Nigeria’s currency, the naira, is presently experiencing more pressures than ever before, based on negative macro fundamentals such as plunging crude oil prices which constitute the lion’s share in Nigeria’s export earnings, and the COVID-19 pandemic which has weakened global demand.
Recently, at a financial summit organized by Lagos Business School via teleconferencing, Nigeria’s celebrated economist, Bismarck Rewane on Nigeria’s present and projected situation said that Nigeria is experiencing “economic paralysis” caused by induced “economic coma.”
He spoke on how Africa’s largest economy, with a GDP (Gross Domestic Product) of $420 billion, would experience negative growth in the next three months due to lack of enough cash buffers that made it survive the earlier recessions in 2008, and 2016, coupled with Nigeria’s low productivity level, and poor management of its economy.
Rewane projected an increase in Federal Government spending, thereby spurring inflation, and Nigeria having higher unemployment levels in the mid-term, due to the COVID-19 onslaught, and plunging global demand for Nigerian goods and services.
In addition, he described the high national debt compared to Nigeria’s GDP as worrisome and projected inflation at 19% by the end of the year and remarked that these negative economic indicators further increased the odds against the naira.
Lately, the naira has been hitting new lows on the OTC, black, and spot markets as market liquidity remains very thin after the Central Bank devalued the naira’s official rate by 15%. It closed at a low of N389 on the spot market on Wednesday.