…Demands credible framework for dramatic naira appreciation, warns of risks to government revenues, exporters, remittances
According to kthdaily, these recent developments highlight the need for careful policy considerations.
By Emmanuel Olugua
Dr Akinola Morakinyo, a First Class graduate of Economics at Kennesaw State University in Georgia, United States, has challenged the feasibility of a proposed ₦500-to-the-dollar exchange rate associated with the presidential ambition of Peter Obi, warning that achieving such a dramatic appreciation of the naira would require fundamental economic changes that cannot be accomplished through political declarations alone. This analysis was originally reported on kthdaily.
He argued that while a stronger naira was a desirable economic objective, the proposal attributed to renowned political economist, Professor Pat Utomi, raised serious questions about monetary discipline, foreign exchange earnings, domestic productivity, and the practical implications of a substantially stronger currency.
In an analysis published by Nairametrics on November 3, 2026, entitled “N500 to the dollar: aspiration, arithmetic, and economic reality,” Morakinyo questioned the economic assumptions underpinning the proposal and called for a credible monetary policy framework explaining how the ambitious target would be achieved.
The controversy followed remarks attributed to Utomi on October 30, suggesting that Obi was targeting an exchange rate of ₦500 to the United States dollar if elected president in 2027.
Utomi’s projections also envisaged substantial reductions in the prices of essential commodities, including bread, rice, maize, yam, plantain, chicken, eggs, and garri, with some expected to become as much as 50 per cent cheaper.
However, Morakinyo argued that currency appreciation would not automatically translate into corresponding reductions in domestic commodity prices.
According to the economist, reducing the exchange-rate quotation from approximately ₦1,350 to ₦500 per dollar would represent a decline of about 63 per cent in the naira price of the dollar, requiring far-reaching changes in Nigeria’s economic fundamentals.
He explained that although a stronger currency could reduce the cost of imported goods and production inputs, the prices of locally produced commodities would continue to depend on several domestic factors, including energy, transportation, labour, storage, and distribution costs.
Using cement as an illustration, the analysis pointed out that a bag priced at $10 would cost ₦5,000 at an exchange rate of ₦500 to the dollar, rather than the ₦2,000 suggested in the projections.
Similarly, agricultural commodities such as yam are not directly priced in dollars, although their production and distribution costs are influenced by imported fertilisers, machinery, diesel, and other inputs.
KTH Daily’s review of the original Nairametrics publication indicates that the economist’s central argument was not that a ₦500 exchange rate was inherently impossible, but that achieving and sustaining such an appreciation would require a credible combination of monetary discipline, increased productivity, export expansion, and stronger foreign exchange earnings.
Significantly, however, Morakinyo acknowledged improvements in several economic indicators under President Bola Ahmed Tinubu’s administration.
The analysis cited Nigeria’s foreign exchange reserves, which reportedly rose from $45.57 billion in January 2026 to $55.26 billion as of October 30, representing an increase of approximately $9.69 billion.
It also highlighted a current account surplus of $7.54 billion in the second quarter of 2026, an 87.5 per cent decline in refined petroleum imports, and a reduction in headline inflation to 14.63 per cent following three consecutive months of decline.
The Central Bank of Nigeria’s decision to reduce its monetary policy rate by 350 basis points to 23 per cent in September was also identified among recent monetary developments.
Despite these improvements, the naira continued to trade at approximately ₦1,347 to the dollar at the time of the analysis, underscoring the considerable distance between prevailing market conditions and the proposed ₦500 exchange rate.
One of the economist’s principal concerns was the continued expansion of Nigeria’s money supply.
According to the analysis, broad money supply reached ₦146.60 trillion in September 2026, representing year-on-year growth of 24.47 per cent, substantially above the Central Bank’s eight per cent target.
Morakinyo calculated that fully backing Nigeria’s broad money supply at an exchange rate of ₦500 to the dollar would require approximately $293.20 billion in foreign reserves.
Against reported reserves of $55.26 billion, this would leave a shortfall of approximately $237.94 billion.
