By Milcah Tanimu

Kingsley Moghalu, a former Deputy Governor of the Central Bank of Nigeria (CBN), has provided insights into the underperformance of the country’s currency in the foreign exchange market. Moghalu, in a statement posted on his official X account, attributed the Naira’s challenges to the government’s failure to diversify the economy away from heavy reliance on natural resources for foreign exchange.

According to Moghalu, the absence of a shift towards an export economy focused on value-added manufacturing and services has led to the continued failure of Nigeria’s economic policies. He emphasized that the core issue lies in the country’s political culture, which perpetuates a rentier economy, making it challenging to break away from resource dependency.

Moghalu pointed out that other resource-based economies like Malaysia, Thailand, and Chile successfully transitioned to manufacturing and exporting sophisticated products over time. He stressed the need for an extraordinary level of political will to bring about the required changes, emphasizing the importance of merit and competent technocratic management over crony-empowerment based on vested self-interest.

In his analysis, Moghalu highlighted the historical reliance on oil revenues to support a managed float with robust foreign reserves, noting that such a strategy is no longer sustainable due to the decline in oil revenues. He concluded by stating that until the fundamental issues related to political will, merit-based governance, and economic diversification are addressed, the outlook for the Naira remains challenging in the evolving global economic landscape.