Political sketch
Formerly Lagos, Northern Nigeria, Oil Rivers, Southern Nigeria, and part of British West Africa. Independent from the United Kingdom on 1 October 1960.
The first Europeans to reach the Nigerian coast were the Portuguese in the 1400s. They initiated a slave trade, later imitated by other European nations. The United Kingdom abolished its own slave trade in 1807, but other nations continued to allow the trade. The British then stationed a naval squadron on the coast of western Africa to intercept the slavers, and British merchant ships began to trade in palm oil and other products. Official British control of the area began with the annexation of Lagos in 1861. Nigeria became a separate British colony in 1886, and in 1914 the region became the Colony and Protectorate of Nigeria. The economy was agricultural, exporting nuts and palm oil. During the First World War, Nigeria was a staging area for the invasion of the neighboring German colony of Cameroon. Large petroleum and gas fields were discovered starting in the mid 1950s. Petroleum became the country's main export.
Nigeria became independent from the United Kingdom on 1 October 1960. It became a republic in 1963, and the four regions were split into 12 states (in 1976 further divided into 19 states and in 1991 into 30 states). In 1966 clashes between the Hausa and Igbo peoples resulted in the killing of thousands of Igbo in the former Northern region, and many Igbo fled to their tribal homelands in the former Eastern region. A military government was formed, and a year later, civil war broke out when the Igbos of the former Eastern region declared it the independent Republic of Biafra. By 1969 federal troops had captured much of Biafra, and in 1970 the Biafrans surrendered. Military government has since alternated with briefer periods of civilian rule; the latest period of civilian rule began in May 1999 after 16 years of military rule. Corruption has been a persistent problem, particularly under civilian rule. Nigeria's people have seen little benefit from the country's oil wealth.
Wars since 1500
Fulani War (Usman's Jihad), 1804-1810; Yoruba War, 1877-1893; British Subjugation of Nigeria, 1901-1903; First World War in West Africa (Germany against United Kingdom and France), August 1914-February 1916; Nigerian-Biafran War, 1967-1970.
Convertibility
The sterling area:
On 2 August 1914, soon after the First World War began, the United Kingdom issued a proclamation imposing a one-month moratorium of payment for bills of exchange accepted before 4 August; an act of 3 August 1914 gave legislative sanction to the proclamation. The moratorium was subsequently extended for a month and ended on 4 November 1914. Legally the pound sterling remained convertible into gold and could be exported, but the risk to shipping from German submarines made the cost of shipment prohibitive, so the United Kingdom was in effect off the gold standard. The British government refused to include private shipments of gold in its war-risk insurance scheme. After the war, the export of gold was prohibited from 1 April 1919 under regulations that were given statutory form in 1920. On 28 April 1925 the government announced that the act would not be renewed when it expired on 31 December 1925. On 13 May 1925 the United Kingdom resumed the gold standard.
The United Kingdom abandoned the gold standard on 21 September 1931. The currencies of British colonies were almost all linked to the pound sterling through currency boards; being on a sterling-exchange standard rather than a gold-exchange standard, they followed the pound sterling off gold. Over the next few years, some former British colonies (Australia, New Zealand, South Africa) and other countries that had important trade links with the United Kingdom switched from gold to the pound sterling as their official or actual anchor. The result was termed the sterling area. The United Kingdom imposed exchange controls on 4 September 1939, the day after entering the Second World War. Most countries that were not current or former British colonies soon left the sterling area. Among the remaining countries, both current- and capital-account transactions were free of restrictions within the sterling area, but were restricted in dealings with outside countries. After the Second World War, the United Kingdom returned to the gold standard under the Bretton Woods system. It removed exchange controls on 15 August 1947, but reimposed them on 20 August 1947 after suffering a large loss of foreign reserves. Sterling had a dual exchange rate from 1961 until the United Kingdom abolished exchange controls. The sterling area remained in existence because sterling was not fully convertible. It began to crumble after the United Kingdom again abandoned the gold standard on 23 June 1972. By January 1973 the sterling area had shrunk to the British Isles and a few small British colonies; even Hong Kong had abandoned sterling as its anchor currency. The United Kingdom abolished exchange controls on 24 October 1979, ending the sterling area.
