The Naira devaluation of 1986 was a major economic policy decision made by the Nigerian government to address the country’s economic challenges at the time. The decision was made by the government of President Ibrahim Babangida, who was in power from 1985 to 1993.
In 1986, Nigeria was facing a severe economic crisis characterized by a huge budget deficit, a balance of payment crisis, and a decline in oil prices. The government, in response, implemented a series of economic reforms, including the devaluation of the Naira, which is the Nigerian currency.
The Naira devaluation of 1986 involved a significant reduction in the value of the Naira against major international currencies, particularly the US dollar. This was done in order to make Nigerian exports more competitive and to encourage foreign investment.
The devaluation of the Naira had both positive and negative impacts on the Nigerian economy. On the positive side, it helped to boost exports and increased the revenue generated from oil exports. It also made the country more attractive to foreign investors, which helped to stimulate economic growth.
On the negative side, the devaluation of the Naira led to an increase in the prices of imported goods, including essential commodities such as food and medicine, which caused hardship for many Nigerians. It also led to a decline in the purchasing power of the Naira, which affected the standard of living of many Nigerians.
Despite the challenges associated with the Naira devaluation of 1986, it was a significant economic reform that helped to set the stage for future economic growth and development in Nigeria. It also highlighted the need for sound economic policies and good governance to address the country’s economic challenges.