HOW WILL PRESIDENT-ELECT TINUBU MANAGE FOREIGN EXCHANGE CHALLENGES

As Nigeria prepares for the swearing-in of its president-elect, many are wondering how the country's new leader will tackle the issue of foreign exchange that has plagued the Nigerian economy for over 3 decades. 

While the Nigerian naira continues to lose value against major global currencies, including the US dollar, the euro, and the British pound, it is clear that something needs to be done to address this challenge urgently.

When Asiwaju Bola Ahmed Adekunle Tinubu, widely known as Bola Tinubu, is sworn in as Nigeria's next president, he will no doubt face this challenge head-on. 

Tinubu, popularly called 'Jagaban" by his ardent followers meaning a "warrior", has served in a number of commanding political positions in Nigeria, including Governor of Lagos State for 8 years and Senator for Lagos West. 

He is well known for his strong business acumen, powerful leadership strengths, and his ability to tackle complex issues. 

The Current State of Foreign Exchange in Nigeria.

As of December 2021, the exchange rate of the naira to the US dollar is approximately 1 USD to 550 NGN. by the end of the fourth quarter in 2022 it was as high as 800 NGN to 1 USD. 

This has a number of implications for the Nigerian economy, including making imports more expensive and making it more difficult for Nigerian businesses to compete globally.

The Main factor that has contributed to this situation is Nigeria's overreliance on oil exports. The country is one of the largest oil producers in the world, and oil exports make up 80% of Nigeria's revenue. 

However, when the price of oil dropped, as it did in 2020 due to the COVID-19 pandemic, Nigeria's economy was hit hard.

Another factor is Nigeria's high inflation rate. Inflation has been steadily rising in Nigeria over the years, and as of January 2023, it hits an all-time high of 21.82%, since 2015. This has made it more difficult for the Central Bank of Nigeria to manage the country's monetary policy and the redesign of the Naira hardly put a dent in the face of the issue.

Tinubu's Approach to Foreign Exchange

When Tinubu begins his first four years of rule as Nigeria's next president, he is likely to take a multi-pronged approach to address the country's foreign exchange challenges as evident in some of his manifestoes prior to being elected.

Diversification of the Economy

One of the first steps he is likely to take is to diversify Nigeria's economy. By reducing the country's reliance on oil exports and promoting other sectors, such as agriculture and technology, Tinubu can help to stabilize the value of the naira and make the Nigerian economy more resilient to global economic shocks.

Corruption Reduction

Tinubu is also likely to focus on reducing corruption in Nigeria. Corruption is a major issue in Nigeria, and it has contributed to the country's economic challenges. By cracking down on corruption and promoting transparency and accountability, Tinubu can help to restore investor confidence in Nigeria and attract more foreign investment.

Partnership with the Private sector

Another approach "Jagaban" will definitely take is to partner with the private sector. One of the major roles played by the private sector in all economies globally is the reduction of the unemployment rate, capital generation for infrastructural projects, and avenue to usher in foreign investment.

The Challenges Ahead

While Tinubu's approach to addressing Nigeria's foreign exchange challenges is promising, there are several challenges that he will need to overcome.

Political Opposition

One of the biggest challenges is the political opposition he will face. Tinubu is a controversial figure in Nigeria, and he has faced criticism from some quarters over his political and business dealings. Evident from the just concluded elections, a lot of his opposition will feel aggrieved, and he will have to come up with strategies to pacify them and their supporters.

Building Consensus

Finally, Tinubu will need to build consensus among Nigeria's diverse population. Nigeria is a country with many different ethnic and religious groups, and bringing these groups together to address the country's challenges will be no small feat.

Conclusion

Bola Tinubu is a leader with a track record of success in both business and politics and it is apparent that his approach to foreign exchange will likely involve diversifying the economy, reducing corruption, and partnering with the private sector of the country. 

While there are certainly challenges ahead, Tinubu's track record and commitment to Nigeria's success bode well for the country's future. 

Ultimately, only time will tell how successful Tinubu will be in addressing Nigeria's foreign exchange challenges, but his leadership and vision offer hope for a brighter future.