President Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dele Kelvin Oye has said recent Naira devaluation was fuelling food and grain export to West African countries as Nigeria’s food is now the cheapest in the sub-region region due to the low value of Naira. Oye said this in response to comments by the Nigeria Governors Forum (NGF) stressing that while the immediate effect of the devaluation of the Naira on exports may be positive, the broader implications of a persistent devaluation are multifaceted.
The NACCIMA President in a statement said the
observations made by the NGF highlight a nuanced aspect of currency
devaluation, especially its effect on trade competitiveness.
He said: “The observations made by the Nigeria
Governors Forum highlight a nuanced aspect of currency devaluation – its effect
on trade competitiveness. The devaluation of the Naira, while presenting broad
economic challenges, does appear to have inadvertently enhanced the
competitiveness of Nigerian food and grain exports within the West African
region. This phenomenon is rooted in the economics of exchange rates. A weaker
Naira means that Nigerian goods become less expensive for buyers using stronger
currencies. Consequently, Nigerian food and grains are now more competitively
priced when compared to similar products from countries with stronger
currencies. This price advantage can lead to an increase in demand for Nigerian
exports within the region.”
Addressing inflationary pressures, the statement
said: “On inflationary pressure, the cost of imported goods, including
agricultural inputs such as machinery, fertilisers, and pesticides, will
increase, and potentially driving up domestic production costs over time. On
consumer impact, the increased export of food and grains could lead to a
reduction in domestic supply, thereby escalating food prices locally and
aggravating food insecurity in Nigeria.”
Analysing the short-term gains versus long-term
health, Oye said while devaluation might boost exports in the short term, there
were concerns about the long-term health of the economy if the underlying
causes of the devaluation, such as macroeconomic instability or policy uncertainty,
were not addressed.
On sustainable export growth, the NACCIMA
President noted that “for export growth to be sustainable, it must be supported
by productivity gains and not merely currency devaluation. Investments in
agricultural technology, infrastructure, and human capital are crucial for
maintaining a competitive edge.” He also, “in conclusion, while the devaluation
of the Naira has made Nigerian food exports more attractive in the short term,
it is essential to approach this development holistically. It is crucial to
balance the immediate benefits of increased export revenues with the need for a
stable macroeconomic environment and the well-being of the Nigerian population.
Long-term stability and growth of the agricultural sector will require
structural reforms that address the root causes of currency weakness, improve productivity,
and ensure food security for the Nigerian people.”
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