A lot of Nigerians grew up believing the naira once had a naturally “strong” exchange rate because governments announced figures like ₦120, ₦150 or ₦200 per dollar. But those figures were largely administrative decisions, not the true market value of the currency.
For years, Nigeria operated a heavily managed foreign exchange system. The Central Bank supplied dollars at politically determined rates while demand far exceeded supply. The difference between the official rate and the real market rate created one of the most profitable arbitrage systems in the country’s history.
Here is the simple mathematics behind it:
If the government fixed the dollar at ₦200 while actual market demand valued it closer to ₦350 or ₦400, anyone with privileged access to official forex instantly made enormous profit without producing anything.
Buy $1 million officially at ₦200/$
= ₦200 million.
Sell same $1 million in the parallel market at ₦350/$
= ₦350 million.
Risk-free gain: ₦150 million from a single transaction.
Multiply that across thousands of allocations over many years and you begin to understand why forex allocation became a political and economic empire.
The system expanded deeply during the oil boom years and became normalized across successive administrations. Under President Goodluck Jonathan, import dependence intensified and luxury consumption tied increasingly to the dollar economy. Under President Muhammadu Buhari, multiple exchange windows became entrenched. Official rates, investor rates, special intervention rates and parallel market rates all existed simultaneously. That gap became a goldmine for connected interests.
The real tragedy was not just currency distortion. It was what Nigeria sacrificed to sustain the illusion.
A country earning finite oil revenue was subsidizing both fuel and foreign exchange at the same time.
The fuel subsidy example explains it perfectly.
Nigeria’s actual daily petrol consumption estimates frequently conflicted with subsidy claims. Independent industry reviews often questioned how a country with roughly 220 million people could suddenly account for consumption figures approaching 70 to 100 million litres daily, especially when neighbouring countries with far smaller populations relied on smuggled Nigerian fuel. The inflated figures meant subsidy payments rose astronomically.
Imagine this:
If actual consumption was 25 million litres daily but subsidy claims were submitted for 80 million litres, government would effectively pay subsidy on 55 million phantom litres every single day.
55 million litres × ₦400 subsidy differential
= ₦22 billion daily.
Over one year:
₦22 billion × 365
= over ₦8 trillion.
That is enough money to build rail systems, modern refineries, power infrastructure and industrial hubs. Instead, huge portions disappeared into opaque import chains, round-tripping schemes and offshore refinery interests.
The same logic applied to the forex market.
Nigeria was using national revenue to artificially suppress the visible symptoms of deeper structural problems: low productivity, import dependence, weak refining capacity and fragile exports outside crude oil.
What many people called a “strong naira” was often a subsidized naira.
Eventually, economic reality caught up. By 2023, the government under President Bola Ahmed Tinubu moved toward exchange rate liberalization and fuel subsidy removal simultaneously. Painful? Absolutely. But it also exposed how much of the previous system depended on continuous state intervention and borrowed stability.
In economics, you can postpone market reality for years, sometimes decades. But postponement has a cost. The bill eventually arrives with accumulated interest.
Nigeria did not suddenly become poor in 2023. The country had been financing artificial comfort for years while neglecting production. What changed was that the cushion expired, and the underlying weaknesses became impossible to hide anymore.
I am Abiola Aremu Ogunlade and
May Nigeria win 🇳🇬🇳🇬🇳🇬
This is the singular reason most of you hate PBAT but he didn't send you.