract and fruitless arguments. Nigeria would not have adopted the national plans and SAP had Nigerians the competence to assess a development programme.
The naira exchanged 194 units to one dollar in the official market up to the month of May 2015. It experienced more devaluation in the period 2015-2023, N460 to the dollar. In May 2023, it almost exchanging N2000 to the dollar.
Is the devaluation of the naira the way forward for the Nigerian economy? No! Mandatory currency devaluation ruins a nation; it is not the way forward for any nation. The Nigerian Foreign Exchange Market was introduced to Nigeria as part of the SAPs introduced to indebted African nations by the World Bank and IMF in the early 1980s.
Unifying foreign exchange windows and floating the Naira caused the currency to plummet against the US dollar. While the government argues this is a necessary structural correction, citizens always bear the immediate burden of skyrocketing costs for food, fuel, and transport. Even though the minimum wage was increased, galloping inflation and devaluation have continually offset these gains, rendering paychecks insufficient to outpace basic living costs.
Nigeria’s twin economic reforms—the removal of the fuel subsidy and the floating of the naira—were introduced in 2023 to eliminate massive state distortions and attract foreign investment. Together, they have driven up the cost of living and spurred widespread inflation, while also significantly boosting government revenues that have no value when compared against the dollar.
Inwalomhe Donald writes via inwalomhe.donald@yahoo.com
