Nigeria's FX Policy - After more than a week of extensive personal economic analysis of Nigeria's foreign exchange floating policy since 2023, I have reached a personal conclusion that the policy may be good for government revenue and some macroeconomic indicators, but under its present operation, it cannot translate into broad-based economic prosperity, even over the next 20 years.
This may explain why we are seeing macro gains without a corresponding pathway to microeconomic gains. Macroeconomic gains are not necessarily the same as economic gains. Nigeria's real GDP growth was approximately 4.3% in 2022, 3.3% in 2023, 4.1% in 2024 and about 4.0% in 2025 - so while growth has improved, it remains broadly within the 3-4% range, despite an extraordinary exchange rate adjustment.
CBN data show the average NAFEM rate depreciated by about 40.86% in the first half of 2024 alone, from N804.22/$ in H2 2023 to N1,360.03/$ in H1 2024. The question is not whether Nigeria grew after the float - it is whether productive capacity and economic growth expanded proportionately to the scale of the currency adjustment. That is much harder to establish. There is, however, clear evidence of substantial fiscal gain for government: approximately N2.517 trillion in exchange-rate gains was shared through FAAC in 2023, about N5.86 trillion in 2024, and another ~N589 billion by H1 2025 - approximately N8.97 trillion in directly documented FAAC exchange gains.
My broader estimate is that government has gained more than N12 trillion from the FX policy when wider FX-related fiscal effects are considered. But my estimate is that the Nigerian economy has lost more than N50 trillion over the same period through currency depreciation, higher production costs, reduced purchasing power, weakened investment capacity and lost productivity. If these estimates are correct: N50tn / N12tn = 4.17 - in simple terms, for every N1 of broader fiscal gain to government, the economy may have lost approximately N4.
This does not mean N3 was literally transferred abroad - rather, the difference represents the wider economic cost of the policy, though a substantial portion can manifest as a transfer of purchasing power and economic surplus toward dollar holders, foreign producers and external suppliers. In an import-dependent economy, depreciation effectively increases the share of domestic income required to obtain foreign output.
The danger is that an FX policy intended to correct the economy may instead redistribute economic value from naira earners toward dollar holders, foreign producers and foreign economies, without leaving any meaningful value for our economy. The answer is not necessarily to abandon floating - it is to convert the fiscal gains from depreciation into productive capacity: electricity generation, transmission and distribution, industrial infrastructure, transport, domestic manufacturing and productive capital.
If additional government revenue is absorbed into recurrent expenditure, consumption disguised as capital expenditure, or capital spending that does not generate corresponding productive capacity, government can become fiscally stronger while the productive economy becomes weaker - which seems to be the situation at the moment. The ultimate test of Nigeria's FX policy is not how much additional naira government receives from every dollar of revenue: it is whether Nigeria becomes more productive, more competitive, more investable and more prosperous.
If it does not - which it doesn't - the policy needs to be reevaluated and adjusted. A policy designed to correct an abnormality in our economy should not become a mechanism for transferring economic value from Nigeria to holders of dollars, foreign producers and foreign economies.
