In 2014, armed with optimism and a British accent that I was sure would fade within six months, I returned to Nigeria after 19 years of living abroad. Little did I know, I was about to enter a financial boot camp, with the naira as my drill sergeant. Fast forward to 2024, and my relationship with Nigeria’s currency has been a rollercoaster of highs, lows, and the occasional free fall. Over the past decade, I’ve learned a lot, not just about how a currency works, but about how it defines your life. Although the points below might seem bleak, this piece is just part 1 of a two-part article. In part 2 I offer some insights on how to hedge against currency devaluation and its passthrough cousin, inflation!

Here are 10 things I’ve learned about the naira’s impact on everything from personal spending to Nigeria’s economy.

1. The Naira’s Journey has been A Marathon with No Finish Line

When I moved back, the naira was exchanging at a relatively calm ₦165 to the dollar. Fast forward to 2024, and after a few detours through multiple exchange rates and a whole lot of policy drama, the naira now sits at around ₦1600 to the dollar. The naira has been on a steep decline, driven by falling oil prices, rising inflation, and weak economic fundamentals. Yet, what’s often missed in these conversations is that the naira’s volatility was also compounded by past policy decisions that distorted the true value of the currency. I’ve had to explain to both local and foreign investors that when it comes to the naira, official exchange rates often paint a more optimistic picture than reality.

Today, courtesy of the government’s much-needed exchange rate unification in 2023, things have stabilised somewhat. The unification removed the multiple rates that made doing business feel like a game of roulette. While it was a necessary step, what we rarely talk about is that the naira’s depreciation is like that friend who promises to change but never really does.

2. Purchasing Power Erosion Also Has a Psychological Impact

In 2014, ₦10,000 could take you far enough to feel like a baller at the grocery store. Today, it’ll barely get you a basket of basics, and you’ll be wondering if the price tags have been mixed up. Inflation has hovered above  20% in recent years, quietly turning the naira into a shadow of its former self. It's not just the big things like rent or fuel, it’s the little things, like realising that you can no longer afford to casually buy bottled water at every turn. Economists call this "diminished purchasing power." I call it "going broke in slow motion. The true cost of this isn’t just in food or fuel but in the psychological impact of constantly having to recalibrate one’s spending habits and lifestyle expectations.

3. Real Income: Keeping Up with the Joneses? Try Keeping Up with Inflation

Salaries may go up, but inflation runs faster. Salaries across many industries have technically increased, but the naira’s trajectory has ensured that real income has barely moved. A raise these days often feels like one step forward, two steps back. This is particularly glaring in professional sectors where the impact of global inflation is felt more acutely. The hardest pill to swallow? While you may rise up the corporate ladder, the reward often feels diminished when weighed against the relentless devaluation of your earnings. You get excited for that pay bump, only to realise that your new salary doesn’t even cover the things your old one could. It’s the naira’s way of keeping you humble.

4. Exchange Rate Unification Has Been A Tough Love Reform

In 2023, Nigeria finally unified its multiple exchange rates, ending years of confusion that made the naira seem like it had split personalities. Let’s be honest, before the unification of Nigeria’s exchange rates, the parallel market was like that dodgy guy in the corner of the party. No one admits they talk to him, but everyone does. Ignoring the parallel market before unification was like pretending it wasn’t raining when you’re soaked.

The unification has brought some clarity and, crucially, helped improve investor confidence. However, the painful part was realising that the official rate was closer to the rates everyone whispered about in the background. The upside? Investors now know what they’re getting into, and businesses can plan a bit better.

5.Currency vs. Competitiveness: The Real Debate

One under discussed aspect of the naira's decline is its impact on Nigeria’s competitiveness. On paper, a weaker naira should make Nigerian exports more attractive. But structural inefficiencies such as unreliable power, poor infrastructure, and regulatory hurdles mean that Nigerian products struggle to capitalise on this supposed advantage. Meanwhile, the increased cost of imports due to the naira's weakness exacerbates inflationary pressures. It’s a vicious cycle, and it raises a bigger question; Can a country really ‘devalue its way’ to prosperity without addressing its foundational issues?

6. The Battle for Street Credibility

No one tells you this before you move back, but you’ll find that the dollar quietly runs this town. It’s not just a foreign currency, it’s the unofficial currency of large transactions. Whether you’re paying school fees, buying property, or planning your next vacation, dollar accounting will creep its way into your calculations. For the naira, it’s a bit of an identity crisis. We live in Nigeria, earn naira, but think and plan in dollars. It should not be this way. It’s a strange existence, but one that reflects the naira’s instability over the years. It’s high time we re-write this narrative.

7. Inflation is The Silent Confidence Killer

Inflation doesn’t just raise prices, it makes you rethink every financial decision. When prices change before your eyes, it creates a sort of paranoia. Businesses jack up prices preemptively, anticipating the worst, and individuals do the same. Whether you’re buying a car, renting property or shopping for groceries, inflation has made even the simplest transactions feel like a race against time. Even in our finance world, I’ve seen how this fear plays out; clients locking in deals today because they’re sure tomorrow will be more expensive. Inflation doesn’t just inflate costs, it deflates confidence.

8. The Lost Savings of a Generation

In 2014, I naively believed in the power of saving in naira. But I quickly corrected course. Investment is a better strategy (but I’ll save the details for part 2 of this article). Inflation consistently outstrips interest rates, meaning that your naira savings today are worth less tomorrow. Many of us have been forced to become mini investors, looking for real estate, stocks, or foreign-denominated assets to preserve wealth. Today, the smart play is no longer traditional savings accounts but investments that can beat inflation. Saving in naira, without hedging against inflation, feels like a slow leak you can’t stop

9. Real Estate is a decent bet If you’re well informed

If you’re tired of chasing inflation, property is the next best thing. Real estate has been one of the few areas where Nigerians have consistently been able to protect their wealth. A plot of land in 2015 for ₦20 million? In 2024, that same plot is selling for ₦100 million. For professionals real estate has been less of an investment and more of a necessity; a tangible asset that offers a sense of stability when the currency itself doesn’t.

10. Nigerians Will Always Find a Way

Despite everything, if there’s one lesson the naira has taught me, it’s that Nigerians are masters of adaptation. We’ve turned to fintech, created e-commerce empires, and found new ways to thrive in the face of an unpredictable currency. In financial services, I’ve watched this resilience first hand. From the way people innovate in their businesses to how they plan their finances, we’ve learned to survive, and even prosper in spite of the naira’s trials.

Conclusion: The Naira Is More Than Just Currency

Ten years after my return, the naira has been more than just a currency to me, it’s been a reality check, a teacher, and sometimes, an adversary. Its trajectory has shaped every financial decision, from where I invest to how I plan for the future. While the unification of exchange rates has brought some relative stability, the naira remains a symbol of Nigeria’s deeper economic complexities. Yet, amidst all the fluctuations, one constant remains: Nigerians’ ability to adapt, thrive, and find opportunity even in the most challenging economic environments. And in that sense, the naira has taught me more than I ever expected.

In part two, I delve into some top investment strategies to hedge against devaluation and inflation, and hope to help you see some light at the end of the naira tunnel.

[Culled from LinkedIn]