A critical examination of IMF policy proposals affecting Nigeria

Emmanuel Nicholas

In the 1960s, African nations like Nigeria and Ghana were lending money to many European countries, including England. The currencies of both Nigeria and Ghana were stronger than the pound sterling and the dollar at the time.

One naira was exchanged for six dollars and one naira for four pounds, and the foreign reserves of both countries were larger than the reserves of the United Kingdom, which was still recovering from the Second World War.

The value of the naira maintained its momentum until 1986, when Nigeria’s currency began to depreciate due to numerous sanctions from foreign countries, which sought to use sanctions to frustrate the military government and remove it from power.

The World Monetary Organization has been involved in projecting manipulative financial schemes for African countries that aim to collapse their economies; this has been a cruel strategy of the West against many developing nations.

In Nigeria, this strategy was first introduced in September 1986. The Structural Adjustment/Second-Tier Foreign Exchange Market (SFEM) was introduced as part of a package of IMF reforms that General Ibrahim Babangida (IBB) was forced to accept, given the economic problems Nigeria then faced.

It was during this time that bureaux de change were introduced into the economy.

The rate at which the naira depreciated in those few years probably explains why Nigerians have never gotten over the idea that a strong currency is the mark of a “strong” economy.

People remember that things got worse as the naira lost ground to the dollar, and, to make matters worse, the industrialization that a weaker exchange rate was supposed to bring, as proposed by the IMF, never materialized.

From the day that Sani Abacha took power until his death on June 8, 1998, a period of some five years, the official exchange rate of the naira to the dollar never changed from 22 naira to $1.

The Autonomous Foreign Exchange Market (AFEM) was introduced in 1995 as a way for the Central Bank of Nigeria (CBN) to sell foreign exchange to end users at “market” rates, and this helped to stabilize the Naira value.

After the demise of General Sani Abacha, General Abubakar was brought in to conduct elections. His regime ushered in the civilian administration, but the value of the dollar did not depreciate above 22 Naira to a dollar.

Shortly after President Olusegun Obasanjo was elected and sworn in in 1999, the World Bank and the IMF continued to introduce different regimes of currency management, claiming that those suggestions would open the country to foreign investment.

Successive democratic governments continue to adhere to the financial suggestions of the World Bank and IMF, and Naira continues to somersault in the exchange market and land in the realm of 80 to 120 Naira per dollar, yet the foreign investors were not seen but were only heard on the radio.

Up to the administration of Dr. Goodluck Jonathan, the naira further depreciated, but was still between 140 and 170 to the dollar, and the economy was massive.

Under his administration, the country rebased its gross domestic product for the first time in over a decade, thereby becoming the largest economy in Africa, surpassing South Africa and Egypt, and the Jonathan government accumulated more than US$454 billion in oil revenues during its tenure.

Western powers, reportedly uneasy about Nigeria’s rapid economic ascent, are accused of backing certain political actors to displace his administration, imposing de facto embargoes on both hard and soft military equipment that hampered his ability to combat terrorism, and subsequently exploiting the security crisis, most notably the Chibok schoolgirls episode, to vilify and undermine his government.

But as soon as President Muhammadu Buhari took office, international financial organizations mounted pressure on him for the naira to be floated to attract more foreign investment, and He accepted the proposal.

The policy of floating the naira is responsible, in part, for the deep depreciation of the naira’s value, allowing powerful nations to gain higher profits in trade with Nigeria.

England is not the largest producer of gold, but it pegged the pound sterling to gold; America similarly pegged the dollar. Why must Nigeria float its currency when the gains of floating it have not materialized?

African leaders should learn from the nightmare of Libya. Muammar Gaddafi was doing well for his nation: he preached a United States of Africa; education was free for school children up to university level, and those who wanted to study abroad were sponsored by the state.

Fuel in Libya was very cheap for its people; every married couple received a flat and a car, and many social supports were provided by the state.

The Western world saw Libya’s economy as a threat, and Gaddafi’s advocacy for a united Africa with one currency as an even greater threat.

They blackmailed Gaddafi and accused him of terrorism; it has since been revealed that some of the groups he fought against received support from the United States.

How can they tell African leaders to weaken their currencies to attract investors, and after depreciation, no investment is received, the economy often becomes more vulnerable, and the promise of an influx of foreign investment is just a ploy to deceive leaders and further weaken their economies?

Nigeria and other African countries should peg their currencies to the value of their abundant natural resources. The manipulative policy of floating the currency should be exterminated in Africa.

We are no longer slaves or colonies, and we must not continue to accept every ragtag policy they impose on us. As long as the superpowers refuse to allow African nations a permanent seat on the United Nations Security Council, it means they are not ready to see any African country become a developed nation.

The long decline of the naira shows that no single policy or external prescription can fix a currency weakened by policy inconsistency and external shocks.

The solution must be comprehensive, domestically led, and carefully sequenced to restore confidence, rein in inflation, rebuild foreign reserves, and diversify the economy

Key pillars include consistent fiscal discipline and efficient revenue collection to reduce deficit-financed money creation; credible, transparent monetary policy and a managed—but market-aware, exchange-rate regime that prevents sudden, disorderly devaluations while allowing natural adjustment; and deliberate efforts to expand non-oil export capacity and local production so that foreign earnings are steadier and import dependence falls.

Practical measures include unifying and deepening foreign-exchange markets; rebuilding reserves through export promotion and prudent borrowing; tightening macroprudential controls to limit capital flight; promoting formal remittance channels and diaspora investment; and creating hedging tools for exporters and importers.

Simultaneously, strengthen institutions: ensure central bank independence, enforce anti-corruption measures, maintain predictable regulation, and protect vulnerable households with targeted social programmes—like the measures President Bola Tinubu is implementing to cushion short-term adjustment costs.

If implemented together and transparently, these policies will reduce volatility, attract productive long-term investment (rather than speculative flows), and restore purchasing power. In short: stabilize macro fundamentals, diversify the economy, manage the exchange rate pragmatically, and rebuild public trust. Only then can Nigeria move from chronic depreciation toward a durable, stronger naira.