Economic and Policy Review

Nigeria’s Economic Transformation Roadmap: Medium-Term Priorities

2024-07-23T11:32:10+00:00

No Abstract

Managing a Liberalised Exchange Rate System in Nigeria: Lessons from Indonesia

2024-07-23T11:36:55+00:00

This paper examines Indonesia's exchange rate management experience following the 1997/1998 Asian financial crisis to draw useful lessons for Nigeria's recent transition to a liberalised exchange rate regime. It describes one of Nigeria's historical exchange rate policy challenges, emphasising the role of rent-seeking behaviour and corruption. Drawing on Indonesia's successful adoption of a floating exchange rate regime, the paper highlights vital lessons Nigeria can learn, such as central bank independence, a managed floating exchange rate regime, and effective foreign exchange supply and demand management. The analysis also underscores the importance of private sector engagement with the central bank for sustainable exchange rates and macroeconomic stability.

Unstraining Productivity Growth in Nigeria: The Exchange Rate Perspective

2024-07-23T11:39:29+00:00

The volatile movement in Nigeria's exchange rate constitutes a severe headwind to the economic activity in the country and the eventual performance of productivity and economic growth. This article explored the interrelationship between exchange rate volatility and productivity in Nigeria. It reviewed the literature on the linkages between productivity and exchange rate volatility and highlighted the different dimensions of relations between the two economic variables. The article highlighted the drivers of the recent turbulent movement in the Nigerian foreign exchange market, categorising them based on the demand and supply sides of the market. On both sides, the escalation of market players' speculative behaviours has amplified the pressure on Naira. Meanwhile, the dependence on imports for raw materials, intermediate inputs and finished products primarily drives exchange rate volatility. The article also strongly emphasised the need for harmonising foreign exchange management guidelines and clarity and transparency in managing the foreign exchange market.

The eNaira as a Tool for Financial Inclusion: Challenges and Recommendations

2024-07-23T11:43:23+00:00

Following the COVID-19 crisis, digitalisation and using online payment systems rather than cash accelerated. With this, the relevance of Central Bank Digital Currencies (CBDC) became even more pronounced, spurring Nigeria to launch the eNaira. Yet, it remains to be seen whether there will be a broad acceptance of the eNaira in Nigeria. The Central Bank of Nigeria (CBN)'s primary goal in launching the eNaira is to increase financial inclusion in Nigeria. While millions of Nigerians have access to financial products and services, the Foreign Commonwealth and Development Office (FCDO) estimates that about 38 million adult Nigerians do not have access to essential financial products and services. The eNaira could fill this gap. The paper considers whether the e-Naira can drive financial inclusion in Nigeria. To do this, it examines the eNaira to determine whether its qualities as a CBDC can drive financial inclusion. The paper also assesses the success or lack thereof of the eNaira and the challenges of implementing it in Nigeria. Based on this assessment, the paper makes some policy recommendations to enable e-Naira to gain more acceptance in Nigeria.

Policy Imperatives for Strengthening Value Addition in Nigeria’s Agricultural Sector

2024-07-23T11:46:32+00:00

This paper examines the potential for building on the existing policy framework to strengthen value addition in Nigeria’s agricultural sector. In doing so, we highlight its positive impact on food security, export revenue, import substitution-driven job creation, and economic growth. Drawing on Agricultural Structural Transformation theory, we identify value addition as a key mechanism for transitioning from primary to secondary and tertiary production. The paper concludes with four actionable policy recommendations for unlocking Nigeria’s agricultural potential and achieving a more stable and resilient economy. Our evidence-based recommendations, which include policy imperatives such as Public-Private Partnerships, as well as government support for technology adoption, tax and investment incentives to promote value-addition in economic clusters with crops where Nigeria has a comparative advantage and proactively deepening market linkages, are informed by a review of case study evidence from Thailand's rice production, the Netherlands dairy and egg sectors, China's Special Economic Zones (SEZs), Uganda’s Cultivate Africa Future Fund’s Agriculture PPP Project (CultiAf-Ag-PPP), and Kenyan tea industry.