The West African Currency Board:
In late 1915, the Gold Coast (now Ghana), Nigeria, and Sierra Leone passed ordinances making British notes legal tender. The West African Currency Board circulated the notes; at the time, it was not allowed to issue notes. Circulation of British notes was a temporary measure intended to reduce a shortage of currency during the First World War, when German submarine warfare made it risky to transport coins by ship from the United Kingdom, where they were minted. In March 1919, the Nigerian colonial government passed a law allowing the West African Currency Board to defer cashing its notes for up to three months. The law was intended to reduce the incentive to exchange notes for silver coins and melt down the coins at a time when the price of silver was unusually high.
Nigeria alone:
Nigeria abolished the distinction between sterling area and non-sterling area currencies on 16 July 1962 (Nigeria, Exchange Control Act 1962). It left the sterling area on 23 June 1972.
Other
Defaults on or restructurings of debt to the private sector (mainly from Purcell and Kaufman 1993 and Standard & Poor's 2004): 1982-1992 (foreign currency bank debt, interest rate shocks and civil unrest, during worldwide developing country debt crisis), 1986-1988 (foreign currency bond debt), 1992 (foreign currency bond debt), 2002 (foreign currency bond debt).
Reinhart and Tokatlidis (2000: 33) dating of recent financial liberalization: Domestic (notably interest rates) 1987-1991, 1995; external (notably foreign-exchange market and participation by foreign financial institutions) 1995.
Banking crises (data since 1970s mainly from Caprio and Klingebiel 1999 and Frydl 1999): Runs on locally owned banks occurred 1951-1954; problems in 1983; in 1993, insolvent banks had 22% of deposits; in 1995 almost half of banks were reported to be in financial distress; moderate problems in 1997, with distressed banks having 3.9% of total assets.
Bordo and Eichengreen (2001) list currency crises in 1981, 1986, 1988, 1991, 1993, 1994, and 1996 (a twin currency and banking crisis).
Frankel and Rose (1996) list of currency crashes: 1986, 1992.
The breakaway region of Biafra issued its own currency, the Biafran pound, from 10 January 1968-8 January 1970 through a central bank, the Bank of Biafra.
References
Primary sources:
--Laws and decrees:
Great Britain (United Kingdom). Gazette. 1665-present. Oxford Gazette (1996-1666); London Gazette (1666-present). Oxford (1665-1666); London (1666-present): His/Her Majesty's Stationery Office from 1903. Online at <http://www.gazettes.online.co.uk>; as of September 2005, gazettes since 1900 are available.
Nigeria. Gazette. 1914-present. The Nigeria Gazette (1914-1954); Federation of Nigeria Official Gazette (1954-1963); Official Gazette of the Federal Republic of Nigeria (1963-present). Lagos (to 1990s); Abuja (since sometime in 1990s): Published by Authority (to perhaps 1960s); Federal Ministry of Information (since at least 1960s). (Successor to Southern Nigeria gazette.)
Southern Nigeria. Gazette. 1905?-1914. Official Gazette. Lagos. (Succeeded by Nigeria gazette.)
--Publications of monetary authorities:
Central Bank of Nigeria. Annual report. 1959/1960-present. Annual Report and Statment of Accounts for the Period Ended 31st March 1960 (1959/1960); Annual Report and Statment of Accounts for the Year Ended 31st December ... (1960/1961-present). Lagos (1959/1960-1991); Abuja (1992-present): Central Bank of Nigeria.
Central Bank of Nigeria. Bulletin. 1963-present. Monthly Economic and Financial Review (1963-1967); Monthly Report (1967-present). Lagos (1963-1991); Abuja (1992-present): Central Bank of Nigeria.
Central Bank of Nigeria. Review. 1963-present. Economic and Financial Review. Lagos (1963-1991); Abuja (1992-present): Central Bank of Nigeria.
