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Nigeria has faced significant economic challenges in recent years, from rising inflation and currency devaluation to political instability and widening income inequality. Many analysts have pointed to a deeper problem underpinning these crises—a “Greed Economy.” This concept describes an economy where the pursuit of personal profit trumps long-term societal welfare, and where market actors manipulate systems to gain disproportionately, exacerbating inequality and economic instability. Nigeria’s current fiscal, monetary, and market dynamics all seem to reflect elements of this Greed Economy, creating an environment where exploitation flourishes.

To understand how the Greed Economy plays out in Nigeria, it’s essential to analyse examples backed by data that show how exploitation, corruption, and opportunistic behaviours have impacted the economy. The following sections illustrate key areas where data trends support the narrative of a Greed Economy in Nigeria.

Monetary Policy and the Naira Crisis: A Case of Arbitrage

At the core of Nigeria’s economic turmoil is the depreciation of the naira, driven by flawed monetary policies and artificial manipulation of exchange rates. One striking example is the prevalence of exchange rate arbitrage, where individuals and businesses take advantage of discrepancies between official and parallel market rates for personal gain.

Dual Exchange Rate System

The Central Bank of Nigeria (CBN) has historically maintained a dual exchange rate system, where the official rate remains artificially low compared to the parallel market rate. This policy facilitates arbitrage opportunities for those with privileged access to foreign exchange. For example:

- In 2020, while the official exchange rate hovered around ₦380 per U.S. dollar, the parallel market rate exceeded ₦460.

- By 2023, the disparity widened dramatically, with the official rate at ₦460 and the parallel market rate surpassing ₦950.

- As of early 2024, the naira depreciated further, with parallel market rates exceeding ₦1,655 per dollar.

This divergence incentivizes the purchase of dollars at the official rate—primarily accessible to government officials and large businesses—for resale in the parallel market. The profits generated are immense but come at a significant cost to the economy, including dwindling foreign reserves, speculative pressures, and escalating inflation (Punch Nigeria, 2023).

Here is a chart showing the depreciation of the naira from 2014 to 2024, comparing the official exchange rate with the parallel market rate. The widening gap between the two demonstrates the significant challenges caused by currency manipulation and exchange rate arbitrage in Nigeria. Considering the severe depreciation trend of the naira, the government had no choice but to float the naira in the official market as an attempt to close the gap between official and parallel market rates and prevent arbitrage seeking.

This incentivizes individuals with access to official rates—typically government officials and large importers—to purchase dollars cheaply and sell them at a higher rate in the parallel market, making vast profits at the expense of the economy. This practice deepens the depreciation of the naira and contributes to inflation.

Long-Term Impacts

Between 2015 and 2024, the naira lost 840% of its value against the U.S. dollar (CBN, 2024). The declining purchasing power has left the average Nigerian struggling to afford necessities, intensifying poverty levels. Studies suggest that speculative currency practices and limited foreign exchange availability, compounded by global economic pressures, have further destabilized the economy (World Bank, 2023). This drastic erosion in the currency’s value highlights the ongoing effects of misaligned monetary policies, limited foreign exchange availability, and continued exploitation through exchange rate arbitrage, stable foreign exchange market and speculative pressures have worsened the currency situation, pushing Nigeria deeper into inflationary pressures and reducing purchasing power for the average citizen.

In a Greed Economy, this type of arbitrage is a symptom of weak economic policy and an opportunistic exploitation of flawed systems. It leads to a vicious cycle where those with access to foreign exchange get richer, while the average Nigerian bears the brunt of prices and declining purchasing power.

Fiscal Mismanagement and the Greed Factor

Nigeria’s fiscal policies are similarly mired in inefficiencies and corruption, further entrenching the Greed Economy. Despite being Africa’s largest oil producer, the country struggles to convert resource wealth into economic stability due to governance lapses and unchecked exploitation. Instead, the country is mired in debt, with much of its budget going toward servicing loans rather than investing in infrastructure, healthcare, or education.

The Fuel Subsidy Debacle

Fuel subsidies, initially designed to shield citizens from high fuel prices, have instead become a tool for systemic exploitation:

- Between 2009 and 2011, Nigeria’s House of Representatives documented widespread fraud in subsidy disbursements, with funds enriching a few importers at the expense of public welfare (Premium Times, 2022).

- In 2023, the removal of subsidies saw petrol prices jump by 428% within 17 months, leading to severe inflationary pressures on the cost of living.

Debt Servicing and Inequality

Nigeria allocates a significant portion of its budget to debt servicing rather than development. This focus diverts funds from critical sectors like healthcare, education, and infrastructure. In 2022, 50% of Nigeria’s wealth was controlled by the top 10% of the population, underscoring the inequities embedded in fiscal policy (Vanguard Nigeria, 2023).

A key driver of this fiscal mismanagement is the unchecked greed of public officials. The recent subsidy removal debacle is a case in point: while fuel subsidies were meant to alleviate the cost burden on the populace, they were often mismanaged, with benefits flowing to a select few importers who manipulated the system for personal gain.

In a greedy economy, fiscal policy is less about creating wealth for the collective good and more about serving the interests of a powerful minority. As a result, the gap between the wealthy elite and the struggling masses continues to widen, further entrenching inequality.

Market Dynamics: Capitalism without Accountability

Nigeria’s market structure reflects unbridled capitalism, where profit maximization is pursued without regard for ethical considerations or long-term sustainability. Nigeria’s market dynamics increasingly reflect this ethos. Large corporations often dominate industries, leveraging monopolistic practices to stifle competition and extract maximum profit at the expense of consumers.

