‘Nigeria’s Currency Very Volatile’— Former CIBN Boss Explains Why Prices Of Goods Are Still High

A former President of the Chartered Institute of Bankers of Nigeria, Prof. Segun Ajibola, has said that the economic team needs to aggressively address the persistent high prices of goods despite the gain made by the naira against the US dollar.

Ajibola made the comment during an interview on Arise TV, monitored by THE WHISTLER.

Last year, the naira depreciated by nearly 98 per cent after it fell to N1,000 per dollar in December 2023.

Nigeria suffered a spike in inflation after the currency plunged further to N1,900 per dollar by February 2024. Inflation rose to 31.70 per cent and 33.20 per cent in February and March, according to official data from the National Bureau of Statistics.

But the currency rose earlier than expected in April.

The naira was described as the best-performing currency by Goldman Sachs Group Inc. after the currency appreciated from N1,900 per dollar in February 2024 to nearly N1,000 in April due to drastic measures adopted by the Central Bank of Nigeria to frustrate speculators.

However, prices of goods and services have remained elevated despite the rebound of the naira.

Ajibola said, “When we start talking about the performance of the naira over the period, yes, we see the rise but what were the fundamentals that caused that rise in the nominal value of the naira to the dollar? But one thing is certain, it is so easy for prices to go up.

“It is so difficult for prices to come down. In economics, we refer to prices as sticky downwards.

“The moment they go up, to bring them down, you need about five times the effort (employed) to stabilise them in order to bring the prices down when you allow it to go up.”

The professor explained that the naira has suffered volatility over the past 12 month, adding that it affected its purchasing power.

“Both the naira and the dollars are mere tools. In economics, they are means to an end. The end itself is what is achieved using the currency.

“If you look at our economy in the last 12 months or thereabout, our currency is perhaps one of the most volatile globally, rising to a peak in terms of depreciation and also coming down to what it is today,” he said.

Ajibola argued that most goods and services in Nigeria have either a direct or indirect dollar content.

He said that to sustain the gain the naira has made, the country must address its dependence on imported goods.

The ex-CIBN President said, “The greatest challenge that we face is the impact of dollar content in our life as a people, as a country and that is the problem which we have not been able to address.

“I think the first challenge we have is to demystify the dollar in our national life. How do we reduce the role of the dollar such that the dollar will not be the determinant of what happens to us as Nigerians?