Naira devaluation under Tinubu — the 2023-2024 unification and what it actually accomplished

<p>Bola Tinubu took office in May 2023 inheriting a Naira regime with multiple official rates, a Central Bank of Nigeria parallel-market premium of roughly 60%, and an external reserves position depleted by years of below-market FX sales. The unification of exchange rates in June 2023 produced an immediate 40% devaluation; a second devaluation in February 2024 pushed the official rate from around N750 per USD to over N1,500 per USD. By late 2024 the rate had settled in the N1,500-1,650 range. The macroeconomic shifts that followed are worth examining in detail.</p> <p>The intended logic was textbook IMF orthodoxy. A unified market-determined exchange rate would: eliminate the rent extraction by which politically connected importers had been buying cheap official-rate FX and selling at parallel-market prices; restore portfolio investor confidence by signaling rule-based monetary management; rebuild reserves by allowing the diaspora remittance flows that had been routing around the official channel to come back through it. Olayemi Cardoso, the CBN governor appointed in September 2023, executed this with a credible commitment that distinguished him from Godwin Emefiele&#x27;s interventionism.</p> <p>The portfolio response materialized. JP Morgan readmitted Nigerian sovereign bonds to its Government Bond Index–Emerging Markets in early 2024; foreign portfolio inflows recovered to roughly USD 8 billion in 2024 against under USD 2 billion in 2022. Remittances, which IFAD data had tracked through unofficial channels, increasingly routed through licensed International Money Transfer Operators. Reserves rose from roughly USD 33 billion to over USD 40 billion by end-2024.</p> <p>The household cost was severe. CPI inflation, already high pre-devaluation, accelerated to a peak of over 34% in mid-2024 — driven by imported-fuel pass-through (after the May 2023 petrol subsidy removal) and by food-price effects from the FX devaluation on imported rice, wheat, and fertilizer. Tinubu&#x27;s social investment programmes — cash transfers, student loans, the CNG conversion programme — have absorbed some of the cost but have executed unevenly. The political backlash, including the GenZ-led protests in 2024, has tested the durability of the reform commitment.</p> <p>The honest mid-term assessment, two years in: the unification was a genuinely necessary reform that should have happened a decade earlier, the macroeconomic plumbing now works more transparently than under the Emefiele regime, and the cost has been borne disproportionately by low-income urban consumers rather than the importer-rentier class the reform was supposed to discipline. Ngozi Okonjo-Iweala has noted publicly that Nigeria&#x27;s reform was structurally correct but politically under-cushioned. The next two years will tell whether the macroeconomic stabilization translates into broad-based household income recovery, or whether the political coalition that backed the reform fractures before that recovery arrives.</p>