Economy
Nigeria can’t float its currency now—CBN
Central Bank of Nigeria Governor has said that the Nigeria cannot float Naira to avoid an exchange rate spiral. This was stated by the Central Bank Governor Mr. Godwin Emefiele. Emefiele was reacting to World Bank President who criticised Nigeria multiple exchange rates and suggested the floating of the Naira. Emefiele also said that the fuel subsidy will be removed next year when Dangote Refinery becomes fully operational.
World Bank President David Malpass had in response to a question at the ongoing IMF/World Bank Group Spring Meetings virtual opening press conference in Washington said “generalized subsidies have significant negatives. One is, they are expensive because they go to everyone, and they’re often taken–more used by people with upper incomes than by people with lower incomes; they’re not targeted. So, we encourage, when there needs to be a subsidy for either food or for fuel, that it be carefully targeted, well targeted for those most in need. And we have encouraged Nigeria to rethink its subsidy effort. Also, two other things that I’ll mention on Nigeria that are important. It runs a multiple exchange rate system, which is complicated and is not as effective as it would be if there were a single exchange rate. The most useful thing for development is to have a single exchange rate that’s market-based, that is stable over long periods of time. That attracts investment and it also means that there is discipline within the country’s fiscal policies. That would help.
“And then, Nigeria also has trade barriers that distort trade flows, and that could be improved substantially in order to help the people in Nigeria move forward. I do take note of the complicated situation that they face. There are weapons flowing in through northern Africa that find their way to non-Nigerians that create violence in Nigeria. This is a very challenging situation that the government faces. And I think we, all over the world, people should have an understanding of the fragility that’s facing several parts of the world, but in particular the Sahel and the Sub-Saharan African area where the weapons flow from outside of Africa is putting a grave burden on governments around the continent. Nigeria has huge opportunity because of its natural resources and because of its people, and I think could see its growth accelerate with improvements in policy.
Emefiele said that the policy of the government is to ensure a managed float of the Naira as opposed the proposal of the World Bank for the currency to freely float. A free floating exchange rate is a flexible exchange rate system solely determined by market forces of demand and supply of foreign and domestic currency, and where government intervention is totally inexistent. On the other hand, a managed floating exchange rate is an exchange rate regime in which the exchange rate is neither entirely free (or floating) nor fixed. Rather, the value of the currency is kept in a range against another currency by central bank intervention. Emefiele said, “Even at our private meetings, what we come up with is to say look, we realise that different countries have different challenges, what we do expect is for you to go back and develop a home grown solution that helps your situation.
“Let me say that Nigeria is on a managed float. What that also means is that we cannot adopt what is being proposed that we go on a free float of the currency. Doing that will create an exchange rate spiral for Nigeria as long as the demand surpasses the supply of foreign exchange in Nigeria. We have been at this since 1986 and that is why we are saying whereas we are doing something to adjust the currency, like for instance between 2015 and now, you will observe that we have adjusted the currency from about N155/USD to about N410, N420 that it is today. So, we cannot be accused of not adjusting the currency. But we are trying to adopt a very gradual approach towards adjusting the price to the level that it is today. But at the same time, we have to be given the chance to also look at while you are adjusting the price, you must also do something about demand and supply.” Emefiele noted that the bank is more concerned in fixing the supply shortage, which would help reduce pressure on Naira when achieved.
According to him, Dangote Refinery will help reduce the foreign exchange spent on the importation of petroleum products. He said, “And that is the reason we are saying we need to do something on demand to make sure that those things we can produce in the country, we restrict access to foreign exchange so that it will encourage people to produce locally. When that happens, what it means is that the demand for foreign exchange will reduce and when demand of foreign exchange reduces, fortunately you will find that the price will be better and will not rise beyond the expectation of Nigerians. With Dangote refinery coming up with the 650,000 barrel refinery, hopefully by around the end of the year, that will also hopefully reduce the demand for foreign exchange that normally will go for the importation of petroleum products. I have often said, between the importation of refined products alone into importation of rice or sugar or wheat, this consumes close to about 40 per cent of foreign exchange that is needed to fund import in Nigeria.
“If we find for instance a situation where by the end of this year we are no longer going to be needing foreign exchange to import petroleum products, I believe that demand will drop. As demand drops, what you will find is that whatever supply is able to match demand, we can see a stable exchange rate. By the time we achieve this, we will continue to engage with the World Bank and the IMF. And we will say that they are doing their best. “ On the issue of subsidy, the CBN governor defended the postponement of the removal of the subsidy till when the country is prepared. According to him, the subsidy will be removed by next year when the Dangote Refinery is fully operational. Emefiele said, “On this issue of subsidy, when you find people talking about removal of subsidy, I support. Also when you talk about holding onto the subsidy until the right time, I do support that. We decided to defer the policy of removal of subsidy until sometime next year when we are sure that the Dangote Refinery has fully taken off. What does that mean? That at least, we need to make it easy for people to refine petroleum products and pay in Naira. Dangote himself is going to procure the crude out of the 455,000 barrels per day in Naira and so, we save the cost of both transportation and logistics. Effectively if we wait till that time, we will be able to achieve the same result but we have to be a little bit patient.”
The Arab Africa Trade Bridges (AATB) Program and the Federal Republic of Nigeria formalized a partnership with the signing of the AATB Membership Agreement, officially welcoming Nigeria as the Program’s newest member country. The signing ceremony took place in Abuja on the sidelines of the 5th AATB Board of Governors Meeting, hosted by the Federal Government of Nigeria.
