The Federal Government of Nigeria is implementing key measures to reduce dollar dependency and bolster the naira’s value, Finance Minister and Coordinating Minister for the Economy, Wale Edun, announced yesterday in Washington, D.C. Edun made the remarks during an investors’ meeting held on the sidelines of the ongoing World Bank/International Monetary Fund (IMF) Annual Meetings.
As a partially dollarised economy, Nigeria relies heavily on the U.S. dollar for international trade, invoicing, and as a store of value, especially during periods of high inflation. According to Edun, this shift to dollarisation is a defense mechanism against the weakening naira, with many preferring to save in dollars rather than the local currency.
In his speech, themed “A New Nigeria: An Era of Bold Reforms,” Edun revealed that the government has urged manufacturers and businesses to start invoicing in naira instead of dollars, a move aimed at reducing demand for foreign currency in the domestic market. “We are asking people to invoice in naira rather than dollars, thereby reducing the demand for dollars,” Edun stated.
The meeting was attended by representatives from prominent global financial institutions including Standard Chartered Bank, Goldman Sachs, JP Morgan, as well as top Nigerian officials like Central Bank Governor Yemi Cardoso, Debt Management Office Director-General Patience Oniha, and Budget Office Director-General Tanimu Yakubu.
Edun outlined additional steps the government is taking to ensure a steady flow of dollars into the economy, further stabilizing the naira. He highlighted the deregulation of key sectors, such as fuel and energy, stating, “We have moved to free market pricing in petrol, jet fuel, kerosene—this is the first time in 40 years we are doing this.”
He noted that increased oil production would further contribute to dollar inflows, while security forces are working to ensure the sector’s stability. The minister also pointed out that Nigerians in the diaspora remain a key source of dollar inflows, with the financial and bond markets open for their investments.
Reflecting on the removal of petrol subsidies on October 2, Edun emphasized that the full benefits of this reform would soon be felt. “It is now that we will assess the gains of the subsidy removal, which will be a huge dividend to the people,” he said.
Meanwhile, Central Bank Governor Yemi Cardoso commented on the monetary policy implications of subsidy removal. He explained that the CBN plans to issue more Open Market Operation (OMO) bills to stabilize the market, adding, “The NNPC buying dollars from the open market is not for the CBN to determine, as the NNPC is a customer entitled to make its own business decisions.”
Cardoso also noted that higher interest rates could drive local production, while diaspora remittances continue to rise.
CBN Deputy Governor for Economic Policy, Mohammed Sani-Abdullahi, further detailed efforts to enhance Nigeria’s non-oil export earnings, with a target to raise revenues from N3.6 billion to $10.3 billion. He also highlighted that the country’s external reserves had climbed to $40.3 billion, driven by increasing oil production.
Addressing the naira’s exchange rate, Sani-Abdullahi clarified that the CBN is no longer actively defending the currency. “We’re not defending the naira as we used to. We are building buffers and want to improve supply organically, allowing the naira to find its natural level,” he explained. He added that the CBN aims to address liquidity risks and move towards a transparent, market-determined exchange rate.
The deputy governor attributed the heightened demand for dollars to market participants’ fears of foreign exchange shortages, but reassured that the government’s reforms are focused on strengthening public finances, tax administration, and non-oil exports to maintain Nigeria’s attractiveness for local and foreign investors.
