Nigeria’s government may be forced to devalue the currency, the naira, in one of the next steps to deal with the economic crisis in the country.
That’s the view Malte Liewerscheidt, the senior Africa analyst at UK-based risk consultancy Verisk Maplecroft, expressed following the decision by President Muhammadu Buhari’s administration to scrap fuel subsidies.
The government has been left little choice other than to get rid of the expensive fuel subsidy. The recent recovery in crude oil prices, persistent foreign exchange shortages and huge gaps in funding the 2016 budget have backed them into a corner.
The decision might signal an increasing willingness on the part of Buhari to take market forces into account in economic policy decisions. A devaluation of the naira could now be on the cards.”