Vice-President Kashim Shettima’s claim that the naira “would have appreciated to N1,000 per dollar in weeks” if the Central Bank of Nigeria hadn’t stepped in captures a real shift: the currency is no longer in free-fall.
On 20th February 2026, the naira traded around N1,340/$ on the parallel market, up from lows beyond N1,600, and fundamentals are beginning to turn.
The reform backbone
Two of President Tinubu’s moves set the stage:
- FX market unification/float (June 2023). Collapsing multiple rates and letting the naira find its level killed arbitrage and started to pull in portfolio flows. The shock was brutal, prices spiked, and wallets shrank, but it restored credibility.
- Petrol subsidy removal (May 2023). Cutting that fiscal drain saved N1 trillion in two months and freed revenue for other needs, even as transport and food costs jumped.
Both measures were painful, but they created space for a market-driven rate and gave the Central Bank of Nigeria (CBN) room to act predictably.
CBN’s role: steadiness over spectacle
Vice President Shettima called the CBN’s latest intervention “generous.” The bank has kept a tight monetary stance, cleared almost all FX backlogs, and allowed licensed Bureau De Change (BDC) limited access ($150k USD weekly cap from 10th Feb 2026) to smooth liquidity.
That predictability, raising/reducing rates when needed, avoiding ad-hoc controls, has anchored expectations and helped reserves recover to over $50 billion USD gross, the highest in 13 years. Monetary policy looks disciplined.
Fiscal dominance – the tug-of-war underneath
Here’s where the story gets sticky. Fiscal dominance is when government spending and borrowing overpower the central bank’s inflation fight, a tug-of-war between the Finance Ministry and the CBN, often ending in higher inflation or instability. Nigeria is living with that tension.
The 2026 budget, titled “Budget of Consolidation, Renewed Resilience and Shared Prosperity,” is approximately N58.18–N58.47 trillion ($37.7–$41.5 billion) with a deficit of N23.85 trillion (4.28% of GDP). Debt service eats up a huge slice of revenue, and actual receipts keep falling short of projections, even as Federation revenue rose from N16.8 trillion (2023) to N31.9 trillion (2024).
Deficit finance and borrowing remain high, and most of the Sub-National spending leans toward unnecessary projects, new bus terminals, and government lodges, rather than income-generating assets.
The result: inflation eases only slowly. According to The National Bureau of Statistics, headline inflation fell to 15.10% in January 2026 (down from 15.15% in December), but food pressures persist, squeezing households. Fiscal dominance risks undermining the CBN’s credibility if unchecked.
From hunting revenue to nurturing business
Government rhetoric still leans on aggressive tax collection (“hunting”). What businesses need is Trade Facilitation: faster NAFDAC and Standards Organisation licensing, fewer duplicative levies (the Oyedele Presidential Fiscal Committee aims to cut 60+ taxes to under 10), and trade-policy certainty.
A hunting mindset undermines the private-sector dynamism the FX reform was meant to unleash.
Dangote refinery – the homegrown catalyst
Aliko Dangote’s prediction that the naira can hit N1,100/$ isn’t just talk; the refinery’s ramp-up cuts fuel imports, saves FX, and anchors the optimism Vice President Shettima voiced. It’s a reminder that entrepreneurship, not only policy, drives real value.
Dangote Refinery already produces aviation fuel (Jet A1), about 20 million litres daily plus naphtha, polypropylene (830 kt / yr now, expanding to 2.4 mt / yr), bitumen, liquefied petroleum gas, sulphur and bunker fuel, all from its 650,000-bpd plant.
The refinery intends to boost polypropylene to 2.4 million tonnes annually, add large‑scale linear alkylbenzene for detergents and base‑oil lubricants, and expand overall capacity to 1.4 million bpd, which will multiply those by‑product volumes.