In sectors like telecommunications, agriculture, and real estate, the market power of a few players has allowed prices to skyrocket while wages stagnate. The lack of effective regulation allows these companies to exploit consumers, who have little choice but to pay inflated prices for basic goods and services.

This monopolistic control over key sectors stifles innovation, discourages competition, and makes it harder for small and medium-sized enterprises (SMEs) to thrive. In a Greed Economy, market dynamics are skewed in favour of those with capital and influence, leaving the broader population with little recourse but to bear the financial burden. These conditions have led to a significant contraction in the SME sector, which is crucial for employment generation and economic diversification (World Bank, 2023).

The Consequences: Rising Inequality and Economic Instability

The inevitable outcome of Nigeria’s Greed Economy is rising inequality and growing economic instability. The wealth gap continues to widen, with a small elite controlling an increasing share of the country’s resources while the majority struggle to make ends meet (Oxfam Report, 2023). This disparity is not just an economic problem but also a social one, fuelling resentment, political unrest, and a sense of disenfranchisement among the population.

Inflation has hit the poorest Nigerians the hardest, particularly in food prices. As the cost of living rises, many households find it increasingly difficult to afford necessities, leading to declining living standards and growing poverty levels. This economic pressure has also contributed to the brain drain, as skilled workers and professionals leave the country in search of better opportunities abroad (NBS, 2023).

Pathways to Reform: Toward an Inclusive Economy

Addressing the Greed Economy requires a multi-pronged approach that includes regulatory reform, better governance, and a commitment to ethical business practices.

- Monetary Policy Reform: The CBN must eliminate the dual exchange rate system and allow market forces to determine the value of the naira. This would reduce the arbitrage opportunities and promote a more transparent and efficient currency market.

- Anti-Corruption Measures: Nigeria needs stronger anti-corruption laws and enforcement mechanisms to hold public officials accountable for fiscal mismanagement. This includes greater transparency in the allocation of public funds and more stringent oversight of government contracts and expenditures.

- Regulatory Oversight: There must be stricter regulations on monopolistic practices and corporate malfeasance. The government should encourage competition by supporting SMEs and ensuring that market conditions do not favour large corporations at the expense of the broader economy.

- Social Safety Nets: Finally, the government should invest in social programs that alleviate the financial burden on low-income households, such as affordable housing initiatives, healthcare programs, and education subsidies.

Conclusion: A Call for Ethical Governance

Nigeria is facing significant economic challenges, largely driven by systemic exploitation and arbitrage that enriches a small elite while leaving the majority in distress. Trends in Nigeria’s currency market, the fuel subsidy program, rampant income inequality, and questionable corporate behaviour paint a picture of a deeply rooted Greed Economy. This system disproportionately favours individuals with access to power, capital, or government connections, worsening the conditions for ordinary Nigerians.

The unchecked greed in the currency and fuel markets has triggered soaring inflation, increased poverty, and deepened inequality. The effects of subsidy removal, currency depreciation, and rising prices for essential goods have created a precarious economic landscape where everyday citizens bear the negative consequences of inefficiencies and market manipulation. Without substantial reforms—such as more effective monetary policies, strong anti-corruption initiatives, and rigorous regulatory oversight—the Greed Economy will persist, fostering further inequality and instability that jeopardizes the nation’s long-term growth potential.

While removing subsidies may eventually help to balance the budget, neglecting to tackle the underlying greed economy or providing necessary social safety nets means that Nigeria’s most vulnerable citizens will continue to endure hardship. Yet, we can envision a brighter future with decisive leadership and a commitment to ethical governance and regulatory reform.

By overhauling Nigeria’s economic policies and demanding accountability, we can shift away from a system that rewards exploitation and move toward one that champions inclusive growth and shared prosperity for all Nigerians. The time to act is now.

Photo source: cottonbro studio (pexels.com).

References:

“Black Market Exchange Rates Cross ₦900 Per Dollar as Naira Struggles.” Punch Nigeria, 2023.

“Income Disparities in Nigeria: Top 10% Control 50% of Wealth.” Vanguard Nigeria, 2023.

“Nigeria’s Dual Exchange Rate System Exacerbates Naira Depreciation.” Nairametrics, 2023.

“Nigeria’s Fuel Subsidy Removal Sends Petrol Prices Soaring.” Reuters, 2023.

“Nigeria’s House of Representatives Report on Fuel Subsidy Fraud (2009-2011).”

“NNPC Admits Fraud in Fuel Subsidy Disbursements.” Premium Times, 2022.

“Parallel Market Pressures: Naira Hits ₦950 Against Dollar.” The Guardian Nigeria, 2023.

Business Insider Africa, “Petrol price jumps 428% as FG increases fuel price four times in 17 months” Reported on October 9^th 2024

Central Bank of Nigeria, “Naira Depreciation Trend from 2015 to 2023.”

Central Bank of Nigeria, “Official Naira Exchange rate from 2001 to 2024.”

National Bureau of Statistics, “Food Inflation Rates for July 2023.”

National Bureau of Statistics, “Inflation Report July 2023.”

National Bureau of Statistics, “Nigeria’s 2022 Budget and Subsidy Cost Analysis.”

Nigerian Communications Commission (NCC), “Telecommunications Market Share Data.”

Oxfam Report, “Rising Billionaire Wealth Amid Nigeria’s Growing Poverty Crisis.”

World Bank, “Nigeria’s Widening Income Inequality: Gini Coefficient Analysis.”

World Bank, “Nigeria’s Poverty and Poverty Reduction Strategies.”