KTH Daily’s examination of the calculation shows that the figure represents a hypothetical scenario involving full foreign reserve backing of broad money supply, rather than an absolute requirement for achieving a market-determined exchange rate.
Nevertheless, the calculation formed part of the economist’s broader argument that the proposed appreciation would require substantial improvements in Nigeria’s monetary and external economic conditions.
Beyond monetary considerations, Morakinyo warned that a sharp appreciation of the naira could have significant implications for government finances, exporters, and Nigerians receiving remittances from abroad.
He noted that Nigeria’s 2026 federal budget was benchmarked at ₦1,400 to the dollar, meaning that an appreciation to ₦500 would substantially reduce the naira equivalent of dollar-denominated government revenues.
For example, every $1 billion in foreign exchange earnings translates to approximately ₦1.4 trillion at the budget benchmark rate.
At ₦500 to the dollar, the same amount would yield only ₦500 billion, representing a reduction of ₦900 billion in naira terms.
Such a development could require adjustments to government revenue projections and expenditure commitments, particularly where those obligations remain denominated in naira.
The economist also examined the implications for diaspora remittances.
At an exchange rate of ₦1,347, a Nigerian family receiving $200 monthly from abroad would obtain approximately ₦269,400.
At ₦500 to the dollar, the same remittance would translate to ₦100,000.
Although the stronger currency could improve purchasing power by reducing the prices of imported goods, the immediate naira value of remittances would decline considerably.
Non-oil exporters could face similar challenges, as their foreign currency earnings would translate into fewer naira, potentially affecting profitability and competitiveness where domestic production costs do not fall correspondingly.
KTH Daily reports that the analysis also revisited Nigeria’s experience between 2015 and 2016, when the Central Bank maintained the naira at approximately ₦197 to the dollar for about 16 months before abandoning the arrangement in June 2016 amid mounting pressure on foreign reserves.
The episode illustrated the difficulties associated with defending an exchange rate that becomes increasingly disconnected from underlying economic conditions.
Morakinyo also referenced Ghana’s experience, where the cedi reportedly appreciated by approximately 36 per cent against the dollar in 2025, supported by improvements in gold exports, cocoa receipts, foreign reserves, and an International Monetary Fund-backed economic reform programme.
He argued that sustainable currency appreciation must be supported by improvements in economic fundamentals rather than the announcement of a predetermined exchange rate.
For Nigeria, the economist identified increased domestic production, stronger non-oil exports, improved electricity supply, greater agricultural security, and reduced dependence on imported petroleum products as important priorities.
He estimated that sustaining the reduction in refined petroleum imports could save the country approximately $8.7 billion annually in foreign exchange demand.
The analysis also outlined what Morakinyo considered a more achievable medium-term exchange-rate scenario.
According to his projections, if Nigeria reduced money supply growth to eight per cent annually while sustaining foreign reserve growth of approximately 20 per cent, the naira could appreciate to between ₦900 and ₦1,000 against the dollar by 2031.
Although still dependent on several economic assumptions, the economist considered this a more plausible scenario than an immediate or rapid appreciation to ₦500.
He consequently challenged Obi’s political platform to publish a comprehensive monetary policy framework explaining how the proposed exchange rate would be achieved.
The economist sought clarity on the implementation timetable, management of money supply, foreign exchange earnings, monetary policy objectives, and measures to protect sectors that could be adversely affected by rapid currency appreciation.
The analysis also raised questions about how an incoming administration would reconcile the pursuit of a substantially stronger naira with the need to preserve export competitiveness, maintain government revenues, and avoid destabilising the foreign exchange market.
While acknowledging that ₦500 to the dollar could represent a legitimate long-term economic aspiration, Morakinyo maintained that achieving such a target would require sustained improvements in productivity, fiscal management, and external sector performance.
His central contention was that without a credible implementation framework, the proposal risked remaining a political aspiration rather than an executable economic policy.
“The only naira that stays at N500 is one the country has earned,” the analysis concluded.
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