According to many news reports quoting the same source, Chatham House, Nigeria achieved its highest level of competitiveness in 25 years. Expectedly, weaker naira has made exports cheaper and improved some economic indicators, like the highest trade surplus in a decade. However, deeper concerns remain about whether these changes reflect real progress or statistical illusions.
Currency depreciation alone cannot guarantee lasting improvements in productivity, infrastructure, or governance. This calls for critical examination. Is a weaker naira driving real competitiveness or masking deeper issues? Are recent trade gains policy-driven or temporary? Can Nigeria sustain growth without fixing structural challenges?
Our economic challenges are well documented. In 2017, the country’s ranking in the Global Competitiveness Index (GCI) improved, yet its actual score declined. This discrepancy occurred because other economies performed worse, rather than because Nigeria made substantial progress. The same risk exists today: apparent gains may be relative rather than absolute. While the country’s trade balance has improved and fiscal pressures have eased, broader structural issues persist.
The current narrative is largely driven by the depreciation of the naira, which has lost over 70% of its value against the U.S. dollar in the past 18 months. This has made exports more affordable globally, contributing to a reported trade surplus of ₦16.9 trillion.
However, a weak currency also raises the cost of imports, contributing to inflation which now exceeds 24% annually. The Central Bank of Nigeria (CBN) has attempted to control this through higher interest rates, but purchasing power continues to erode, affecting households and businesses alike.
The trade surplus is largely driven by crude oil exports, which account for a significant portion of foreign exchange earnings. While a weaker currency makes oil exports more competitive, it does little to address the structural deficiencies holding back other sectors. Non-oil exports, though rising, remain weak due to poor infrastructure, unreliable power supply, and logistical challenges.
The manufacturing sector, which could benefit from a competitive currency, struggles with high energy costs and supply chain disruptions. Without addressing these long-standing issues, we risk being overly reliant on currency depreciation as a means of improving competitiveness rather than focusing on real economic reforms.
Despite claims of improved competitiveness, Foreign Direct Investment (FDI) remains low. Nigeria attracts around $2 billion and above annually, a modest figure for a country with a population of over 230 million. Investors are hesitant due to concerns over corruption, regulatory unpredictability, and currency volatility.
In 2024, Nigeria was ranked 140th globally on Corruption Perception Index, highlighting ongoing governance concerns. Without stronger institutions and clearer regulations, the country’s ability to attract long-term investments will remain limited, regardless of exchange rate movements.
Studies by the CBN have shown that exports and capital flows alone do not determine competitiveness. Productivity, infrastructure, and sound fiscal management play more important roles. If these areas are not strengthened, the recent gains could be short-lived.
Many of the challenges identified in past reports—such as macroeconomic instability and weak human capital development—remain unresolved. This raises doubts about whether recent improvements reflect genuine economic strength or if they are simply the result of statistical shifts caused by external factors like oil prices and currency adjustments.
The World Economic Forum’s competitiveness index measures 98 variables across 12 categories, including governance, infrastructure, and innovation. While our position may have improved, there is little evidence that fundamental issues have been addressed.
Although there have been increased investments in infrastructure, given the continued challenges in transport and energy, it is unlikely to have improved significantly. Similarly, weaknesses in governance and a widening skill gap to power the economy continue to limit Nigeria’s long-term growth potential.
A closer look at the stock market also suggests that the recent surge is not necessarily a sign of improved confidence. The stock market grew by 38% in 2024, but much of this was driven by domestic investors responding to currency fluctuations rather than by foreign capital inflows. This suggests that perceived improvements in competitiveness may be exaggerated and dependent on short-term conditions rather than lasting reforms.
To ensure that this economic progress is real and not just a temporary statistical effect, policymakers must focus on structural reforms. The government must improve infrastructure by prioritising capital investment over recurrent spending. Public investment in power, transport, and digital connectivity will help businesses grow and become more competitive beyond currency effects.
Monetary policy also needs to be carefully managed. While currency flexibility can support exports, it must be paired with measures to reduce inflation and stabilise financial markets. The CBN should work on strengthening the banking sector to improve credit availability for businesses, particularly in manufacturing and agriculture, which have the potential to drive sustainable growth.
Governance reforms are equally important. Addressing corruption, streamlining regulatory processes, and improving judicial efficiency will create a more attractive environment for investors. If foreign businesses see clear rules and stable policies, they will be more likely to commit long-term capital to Nigeria. Stronger institutions will also help prevent the type of economic instability that has historically undermined competitiveness.
Nigeria’s claim of reaching a 25-year high in competitiveness requires scrutiny. While some economic indicators have improved, many of the same structural weaknesses that existed in previous years remain. The naira’s depreciation has delivered short-term benefits, but unless broader reforms are implemented, these gains may prove to be temporary.
To achieve real and lasting competitiveness, we must go beyond currency-driven advantages and focus on productivity, infrastructure, and governance. Policymakers must ensure that progress is not just statistical but reflects in real improvements in living standards, business conditions, and investment inflows. Only then will this 25-year high competitiveness stand on solid ground rather than being a fleeting illusion.
Research & Advocacy Department,
Chartered Institute of Directors (CIoD)
28, Olawale Edun Road (Formerly Cameron Road), Ikoyi, Lagos.