Great Britain (United Kingdom). West African Currency Board. Annual report. 1913/1914-1972/1973. Report of the West African Currency Board for the Period Ended 30th June 1914 (1913/1914); Report of the West African Currency Board for the Year Ended 30th June ... (1914/1915-1971/1972); Final Report of the West African Currency Board for the Period 1st July, 1972 to 31st October, 1973 (1972/1973). London: Darling and Sons for His Majesty's Stationery Office (1913/1914-1917/1918); His Majesty's Stationery Office (1918/1919-1919-1920); Waterlow and Sons (1920/1921-1972/1973).
West African Currency Board. See Great Britain (United Kingdom). West African Currency Board.
--Web site of the current monetary authority (viewed 20 September 2005):
<http://www.cenbank.org>
--Other publications or Web sites:
IMF. International Monetary Fund. 1946-1971 (irregular). Schedule of Par Values. Washington: International Monetary Fund.
Loynes, J[ohn] B[arraclough de]. 1961. Report on the Problems of the Future Currencies of Sierra Leone and the Gambia. Gambia Sessional Paper No. 12/61. Bathurst: Government Printer.
Main secondary sources:
Barclays Bank (Dominion, Colonial and Overseas). 1938. A Banking Centenary: Barclays Bank (Dominion, Colonial and Overseas), 1836-1936. Plymouth, England: Mayflower Press, for private circulation.
BCEAO. 1966. Banque Centrale des États de l'Afrique de l'Ouest. Notes d'information et statistiques, issue "L'Afrique des monnaies," January 1966. Paris: Banque Centrale des États de l'Afrique de l'Ouest.
Central Bank of Nigeria. 1979. Research Department. Twenty Years of Central Banking in Nigeria, 1959-1979. Lagos: Central Bank of Nigeria.
Chalmers, [Sir] Robert. 1893. A History of Currency in the British Colonies. London: Eyre and Spottiswoode for Her Majesty's Stationery Office.
Fry, Richard. 1976. Bankers in West Africa: The Story of the Bank of British West Africa Limited. London: Hutchison.
IMF ARER. 1950-present. International Monetary Fund. Annual Report on Exchange Restrictions (1950-1978), Annual Report on Exchange Arrangements and Exchange Restrictions (1979-1988), Exchange Arrangements and Exchange Restrictions: Annual Report (1989-present). Washington: International Monetary Fund. (Contains information on IMF member countries and some of their dependencies.)
Loynes, J[ohn] B[arraclough de]. 1962. The West African Currency Board 1912-1962. London: West African Currency Board.
Ndekwu, Eddy C. 1994. First Bank of Nigeria: A Century of Banking. Ibadan: Spectrum Books Limited. (Concerns the former Bank of British West Africa.)
Nwankwo, G[odson] O[nyekwere]. 1980. The Nigerian Financial System. London: Macmillan.
Okigbo, P. N. C. 1981. Nigeria's Financial System. London: Longman.
Onoh, J[ames] K. 1982. Money and Banking in Africa. New York: Longman. (An overview on Africa with particular attention to Nigeria.)
Pick's Currency Yearbook. 1955-1977/79. New York: Pick Publishing. Succeeded by Pick's World Currency Report and later World Currency Yearbook.
Shafer, Neil, and Colin R. Bruce II. 2000. Standard Catalog of World Paper Money, Volume 2: General Issues, 9th edition. Iola, Wisconsin: Krause Publications.
Symes, Peter [J]. 2002b. The Bank Notes of Biafra, 2nd edition. Melbourne: P. J. Symes. (Concerns a breakway part of Nigeria.) (I have not seen this.)
