Nigeria is grappling with a severe economic downturn, largely fueled by government reforms and high inflation rates. Policy changes like the implementation of forex exchange market policy and market price control have had negative impacts on Nigeria’s economy and human flourishing, despite originally intended for economic growth. These policies have fueled economic hardship with ripple effects on the cost of living and prices of commodities in Nigeria. The Nigerian government should review restrictive policies and regulations that limit the well-being and economic freedom of citizens, and improve the business environment by reducing trade barriers.
Nigerian government policies have exacerbated inflation and the cost of living in the country. One of these policies is the unification of all segments of the forex exchange (FX) market. The unification, originally aimed at unifying all exchange rates into a single market-determined exchange rate for improved transparency, has led to multinational companies exiting from Nigeria, with multifaceted negative impacts on the country’s economy, such as job losses, reduced investment, and decreased tax revenue. Nigeria needs to prioritize a free market system for exchange rate determination. The government should review and modify current restrictive policies to allow market forces of supply and demand to determine the exchange rate. A freely floating exchange rate system will buffer the national economy against fluctuations in international demand and help to manage the rising inflation within the country.
The Nigerian government, through the Minister of State for Technology, Uche Nnaji, announced plans to stop the importation of solar panels. The government claimed that the move to ban solar panel importation was to encourage local production of solar panels. However, Nigeria’s unstable power supply has made solar energy a necessity. Imposing a ban on solar panel importation threatens small and medium-sized enterprises and the broader economy which could lead to scarcity, cause a spike in price, and push solar energy beyond the reach of average Nigerian business owners. Banning solar panel importation will also increase the cost of doing business and the cost of living, pushing households and businesses back to fuel-powered generators. To combat this issue, the Nigerian government should lift the solar panel importation ban. Concurrently, the government should work on improving the business environment in the country by reducing trade barriers, facilitating trade, providing a reliable power supply, and strengthening border and in-country security, which are crucial to attracting and maintaining domestic and foreign investment.
In the past, Nigeria frequently relied on price controls, a legacy of earlier economic approaches often linked with military regimes, to tackle inflation. A report by Stears cited Nigeria’s ‘addiction’ to price control, and which has been harmful to the economy. This system of government-regulated price limits discouraged investment and innovation across several sectors, as businesses lacked the ability to adjust prices based on market conditions. In February 2025, the Nigerian government took a step in the right direction by ruling out price control policies for curbing the inflation ravaging the country. However, to maximize the benefits of this move, Nigeria needs to support this market-friendly approach by implementing policies that attract investment through improved ease of doing business, and addressing structural constraints like poor infrastructure and insecurity through budget allocation and investment. Without these supportive mechanisms and further structural reforms, Nigeria may struggle to fully realize the benefits of the price control rule-out and could face challenges in achieving sustained economic stability and growth.
It is clear that the overregulation in Nigeria, through the mentioned restrictive policies, is causing more harm than good. The Nigerian government should prioritize citizens’ welfare over restrictive and dictatorial policies in order to uphold individual freedom and flourishing. Nigerian policymakers should always analyze the aftermath of every policy before implementation.
Ismaila Biliaminu Manne is a writing fellow at African Liberty. He tweets at @biliaminuismai1.
Photo by Muhammad-Taha Ibrahim via Iwaria.
