Why exchange rate stability is not enough without local impact –Dr. Abraham
By: Theresa Donatus, Uyo.
Nigeria’s recent success in stabilizing the naira may have brought a sigh of relief to policymakers and investors, but for many citizens, soaring food prices and widespread unemployment continue to overshadow the seeming macroeconomic gains.
In an exclusive interview with our correspondent in Lagos recently, Dr. Terfa Abraham, a senior economist and research fellow at the National Institute for Legislative and Democratic Studies (NILDS), cautioned that exchange rate stability, while welcome, is insufficient without direct local impact.
“Exchange rate stability is good for investor confidence, but it doesn’t mean much to the average Nigerian if food prices remain high and local productivity is weak,” he said.
Nigeria’s foreign exchange market has witnessed relative calm in recent weeks, following months of volatility that saw the naira swing widely against the dollar. But according to Dr. Abraham, this monetary stability has not yet translated into reduced hardship for ordinary citizens.
He argued that the true test of economic policies lies not in financial market figures but in household realities such as the affordability of food, access to healthcare, and availability of jobs. “If people are still struggling to feed three times a day, then stability at the top remains meaningless to those at the bottom,” he noted.
Dr. Abraham stressed that governors and local government chairmen have a vital role in ensuring that federal policies trickle down to communities. He cited agriculture as a key sector where state-level intervention can complement national reforms.
“The exchange rate is a national metric, but governance is felt locally. Citizens must see the impact in roads, schools, hospitals, and food availability,” he said.
According to him, strengthening local food production is a more sustainable response to inflation than dependence on imports. He recommended empowering farmers through cooperatives, modern inputs, and access to markets, insisting that agriculture remains the surest way to combat hunger and unemployment simultaneously.
Dr. Abraham described food security as “the most important currency of the people,” noting that food inflation has been the major driver of Nigeria’s overall inflation rate. He observed that without deliberate investment in farming, storage, and distribution infrastructure, the country would remain vulnerable to food crises despite improvements in monetary indicators.
“Every state in Nigeria has comparative advantage in agriculture, but too many rely on oil allocations from Abuja instead of developing value chains in crops, livestock, and fisheries. If we don’t reverse this, exchange rate stability will remain only a headline achievement,” he warned.
The economist further called for transparency in how state resources are managed, saying Nigerians must see visible projects and programs in their communities. He urged governors to make agriculture, rural roads, and community markets a priority while ensuring that empowerment schemes are not politicized.
“Citizens should not only hear about billions being spent; they should see the impact in their lives. That is what builds trust in governance,” Dr. Abraham emphasized.
While acknowledging progress by the Central Bank of Nigeria (CBN) in stabilizing the currency, Dr. Abraham concluded that monetary measures alone cannot solve Nigeria’s economic crisis. Instead, a holistic approach that links fiscal reforms, agricultural revival, and grassroots empowerment is required to achieve sustainable recovery.
“Exchange rate stability may attract investors, but only inclusive governance and local productivity will guarantee a better life for Nigerians,” he said.