These outputs feed other sectors: Jet A1 cuts airline fuel imports and costs, naphtha and polypropylene supply local plastics, textiles, packaging and pharmaceutical manufacturers, bitumen supports road construction, LPG provides clean cooking fuel, and sulphur and LAB feed fertiliser and detergent production, collectively reducing import bills, creating jobs and spurring industrial growth.
For Government Immediate Action
Fiscal discipline: curb borrowing, put a cap on local public borrowings and use the improved allocations for FAC to pay back down part of local previous borrowings/ bonds(these will force commercial banks interest rates to crash and stimulate private sector access to reasonably priced capital), publish project appraisals, and the Sub-nationals should to link allocations/IGR revenues to revenue-yielding investments.
- Spending efficiency: shift from consumption (new houses) to power, feeder roads, and storage that stimulate private capital and lift private-sector productivity.
- Business environment: domicile the single-window trade system in NIPC, enforce licensing timelines (NAFDAC, SON), and reduce overlapping and unnecessary regulatory compliance to protect investors.
- Social cushioning: expand targeted cash transfers and food logistics before current reforms mature.
- Human capital: invest in early-childhood health, education, and vocational training; the World Bank warns that productivity losses today lock in poverty tomorrow.
The inclusive-growth warning
Macro stability hasn’t reached kitchens. The World Bank’s October 2025 update puts 139 million Nigerians in poverty, up from 87 million in 2023, and warns that without mass-employment sectors and safety nets, reform durability and political stability are at risk.
Other factors driving appreciation—beyond policy
- Bitcoin as a hedge. There’s an observable inverse link: when the naira weakens, crypto demand spikes as households hedge. The recent naira strength coincides with calmer Bitcoin inflows, easing pressure on FX demand.
- Naira-for-petrol in ECOWAS. Discussions to invoice petrol sales in naira across the sub-region would lift demand for the currency and deepen its role as a regional unit of exchange.
- Policy coordination gap. Nigeria’s fiscal/monetary settings still run partly in isolation. Better alignment with ECOWAS convergence goals, AfCFTA trade facilitation, and WTO rules, and a shared response to global trade uncertainty from U.S. policy swings, is critical.
- Export-price mismatch. The sudden appreciation of the Naira hurts non-oil exports: cocoa farmers report local prices above world benchmarks, squeezing margins and discouraging rural incomes.
- Velocity of money & inclusivity. Governments need to pump up investments in infrastructure, schools, and sports centres in rural communities to speed up money circulation where multipliers are high. If money velocity rises only in Lagos/Abuja and other major cities, earnings recycle into luxury real estate, pricing out residents and widening the poverty gap. Growth must circulate, not pool.
What must governments do further now?
- Coordinate. Formal fiscal-monetary dialogue with ECOWAS and AfCFTA desks; monitor BTC/FX leakage loops.
- Protect export earners. Calibrate appreciation pace; consider targeted hedges for cocoa and other non-oil exporters.
- Steer velocity rural ward. Rural roads, power, storage, and social infrastructure and granting of investment incentives and tax credits to rural investors, will stimulate private capital outside the main Cities.
- Keep discipline. Publish appraisals, curb borrowing, and tie sub-national funds to revenue-yielding projects.
- Cushion and skill. Targeted transfers; vocational training to convert stability into jobs.
Bottom line: The naira’s rebound reflects real reform, a credible CBN, and Nigerian entrepreneurial grit. But fiscal dominance, huge deficits, debt service, and inefficient spending remain counterweights. Without fiscal prudence, private-sector facilitation, and inclusive spending, appreciation will stay a market statistic, not a lived improvement for most Nigerians.
Hon. Dele Kelvin Oye, is the Chairman, Alliance for Economic Research and Ethics LTD/GTE (AERE), a Nigerian non-profit working to strengthen both private and public sectors through independent research, policy advocacy, regulatory support, stakeholder engagement, and promotion of transparent, ethical reforms to improve Nigeria’s ease of doing business.
Excellent analysis by Dele Oye!