The Membership Agreement was signed by Eng. Adeeb Y. Al Aama, the CEO of the International Islamic Trade Finance Corporation (ITFC) and AATB Program Secretary General, and H.E. Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, Federal Republic of Nigeria. The Agreement will provide a strategic and operational framework to support Nigeria’s efforts in trade competitiveness, promote export diversification, strengthen priority value chains, and advance capacity-building efforts in line with national development priorities. Areas of collaboration will include trade promotion, agribusiness modernization, SME development, businessmen missions, trade facilitation, logistics efficiency, and digital trade readiness.
The Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, called for deeper trade collaboration between African and Arab nations, stressing the importance of value-added Agribusiness and industrial partnerships for regional growth. Speaking in Abuja at the Agribusiness Matchmaking Forum ahead of the AATB Board of Governors Meeting, the Minister said the shifting global economy makes it essential for African and Arab nations to rely more on regional cooperation, investment and shared markets.
He highlighted projections showing Arab-Africa trade could grow by more than US$37 billion in the next three years and urged partners to prioritize value addition rather than raw commodity exports. He noted that Nigeria’s growing industrial base and upcoming National Single Window reforms will support efficiency, investment and private-sector expansion.
“This is a moment to turn opportunity into action”, he said. “By working together, we can build stronger value chains, create jobs and support prosperity across our regions”, Edun emphasized. “As African and Arab nations embark on this journey of deeper trade collaboration, the potential for growth and development is vast. With a shared vision and commitment to value-added partnerships, we can unlock new opportunities, drive economic growth, and create a brighter future for our people.”
Speaking during the event, Eng. Adeeb Y. Al Aama, Chief Executive Officer of ITFC and Secretary General of the AATB Program, stated: “We are pleased to welcome Nigeria to be part of the AATB Program. Nigeria stands as one of Africa’s most dynamic and resilient economies in Africa, with a rapidly expanding private sector and strong potential across agribusiness, energy, manufacturing, and digital industries. Through this Membership Agreement, we look forward to collaborating closely with Nigerian institutions to strengthen value chains, expand regional market access, enhance trade finance and investment opportunities, and support the country’s development priorities.”
The signing of this Agreement underscores AATB’s continued engagement with African countries and its evolving portfolio of programs supporting trade and investment. In recent years, AATB has worked on initiatives across agribusiness, textiles, logistics, digital trade, export readiness under the AfCFTA framework, and other regional initiatives such as the Common African Agro-Parks (CAAPs) Programme.
With Nigeria’s accession, the AATB Program extends it’s presence in the region and adds a key partner working toward advancing trade-led development and fostering inclusive economic growth.
Federal Executive Council (FEC) has approved the 2026–2028 Medium-Term Expenditure Framework (MTEF), a key fiscal document that outlines Nigeria’s revenue expectations, macroeconomic assumptions, and spending priorities for the next three years. The approval followed Wednesday’s FEC meeting presided over by President Bola Tinubu at the State House, Abuja. The Minister of Budget and Economic Planning, Senator Atiku Bagudu made this known after the meeting.
The Minister said the Federal Government is projecting a total revenue inflow of N34.33 trillion in 2026, including N4.98 trillion expected from government-owned enterprises. Bagudu said that the projected revenue is N6.55 trillion lower than earlier estimates, adding that federal allocations are expected to drop by about N9.4 trillion, representing a 16% decline compared to the 2025 budget.
He said that statutory transfers are expected to amount to about N3 trillion within the same fiscal year. On macroeconomic assumptions, FEC adopted an oil production benchmark of 2.6 million barrels per day (mbpd) for 2026, although a more conservative 1.8 mbpd will be used for budgeting purposes. An oil price benchmark of $64 per barrel and an exchange rate of N1,512 per dollar were also approved.
Bagudu said the exchange rate assumption reflects projections tied to economic and political developments ahead of the 2027 general elections. He said the exchange rate assumption took into account the fiscal outlook ahead of the 2027 general elections.
The minister said that all the parameters were based on macroeconomic analysis by the Budget Office and other relevant agencies. Bagudu said FEC also reviewed comments from cabinet members before approving the Medium-Term Fiscal Expenditure Ceiling (MFTEC), which sets expenditure limits. Earlier, the Senate approved the external borrowing plan of $21.5 billion presented by President Tinubu for consideration The loans, according to the Senate, were part of the MTEF and Fiscal Strategy Paper (FSP) for the 2025 budget.
The spot rate on Nigerian Treasury bills has been increased by 146 basis points by the Central Bank of Nigeria (CBN) following tight subscription levels at the main auction on Wednesday. The spot rate on Treasury bills with one-year maturity has now surpassed Nigeria’s 16.05% inflation by 145 basis points following a recent decision to keep the policy rate at 27%.
The Apex Bank came to the primary market with N700 billion Treasury bills offer size across standard tenors, including 91-day, 182-day and 364 day maturities. Details from the auction results showed that demand settled slightly above the total offers as investors began to seek higher returns on naira assets despite disinflation.
Total subscription came in at about N775 billion versus N700 billion offers floated at the main auction. The results showed rising appetite for duration as investors parked about 90% of their bids on Nigerian Treasury bills with 364 days maturity. The CBN opened N100 billion worth of 91 days bills for subscription, but the offer received underwhelming bids totalling N44.17 billion.
The CBN allotted N42.80 billion for the short-term instrument at the spot rate of 15.30%, the same as the previous auction. Total demand for 182 days Nigerian Treasury bills settled at N33.38 billion as against N150 billion that the authority pushed out for subscription. The CBN raised N30.36 billion from 182 days bills allotted to investors at the spot rate of 15.50%, the same as the previous auction.
Investors staked N697.29 billion on N450 billion in 364-day Treasury bills that was offered for subscription. The CBN raised N636.46 billion from the longest tenor at the spot rate of 17.50%, up from 16.04% at the previous auction.
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