Experts paint bleak future for Naira as it falls again at official market

Nigerian currency continues its free-fall to the United States dollars and financial experts have told Nigerians to expect further depreciation as the year progresses.

According to data obtained by Ripples Nigeria, the Naira depreciated by 0.11 per cent or 46 kobo against the American currency, to close the first day of April at N416.63/$1 compared with Thursday’s exchange rate of N416.17/$1.

Naira also put on the same poor performance against the British Pound Sterling on Friday dropping in value by 8 kobo.

CBN data shows that Naira closed at N546.54/£1 compared to the previously traded rate of N546.46/£1.

However, it appreciated by N2.29 against the Euro during the session to sell for N459.92/€1 in contrast to the previous day’s N462.21/€1.

Meanwhile, economic experts and financial analysts have predicted a further depreciation of the naira, while also forecasting that the country’s Gross Domestic Product will grow by almost three per cent in 2022.

They spoke during Blue Talks Enterprise Banking’s webinar on Thursday.

According to the Regional Head of Equity Research, West Africa, Standard Bank Group, Muyiwa Oni, who was one of the speakers at the webinar, the financial institution forecasts that the naira’s value will drop as the year progresses.

He said, “We predict that the currency on the official market will be around N440 per dollar from around N416 or N417 that it is. Our view is that as long as we don’t see formal reforms in the foreign exchange market, the shortage we continue to see will persist.”

He observed that due to unfavourable business environments, several investors had resolved to take their money out of the Nigerian economy.

According to him, inflation will average around 15 per cent while the country’s GDP will grow by 2.9 per cent.

Read also: CBN defends Naira with almost $1bn in Q1, but pressure persists

He said, “Last year, we saw a GDP growth of 3.4 per cent which is still recovering from the contraction in 2020. Even with this, some people argue that the economy is not still operating at the 2019 level yet, and our view for 2022 is that we will see further economic growth which we estimate at 2.9 per cent in GDP.

“Our expectation is that the non-oil sectors will continue to drive it. We have seen strong growth in the ICT sector, trade, real estate, construction, and manufacturing as well.”

Oni noted that the predicted rise in inflation would bring some untold hardship to the country, which includes pervasive insecurity, flooding, electricity tariff increase, currency devaluation, rising energy costs driven by geopolitical tensions, and subsidy removal.

Corroborating the forecasts, the Chief Executive Officer, Stanbic IBTC Bank, Wole Adeniyi, said businesses in Nigeria might face enormous challenges even though they are the main contributors to the country’s economy.

He said, “Enterprises play a significant role in most economies and Nigeria is no exception. These enterprises are essential contributors to job creation and economic development in Nigeria.

“SMEs contribute over 48 per cent in national GDP and account for about 96 per cent of businesses, which in turn create about 84 per cent of employment in 36 States across the country.

“However, despite the substantial contribution of SMEs to Nigeria’s economy, challenges still abound, such that the growth and development of different sectors face impediments.

“These challenges include limited access to capital financing and adequate public infrastructure.”

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