Central Bank of Nigeria
Exchange rate policies, Nigeria
This article examined foreign exchange policy measures adopted since 1986. Nigeria's economic policy prior to 1986 was characterized by the overwhelming influence of oil and public sector dominance of productive activities. Prior to this period, the economy faced serious crisis and was characterized by an over-valued currency, low oil receipts, depleted external reserves and high import bills, emergence of trade arrears and rapid accumulation of debts. The various measures adopted were aimed at restructuring the economy and diversifying its revenue base, as well as achieving a realistic exchange rate for the naira. An appraisal of these exchange rate policies indicated that their impacts have been mixed. The use of a flexible exchange rate had eliminated the over-valuation of the naira. The parallel market premium has also been narrowed from about 60.0 per cent in 1986 to about 11.0 per cent in 2002. There was significant improvement in capacity utilization and real output growth between 1986 and 1990. However, subsequent periods recorded less than satisfactory growth rates. The current account balance as a percentage of GDP which recorded an average deficit of 4.3 per cent in the 1980-85, made an impressive tum around with a plus of 3.4 per cent in 1986-1990. Thereafter, it declined to a deficit of 1.1 and 1.5 per cent in 1991-95 and 1996-2001, respectively. In terms of composition, non-oil exports recorded some modest success as hitherto relatively unknown items such as Peugeot cars, asbestos, empty bottles and food items etc featured in our export list at least at the initial period following SAP.
CBN Economic and Financial Review (EFR)
External Sector Division (2003). A review of Nigeria’s exchange rate policies since deregulation in 1986. Economic and Financial Review. 41(3), 11-44.