Ruining Africa's Giant : Devaluation in Nigeria

On the 7th of April 2014, Nigerians awoke to news about the country's economy: They learnt that the Nigerian economy had become the largest economy in Africa with a gross domestic product (GDP) of around 80 trillion naira. What joy that would spawn in Nigerians and how reassuring that would be to Nigerians that they were not doing so poorly after all. Except that it didn't: There was neither joy nor reassurance. Despite Nigeria's wealth, the country yet falters, under-performing in more ways than one. One good example is the fact that the devaluation of the naira has made the average Nigerian worse off, something that is due to the country's addiction for foreign-made goods. Using two stage least squares (2SLS), we show that a rise in the naira-dollar exchange rate by 1 naira reduces the log of Nigeria's per capita GDP by around 3.2 per cent