The Path to Naira Stability: Three Transformative Reforms
Nigeria has made significant strides in recent years, with the government reporting growth in GDP, reduced inflation, and a more stable exchange rate. However, despite these achievements, the naira continues to face one of the most pressing challenges: exchange rate volatility. With the naira depreciating by over 40 per cent in 2024 alone, it ranks among the worst-performing currencies in Africa. This depreciation has led to a growing preference for the dollar, as N1bn is now worth less than $1m. To address this, we must focus on building tangible economic fundamentals that can support the naira and reduce its vulnerability to external shocks.
One of the most critical reforms needed is land and real estate titling. Studies conducted by the World Bank, PwC, and my firm, OAL, reveal that 90 per cent of Nigerian land and real estate lack proper titles. This creates what economists call “dead capital”—assets that cannot be traded, used as collateral, or integrated into the financial system. Economist Hernando de Soto highlighted in his bookThe Mystery of Capitalthat formal property rights are essential for developing economies. By converting dead capital into productive assets, we can unlock vast amounts of economic value.
Property titling reform would transform land and real estate into legally recognised assets. Owners could use their properties as collateral to access credit, allowing banks to lend with greater confidence. This process would release equity locked in land, converting illiquid assets into financial capital that can circulate through the economy. The result would be increased liquidity, more access to loans, and the creation of a vibrant real estate market.
The foundation for this reform is already being laid. The government’s National Land Registration, Documentation and Titling Programme aims to digitise land records and create a transparent system. What is needed now is acceleration and scale. By integrating property values into the financial system and harmonising legal frameworks across federal and state systems, we can create an instant credit market worth potentially thousands of times Nigeria’s GDP. This would provide the necessary funds to finance development across the country.
Unlocking trapped property assets would also encourage investors who currently prefer to buy properties abroad to invest in Nigeria. This would deepen naira-denominated asset markets, reduce dependency on dollar-denominated assets, and strengthen demand for the naira. Using conservative estimates from the World Bank and PwC, the potential value of dead capital is around $900bn, which translates to 1.5 quadrillion naira. Releasing this amount into the economy could have a transformative impact, providing sustainable backing for the naira and creating the foundation for long-term prosperity.
Another key area is the development of a credit economy. Nigeria operates largely as a cash economy, limiting the potential for growth. A well-developed credit system allows people to buy what they cannot afford, provided they manage their debt. For instance, 90 per cent of Americans cannot afford a house without a mortgage. Similarly, Nigerians who can pay rent should be able to afford a mortgage, but this requires a legal framework that supports credit.
A robust policy and legal framework for credit would be transformational. With 200 million Nigerians each having N300,000 in credit facilities, this could inject N60tn into the economy. Naira-denominated credit would boost domestic consumption, reduce import demand, and ease foreign exchange pressure. A thriving naira credit market would deepen financial markets and make the naira more attractive, reducing speculative attacks that drive exchange rate volatility.
Finally, agricultural transformation is essential. Despite having a large workforce in agriculture, Nigeria’s output is significantly lower than that of countries like the United States. This disparity is due to low productivity, not the number of workers. America achieves high output through mechanisation and a fully developed value chain, including cold storage, food processing, logistics, and export infrastructure. Nigeria remains at the subsistence level, using manual tools like hoes and cutlasses.
Mechanisation is the key to transforming agriculture. With proper policies and legal frameworks, capital will flow into the sector, enabling farmers to access credit and invest in machinery. This would increase productivity, reduce post-harvest losses, and enhance food security. Agricultural exports would generate foreign exchange earnings, strengthening the naira and reducing the need for imports. Food self-sufficiency would also help stabilise exchange rates and reduce imported inflation.
These three reforms—land titling, credit economy development, and agricultural mechanisation—are essential for creating the fundamentals that will support the naira. Alongside other reforms such as oil and gas development, maritime sector optimisation, and manufacturing, they can provide the necessary backing for the naira. If implemented effectively, these changes could lead to significant improvements in the next few years, reducing volatility and strengthening the naira.