The Federal Government has spent a staggering $8 billion over the past few months in a bid to stabilize the nation’s embattled currency, the naira. Despite these immense financial interventions, many Nigerians remain skeptical about the impact on their daily lives, as inflation continues to ravage the economy.
Bismarck Rewane, the Chief Executive Officer of Financial Derivatives Company, revealed the figures during an appearance on Channels Television’s News at 10 on Friday, offering a sobering account of the measures taken by the government to stem the tide of rising inflation and stabilize the exchange rate.
Rewane’s comments come in the wake of the Central Bank of Nigeria’s (CBN) recent decision to maintain the Monetary Policy Rate (MPR) at 27.50%. The move, announced by CBN Governor Olayemi Cardoso on Thursday, is part of broader efforts to manage inflationary pressures and the volatile exchange rate. However, according to Rewane, the government’s substantial financial expenditure on defending the naira is just one part of a broader, ongoing strategy that includes borrowing billions of dollars to sustain fiscal stability.
“The government has spent almost $8 billion to support the naira at current levels,” Rewane said. “That’s a lot of work, but it’s also about raising additional funds through debt instruments. We’ve borrowed $4 billion through bond issues.”
Rewane, a prominent economic analyst, emphasized that while the government’s efforts were commendable, the real challenge lay in the market dynamics that affect average Nigerians. He questioned the effectiveness of such a large expenditure, especially when market realities tell a different story from official reports.
The Strain on the Naira
The naira has been under intense pressure for several years due to a mix of external shocks, domestic economic mismanagement, and the ongoing global energy crisis. Despite government interventions, such as the $8 billion support package and the $4 billion in bond issues, the naira continues to struggle against major global currencies. As of today, the naira is still facing a turbulent path on both the official and parallel markets.
In his remarks, Rewane highlighted how the Central Bank’s interventions, including frequent injections of foreign currency into the system, have only offered short-term relief, with little structural change in the country’s macroeconomic fundamentals. For Nigerians, the impact of this constant intervention is felt most acutely at the market level, where prices for basic goods and services remain stubbornly high.
“The naira’s constant decline impacts the purchasing power of the average Nigerian. Prices for imported goods and commodities are rising, and inflation continues to climb,” Rewane added.
Inflation Confusion: Official vs. Reality
One of the most contentious issues in the current economic landscape is inflation. The National Bureau of Statistics (NBS) recently rebased Nigeria’s inflation data, causing confusion and debate across the country. The new numbers show a significant decline in inflation, suggesting that it has dropped from 34.8% (using the old measurement) to 24.4% under the new methodology. However, this new figure stands in stark contrast to the reality that many Nigerians experience every day.
While government figures suggest a reduction in inflation, Rewane is not convinced. He pointed out that despite the adjustments in the official inflation metric, everyday Nigerians continue to feel the pinch of rising prices, especially for food items.
“There’s no way inflation has reduced by 10% in such a short time,” Rewane said skeptically. “The man on the street does not believe that inflation has come down as sharply as that. What people are experiencing is much higher.”
Nigerians have long struggled with high prices for food and essential goods, and the latest inflation numbers have left many confused. According to Rewane, the inflationary pressure felt by ordinary Nigerians is likely closer to the 33% mark, based on market surveys.
“Using the old method, inflation was 34.8%, which was already high,” he explained. “But the new method that reports a sharp drop to 24.4% just doesn’t resonate with what Nigerians are experiencing in their everyday purchases.”
This discrepancy has sparked criticism from economic experts who argue that the rebased figures do not reflect the true state of the economy. The market, in Rewane’s view, offers a clearer, more accurate picture of inflationary pressures that the average citizen feels. With prices for basic commodities remaining high, the official inflation figure has failed to provide the necessary insight into the struggles Nigerians face.
CBN’s Position and the Road Ahead
In a statement following the recent Monetary Policy Committee (MPC) meeting, CBN Governor Olayemi Cardoso highlighted the moderation in the price of Premium Motor Spirit (PMS) and the recent appreciation of the naira as signs of progress.
“The MPC noted with satisfaction the recent macroeconomic developments which are expected to positively impact the price dynamics in the near to medium term,” Cardoso said. “These include the stability in the foreign exchange market and the appreciation of the exchange rate.”
However, Cardoso acknowledged that inflationary pressures, particularly in food prices, remain a persistent challenge. He further noted that the CBN would continue to monitor the situation closely while pursuing policies to contain inflation and promote economic stability.
Despite these official reassurances, many Nigerians are left wondering when the government’s interventions will translate into real, tangible benefits for them. With the country’s economic situation remaining volatile, the burden on ordinary citizens continues to grow.
The Impact on Ordinary Nigerians
While the government’s financial interventions may help in the short term, the reality for most Nigerians is one of hardship and uncertainty. Prices for food, transportation, and utilities remain high, while wages stagnate. As inflation continues to erode the value of the naira, many families are finding it harder to make ends meet.
For Nigerian businesses, the situation is equally dire. The volatility of the exchange rate has made it difficult for companies to plan for the future, and many small businesses are struggling to survive amid high operating costs and declining consumer purchasing power.
“The high cost of doing business is unsustainable for many small businesses in Nigeria,” said one business owner, who requested anonymity. “We’re caught in the middle of an economic storm, with no clear way out.”
As the government continues to pump billions into stabilizing the naira, the question remains: will these efforts be enough to secure long-term stability, or is the country simply postponing an inevitable economic reckoning?
In the meantime, Nigerians are left to grapple with the rising cost of living, while the government’s interventions, though significant, fail to provide the relief they need. As the battle for the naira’s survival continues, it is clear that the road to economic recovery is still fraught with challenges.
