How Can Nigeria Strengthen the Naira by Balancing Local and Global Trade?

The strength of Nigeria’s naira depends on how well the country manages its local production and global trade. Right now, Nigeria imports more than it exports, leading to a heavy demand for foreign currency and a weaker naira. 

To reverse this, the country must shift from an import-dependent economy to one that produces more and competes globally. Here are some key ways Nigeria can achieve this balance:

Process raw materials locally

Nigeria has vast natural resources, from crude oil and cocoa to solid minerals. However, most of these are exported in raw form while the country spends heavily on importing refined versions. 

For example, Nigeria exports crude oil but imports refined petrol at a high cost. If the country invests in refineries and local processing industries, it will reduce import expenses, increase export earnings, and create jobs. This is how Malaysia turned its palm oil industry into a global success. Nigeria can do the same with its resources.

Support local manufacturing

Nigeria’s manufacturing sector is underdeveloped, contributing less than 10% to the economy. Many products, from clothing to household items, are imported. To change this, Nigeria must support its industries with tax breaks, low-interest loans, and better infrastructure. 

When local businesses thrive, fewer people will need to buy imported goods, reducing the pressure on the naira.

Expand the digital economy

Nigeria’s fintech industry is already making waves globally, attracting billions in investment. If the country strengthens its digital economy by improving internet access and supporting tech startups, it can earn more foreign exchange. 

Nigeria can become a hub for software development, outsourcing, and digital services, bringing in dollars instead of losing them.

Maximise trade within Africa

The African Continental Free Trade Area (AfCFTA) is a $3.4 trillion market that Nigeria must tap into. By selling more finished goods, processed agricultural products, and digital services to other African countries, Nigeria can reduce its reliance on the dollar. This will help ease foreign exchange pressure and strengthen the naira.

Invest in infrastructure

Poor roads, unstable electricity, and inefficient ports make it expensive to produce goods in Nigeria. These challenges push businesses to rely on imports rather than local production. Nigeria loses billions yearly due to inadequate infrastructure. Fixing electricity, improving roads, and modernising transport systems will boost productivity and make local goods more competitive globally.