Chris Okpoko
Last week, an article was published in the media, “From devaluation to domination: How Tinubu’s exchange rate reforms turned naira into Nigeria’s export engine.” Written by Tanimu Yakubu, the Director-General of the Budget Office of the Federation. In the article, he analyzed how “Nigerian goods, once overpriced in dollars due to an artificially strong naira, suddenly became bargains on global markets”. According to him, “the result was swift and striking. Non-oil exports jumped from $2.696 billion in H1 2024 to $3.225 billion in H1 2025—a 19.62% year-on-year growth. Export volumes rose from 3.83 million to 4.04 million metric tonnes.” However, he did not analyze the flip side.
The devaluation of a currency often represents both challenges and opportunities for an economy. In Nigeria, the foreign exchange market reform in June 2023, which resulted in the devaluation of the naira from ₦460 to about ₦1,500 now, has had significant ramifications, especially given the recent trade surplus figures that showed an increase to US$2.20 billion in December 2024, from US$1.06 billion previously (CBN Economic Report, January 2025). While this development indicates potential economic growth, it also raises questions about the broader impact on various sectors and industries within the Nigerian economy.
Notwithstanding the potential benefits, devaluation is not without its pitfalls. One of the most significant adverse effects is inflation. With the devaluation, the cost of imports has risen significantly. For a country like Nigeria, which relies heavily on imported goods, ranging from food and consumer products to machinery and technology, this has led to sky-high prices for everyday essentials.
Also, despite a rebased Gross Domestic Product (GDP) early this year, with the nominal GDP at $242.64 billion (at the current exchange rate), the country still retains its fourth position, coming behind South Africa with $400,26 billion nominal GDP, Egypt with $389,05 billion, and Algeria with $263,61 billion. Although it was once Africa’s largest economy by GDP (2014), its potential is hindered by deep-seated structural issues, including weak infrastructure and a heavy reliance on oil.
One of the most significant problems hindering Nigeria’s economic growth has been the devaluation of the naira, affecting businesses and the economy. Nigerian SMEs, which contribute approximately 48 percent to Nigeria’s GDP and employ over 80 percent of the Nigerian population, are among the most significant victims of the currency devaluation exercise (Central Bank of Nigeria (CBN), 2023).
In this regard, a recent study on the “Impact of Naira devaluation on Small & Medium Scale Enterprises (SMEs) in Nigeria: A Survey of South-South States, Nigeria”, by Vincent Edewhor, Ph.D, published in June 2025, revealed that the devaluation of the naira has imposed substantial challenges on small and medium-scale enterprises (SMEs) in Nigeria. The study highlighted the historical depreciation of the naira, the economic implications of the Tinubu administration’s floating the exchange rate, and the interplay between foreign exchange volatility, inflation, and SME sustainability. The findings showed that the escalating operational costs, reduced profit margins, and limited access to affordable foreign exchange have significantly impaired the capacity of SMEs to thrive. Moreover, inflation has further eroded consumer purchasing power, reducing demand and compounding the financial strain on businesses.
Similarly, according to the Nigerian Governors Forum (NGF), the devaluation of the naira was fuelling food export to West African countries. The statement was made by the Acting Head of Media, Halimah Salihu Ahmed, while highlighting efforts by the governors to alleviate the pain and suffering of citizens nationwide last year. Nigerians are currently grappling with economic hardship due to skyrocketing prices of basic household commodities.
In the real estate sector, high material costs have created a negative ripple effect on the real estate industry, which is a significant part of the Nigerian economy. The sharp increase in costs has made it difficult for Nigerians to afford to rent, build, or buy homes. A recent market survey showed that building material costs in Nigeria have continued to rise from 2023 to the present (September 2025), driven by factors such as inflation and foreign exchange rates, making many materials significantly more expensive compared to previous years. For example, cement and iron rods, which were already costly in 2023, have seen further price hikes, reaching new highs in mid-2025.
A 50kg bag of cement costs around ₦3,500–₦4,500 between 2023 and 2024, significantly rising to ₦9,500–₦10,200 per bag by July 2025.
Iron rods have seen a major jump between 2021 and 2023, from ₦200,000 to ₦470,000 per ton. Prices have continued to rise to a range of ₦920,000 – ₦1,400,000 per ton by mid-2025.
A tipper of granite, which was at a lower cost before devaluation, has also seen a substantial price increase, reaching ₦540,000–₦660,000 per tipper by July 2025.
In the aviation sector, airlines, ground handling companies, aircraft maintenance centres, and aviation fuel suppliers are committing more naira to source dollars for aircraft spares, aircraft leasing costs, flight crew training, insurance premiums, and other obligations. Airfares from Lagos to Abuja generally increased from 2023 to 2025, with some sources indicating potential surges due to airline price hikes, although 2023 prices varied significantly. While 2023 one-way fares could range from approximately ₦74,000 to ₦152,000, a 2025 round-trip economy ticket was reported starting at ₦340,000, and one airline announced a 100 percent fare increase in late 2024.
In the telecommunications sector, concerned by the possible collapse, which was plagued by high inflationary pressures and currency devaluation, telcos demanded a 100 percent increase in their tariffs; however, the Nigerian Communications Commission (NCC) approved the implementation of a 50% increase in call, data, and SMS tariffs in early 2025 to address rising operational costs.
Importers who procure raw materials from other countries and students planning to study in universities abroad have all seen the negative impact of the naira devaluation. Inflationary pressures have eroded real incomes, reduced the purchasing power of the people, and worsened poverty rates – those are the challenges facing the country today.
It is noteworthy, however, that at the 2025 Nigerian Manufacturing & Equipment / Nigerian Raw Materials Expo in Lagos, the Minister of State for Industry, John Owan Enoh, emphasized the government’s commitment to creating an enabling environment that prioritizes local production over raw material exports. He stated that the federal government is finalizing a comprehensive new Nigerian Industrial Policy aimed at reversing the country’s dependence on imported goods and strengthening its domestic manufacturing base. A welcome initiative, led by the Ministry of Trade in collaboration with the Manufacturers Association of Nigeria (MAN), is designed to increase the manufacturing sector’s contribution to GDP, which currently stands at less than 10 percent.
Thus, while President Bola Tinubu’s reforms are gradually yielding positive results expected in exports and balance of trade, this is not the time for celebration and praise singing. Nigeria’s economy remains in a difficult situation characterized by high inflation, sluggish growth that barely keeps pace with population expansion, and high poverty rates. Devaluation may boost exports in the short term; however, concerns about the long-term health of the economy arise if the underlying issues of the devaluation, such as macroeconomic instability or policy uncertainty, are not resolved. For export growth to be sustainable, it must be supported by productivity gains. Investments in agricultural technology, infrastructure, and human capital are crucial for maintaining a competitive edge.
In conclusion, the aftermath of the naira’s devaluation presents a complex tableau of opportunities and challenges. The increase in trade surplus signals potential economic momentum; various sectors face unique consequences that can ripple through the entire economy. While the devaluation of the naira has made Nigerian exports more attractive in the short term, it is essential to approach this development holistically. Dependence on imports, inflationary pressures, and fluctuating consumer behavior create a landscape where businesses must navigate carefully to capitalize on new opportunities. In addition, it is crucial to balance the immediate benefits of increased export revenues with the need for a stable macroeconomic environment and the well-being of the Nigerian population. The Long-term stability and growth of the agricultural sector will require structural reforms that address the root causes of currency weakness, improve productivity, and ensure food security for the Nigerian people. Ultimately, fostering a resilient and diversified economy will be essential for Nigeria to navigate the complexities of currency fluctuations while ensuring sustainable development for its population.
