… Inflation Soars from 11.4% in 33.8%
… CBN Raises MPR 13 times in 2 years
By Niyi Jacobs
The Nigerian Naira has suffered a staggering 438% depreciation over the last six years, plunging from N307 to the US Dollar in 2019 to an all-time low of N1650 in 2024. This sharp decline has compounded the country’s economic challenges, pushing inflation to 32.7% as of September 2024, up from 11.4% in 2019.
The six-year slide reflects a combination of structural weaknesses in the economy and global economic pressures. A significant factor has been dwindling foreign exchange reserves, driven by declining oil revenues, Nigeria’s primary source of foreign earnings. Despite the Central Bank of Nigeria (CBN) introducing various foreign exchange controls and interventions, the currency has remained on a downward trajectory.
Inflation has surged in tandem with the Naira’s devaluation, as the cost of importing goods skyrockets. This has placed immense pressure on households, with the prices of essential commodities and services rising beyond the reach of many Nigerians. The situation has eroded purchasing power, deepened poverty, and worsened living standards.
The business environment has also taken a severe hit. Companies that rely on imported raw materials have faced steep production costs, forcing many to scale down operations, increase product prices, or close their doors entirely. This has led to job losses and heightened economic insecurity across the country.
Between April 2022 and September 2024, the CBN raised the Monetary Policy Rate (MPR) 13 times, hoping to curb inflation and attract foreign investments. However, these aggressive hikes have had minimal impact, as structural issues such as poor infrastructure, policy inconsistency, and corruption deter investors from committing to the Nigerian market.
The steep depreciation of the Naira and the inflationary spiral have exposed the vulnerabilities of Nigeria’s oil-dependent economy. Economists argue that without decisive reforms, the situation could worsen. Recommendations include diversifying the economy by boosting agriculture, manufacturing, and technology sectors to reduce reliance on oil revenues. Improved fiscal discipline, better management of foreign reserves, and policies aimed at increasing export earnings are also crucial.
If these measures are not implemented promptly, the Naira’s freefall could continue, further exacerbating economic instability, poverty, and social unrest. For Nigerians, the need for a sustainable economic strategy has never been more urgent.
