Muhammadu Buhari, President of the Federal Republic of Nigeria
Nigeria, though rated the largest economy in Africa is contending with hard times.
Following the fall in global oil prices and the weakening currency which has been under devaluation pressure in recent times, economic experts foresee hard times for Nigerians and the possibility of devaluating the Naira.
Agence France-Presse (AFP) reports that dollar reserves stands at $28bn; $20bn less than in April 2013.
This development portends a looming downfall for Nigeria that is import-dependent for almost everything; from milk and machinery to petroleum products.
International Monetary Fund (IMF) projected Nigeria to have grown by 3.0% in 2015, its slowest pace in over a decade.
Nigeria, unlike Norway that invested hundreds of billions of dollars of its oil money into stocks, bonds and real estate, depends majorly on revenue from oil.
By the reality in the global oil market, the country is exposed to economy down turn as crude oil prices have slumped more than two-thirds since $100 per barrel in mid-2014.
AFP also noted that Nigeria is now in limbo, badly needing foreign investment but unable to get any.
Razia Khan, an economist at Standard Chartered Bank, was quoted by AFP to have said it would be difficult for Nigeria to sustain foreign exchange with this reality.
“If you’re not attracting those inflows and you’re not generating a surplus from the export of oil, then it’s going to be more difficult to sustain foreign exchange reserves where they are,” Khan projected.
In same light, Africa News President in its report claimed Muhammadu Buhari has not ruled out the devaluation of the Naira in order to lure investors without “killing” the currency in any way.
“The current situation creates a lot of anxiety and uncertainty because nobody knows how to anticipate and everyone complains about the government’s lack of orientation,” Anna Rosenburg, expert in emerging markets for Frontier Strategy Group, was quoted as saying,”
Last week, President Muhammadu Buhari stated devaluation of the Naira is one decision he was not ready to take at the moment.
Buhari insisted that further devaluation of the Naira would kill the currency and further inflict more hardship on the poor citizens.
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