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‘Nigeria Needs $100bn Yearly To Stabilise Naira’ - NEW TELEGRAPH
Analysts forecast that Nigeria will need an annual inflow of $100 billion in foreign exchange (FX) to stabilise its currency and support economic growth including revenue from crude oil exports.
This bold projection was shared by Mr. Ugodre Obi-Chukwu, Managing Director of Nairametrics, during a comprehensive macroeconomic review at the Finance Correspondents Association of Nigeria (FICAN) quarterly forum.
Delivering his address, titled “Nigeria in Transition: Reforms, Global Shifts, and Strategic Opportunities,” Obi-Chukwu explained that the target was achievable through diversified sources: $50 billion from crude oil exports, $20 billion from diaspora remittances, $20 billion from capital importation, and the remainder from autonomous inflows.
“In 2014, when the exchange rate was $146, and again in 2018-2019 at $360, we saw stability in the forex market due to capital flows into the economy, which hovered between $80 billion and $100 billion annually,” Obi-Chukwu noted.
He emphasised that robust FX inflows are critical to maintaining a stable exchange rate. Obi-Chukwu who was accompanied by his team identified rising domestic interest rates and potential reductions in U.S. rates as catalysts for capital importation in 2024.
On foreign trade, he underscored Nigeria’s trade shifts from Western to Eastern partners, with China, India, Vietnam, and Taiwan emerging as dominant trading partners due to price sensitivity and cost-effective imports.
“Nigeria’s trade realignment with the East explains the government’s renewed engagement with BRICS and initiatives like the NairaYuan Swap.
These partnerships reflect a strategic shift as Nigeria seeks alternatives to mitigate the constraints of Western-dominated trade and finance,” he said.
Obi-Chukwu highlighted a growing trend of Western companies exiting Nigeria due to challenges in converting local profits into meaningful dollar returns.
In contrast, Asian companies are thriving, driven by different metrics focused on long-term growth and market penetration rather than short-term earnings.
“For Asian firms, Africa represents a strategic goldmine. With access to efficient capital structures, including government-backed funding and pension investments, they are less constrained by quarter-on-quarter earnings expectations,” he explained.
He cited the acquisition of Diageo by Asian-owned Valorant as an example of this shift and projected an uptick in similar deals as Asian and Nigerian firms capitalize on opportunities left by departing Western entities.
