If you were to guess the one economic problem that every Nigerian and business has struggled with regardless of their wealth status in the country, it would be the persistently declining exchange rate. In the last 38 years, the United States Dollar value has soared 55,998 percent against Naira in the official exchange rate market, moving from N0.67 to N379 as at Friday market close. This unequivocally puts Nigerian Naira among the worst performing currencies in the world in the last 4 decades.
One of key mandates of the Central Bank is to ensure exchange rate stability; it’s far too obvious how woefully the apex bank has performed at this task. Asides suffering annual average devaluation of around 18 percent per annum since 1982, the economy periodically struggles with multiple exchange rate, dollar rationing and delayed foreign transaction payments resulting in huge production losses, weaker purchasing power and huge foreign exchange losses for businesses and individuals.
While the exchange rate has been devalued by every single one of Nigeria’s last 5 CBN Governors between 1982 and today, some Governors have fared far better than others in the management of the foreign exchange under their tenure.
The most superior exchange rate management performance was achieved by Sanusi Lamido Sanusi who under his stewardship the Central Bank managed to keep annual devaluation rate around 1.2 percent during his 5- year tenure as CBN Governor. Lamido Sanusi was CBN Governor between 2009 and 2014, during this period crude oil price rallied 38 percent from $80 to $110, proving the required earnings support to ensure Naira stability. Under Sanusi, dollar exchange rate moved from N148 to N157.
Closely behind Sanusi was Charles Soludo who achieved an average annual devaluation of just 2.1 percent during his 5-year tenure between 2004 and 2009. While Soludo is widely remembered for the banking industry recapitalization, he is not given due credit with his impressive management of the Naira despite the crash in crude oil price in 2008. Crude oil price rallied 143 percent between 2004 and 2008 before crashing by 41 percent between 2008 and 2009 during the Global Financial Recession. In 2004, crude oil traded at $37.66, rose to $91.48 in 2008 and fell to $53.48 in 2009. Under Soludo, the dollar exchange rate moved from N133 to N147.
Joseph Oladele Sanusi who also spent 5 years at the helm of CBN between 1999 and 2004 was the third best Exchange rate manager amongst the past 5 CBN Governors. During his tenure, the average annual devaluation rate was just 7 percent although crude oil price grew by 127 percent during his 5 year tenure. Slow devaluation pace of this nature now seems like a lifetime ago considering the rate at which Naira has been devalued in recent times.
Under the stewardship of Godwin Emefiele, the current CBN governor, average annual devaluation in his active 6-year tenure is 15.8 percent. In the last 6 months alone, Naira has been devalued twice as Nigeria battles to manage its currency pressure due to the oil price crash of 2020. When Emiefele began his tenure, dollar exchange rate moved from N157.3 to N379 on Friday. Crude oil price has fallen roughly 60 percent since Emefiele took charge of CBN.
The worst 2 exchange rate managers were Abdulkadir Ahmed and Paul Agbai Ogwuma who under their tenures, average annual devaluation rates were 37.2 percent and 27.2 percent respectively. Ahmed led the Central Bank between 1982 and 1993, during this period, dollar exchange rate moved from N0.67 to N21.88, marking the worst decade for Nigeria’s Naira. Ogwuma was Governor between 1993 and 1999 and the dollar exchange rate moved from N21.88 to N94.88 at the end of his tenure.
Note: Sarah Alade who was acting CBN Governor for just 4 months between February and June 2014 was excluded from this analysis.
‘ In the last 6 months alone, Naira has been devalued twice as Nigeria battles to manage its currency pressure due to the oil price crash of 2020 ’
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