Devaluation of Naira: Prices will rise, poverty will deepen__ Expert

Following the recent devaluation of the naira by the CBN, financial and economic experts have said the poverty level in the country will increase in the short run.

Recall that we earlier reported on Wednesday that the CBN officially devalued the naira as it adopted the NAFEX exchange rate of N410.25 per dollar as its official exchange rate, days after removing the N379/$ rate from its website.

However, an economist, Amarachukwu Nwosu, while speaking with newsmen said the recent devaluation would have a huge impact on the costs of goods and services to be incurred by both businesses and individuals.

He further stated that the devaluation would lead to further hike in prices of goods and services as well as reduce the purchasing power of Nigerians.

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“Devaluing currency means the naira has a lower value. That is basic economics. The problem now is that Nigeria imports almost everything. For instance, a phone that costs N50,000 may now cost N60,000 because of the devaluation. Eventually, the implication of this devaluation will trickle down to everyone,” He said

“The corporate cost of business will be higher with the devaluation of the naira. This is because an item now comes with a higher cost. Therefore, the number of money businesses will be spending will be higher.

“It will also increase poverty rate because if you are earning a particular amount and that amount has lesser value or purchasing power, it means you are likely poorer. The devaluation will lead to the inability to live a decent life, which is poverty. Basically, it will affect everybody.”

According to Nwosu, since Nigeria is an import-based economy, the devaluation will likely have a devastating effect on the economy.

He said the government might devalue the naira again in the next year, adding, “What the government has been doing is managing the currency, which means using our foreign reserves to manage the currency.”

He, however, added that CBN likely devalued the naira as a necessary move to narrow the gap between the official and the black-market exchange rates.