Abuja, Nigeria — Nigeria’s local currency, the Nigerian Naira (₦), has emerged as one of the most volatile in Africa — and perhaps the world — a situation highlighted by prominent legal advocate, Olisa Agbakoba, SAN.
In his recent remarks, Agbakoba warned that mere circulars and policy tweaks by the Central Bank of Nigeria (CBN), will not suffice to stabilise the naira‑dollar disparity. He argued that the underlying problem lies deeper: Nigeria’s economy lacks productive value and structural resilience.
What the Data Show
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Recent research notes that Nigeria’s foreign exchange market exhibits “significant volatility” due to its dependence on oil exports, external shocks and low reserves.
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Bureau de Change operators in Nigeria describe the naira as “fast becoming the most unpredictable currency in the world”, citing speculative attacks, multiple pressures and FX scarcity.
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One report listed Nigeria’s naira as the most volatile African currency in 2025, having lost more than 30% of its value against the dollar since early 2024.
Agbakoba’s Critique
Agbakoba’s comments centre on two major threads below:
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Production, Not Just Rate: He emphasises that fixating on the numeric value of the naira to the dollar is misguided. “What is the naira producing?” he asked. Without production there’s nothing to sell; without sales, the economy is broke.
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Institutional Weakness: He points to weak governance, misaligned monetary‑fiscal‑trade policy, and states that treat revenue sharing as “cake distribution” rather than running themselves as productive entities.
In his view, the high currency volatility is a symptom of deeper flaws: low economic activity, heavy import reliance, weak institutions, and inadequate reserves.
Why The Volatility Matters
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A volatile currency erodes purchasing power, especially for households importing goods or paying for foreign‑priced inputs.
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It complicates business planning and investment decisions: when exchange rate risk is high, firms hesitate to invest.
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It heightens debt servicing burdens: with foreign‑denominated obligations, depreciation inflates local‑currency cost. Agbakoba flagged this as a serious concern.
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It undermines credibility: repeated sharp moves in the exchange rate can erode confidence in economic management and macro‑stability.
Underlying Causes in Nigeria’s Case
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Heavy dependence on oil export earnings means FX inflows fluctuate with global oil prices and production levels.
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Multiple exchange‑rate regimes, fragmented FX supply and demand, speculative attacks, and FX scarcity combine to make the market unstable.
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Low and/or volatile foreign reserves create weaker buffer to absorb shocks.
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Structural weaknesses: limited productive export base, high import dependence, insecurity in key sectors (e.g., agriculture) hamper output and FX earning. Agbakoba highlighted these.
What Can Be Done?
Drawing on Agbakoba’s prescriptions and broader commentary:
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Shift focus from simply stabilising the naira to boosting production, export‑led growth and building diverse sources of FX inflows.
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Align monetary, fiscal and trade policy so that they reinforce rather than contradict each other. Agbakoba noted the misalignment currently.
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Strengthen institutions: enforce property rights, ensure contract enforcement, deepen legal/regulatory frameworks — Agbakoba argued these are prerequisites.
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Build FX reserves and create transparent, efficient FX markets that reduce speculative pressures.
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Improve transparency and communication to build confidence among investors and the public.
Conclusion
Nigeria’s naira has earned the uneasy label of one of Africa’s most volatile currencies.
According to Olisa Agbakoba, the instability is not simply a matter of exchange‑rate policy but reflects deeper economic and institutional faults: weak production, misaligned governance, and an overreliance on external flows.
Unless Nigeria addresses those root causes, any attempt at mere cosmetic currency‑stabilisation risks remaining temporary — and the naira’s volatility may continue to haunt the economy.