Monetary authorities: Nigeria
| Dates | Type | Name | Source | Remarks |
| August or September
1891
-25 June 1913 |
dollarization | pound sterling (issued by central bank Bank of England [headquarters London, England]) | United Kingdom, incorporation papers of African Banking Corporation, 1890; incorporation papers of Bank of British West Africa, 31 March 1894, cited in Richard Fry (1976: 26); incorporation papers of Anglo-African Bank, 1899, cited in Richard Fry (1976: 34) | The first bank was the African Banking Corporation (headquarters London, England), in Lagos, in August or September 1891 (Richard Fry 1976: 20). The Bank of British West Africa (headquarters London, England) took over the Lagos branch of the African Banking Corporation on 31 March 1893 and absorbed the rest of the bank in 1912. The second bank was the Anglo-African Bank (headquarters London, England), which opened in Old Calabar in 1899. It issued a small amount of notes for a few years sometime during 1899-1912, but this was not substantial enough to call free banking. It changed its name in 1905 to the Bank of Nigeria. The Bank of British West Africa bought it on 30 June 1912 (Bank of Nigeria, notice of 20 May 1912, reprinted in Ndekwu 1994: 53). The Bank of British West Africa was again the only bank until the Colonial Bank (headquarters London, England) opened a branch in Lagos in early 1917 (Barclays Bank [Dominion, Colonial and Overseas] 1938: 59). Nigeria issued its first coins in 1907 (West African Currency Board annual report, 30 June 1915: 4). |
| 26 June 1913
-30 June 1959 |
joint currency board (as part of a currency union) | West African Currency Board (headquarters London, England) | United Kingdom, Secretary of State for the Colonies, Memorandum Defining the Constitution, Duties and Powers of the West African Currency Board, 6 December 1912, reprinted in West African Currency Board annual report, 30 June 1914: 7; Order in Council of 7 May 1913, cited in West African Currency Board annual report, 30 June 1914: 4; Secretary of State for the Colonies, Memorandum Defining the Constitution, Duties and Powers of the West African Currency Board, 2 September 1949, reprinted in West African Currency Board annual report, 30 June 1949: 15 | The United Kingdom established the West African Currency Board to capture seigniorage for the colonial governments of Gambia, the Gold Coast (now Ghana), Nigeria, and Sierra Leone. Local proclamations of 26 June 1913 (cited in cited in West African Currency Board annual report, 30 June 1914: 4) allowed the British Order in Council of 7 May 1913 to enter into force. The board's original constitution only allowed it to issue coins, which were more widely used by Africans than notes. About October 1915 the currency board issued British notes as a temporary measure to meet the demand for currency in the Gold Coast (now Ghana), Nigeria, and Sierra Leone, but not Gambia. The colonies where the board issued British notes passed local ordinances making the notes legal tender (West African Currency Board annual report, 30 June 1916: 2). A revision of 25 November 1915 (reprinted in West African Currency Board annual report, 30 June 1916: 6-7) allowed the West African Currency Board to issue notes; the first notes in Nigeria were issued on 11 July 1916 (under Nigeria, Ordinance |
| 1 July 1959
-present (2005) |
central bank | Central Bank of Nigeria (headquarters Lagos, Nigeria / Abuja, Nigeria from January 1992) | Nigeria, Central Bank Act, 17 March 1958 (British royal assent granted 15 May 1958), cited in Central Bank of Nigeria annual report, 31 March 1960: 3; see also p. 6 of the same source | Shortly before independence, Nigeria established a central bank to issue coins as well as notes. It did so in accord with the prevailing view of the time that all independent countries should have central banks. John B. de Loynes, a Bank of England official who also advised Mauritius and other countries on establishing central banks, advised Nigeria. Nigeria joined the IMF on 30 March 1961. Banks were required to have some local ownership by 1973 and required to have at least 60% local ownership in 1977 (Nigeria, Nigerian Enterprises Promotion Decree, February 1972 and 1977, cited in Central Bank of Nigeria annual report 1972: 12; 1977: 7). This was not a full-fledged nationalization, though the government did acquire up to 60% ownership in some previously foreign owned banks. |
Monetary authorities: Biafra (1968-1970)
| Dates | Type | Name | Source | Remarks |
| 10 January 1968
-8 January 1970 |
central bank | Bank of Biafra (headquarters Enugu, Biafra / later Aba, Umuahia, and Owerri) | Pick's Currency Yearbook (1970: 377) | The breakaway region of Biafra issued a separate currency during a civil war. Biafra failed to achieve lasting independence. Biafra transferred its capital several times to avoid capture by advancing Nigerian forces. |
Exchange rate arrangements: Nigeria
| Dates | Official arrangement | Source | Unofficial arrangement, if different | Remarks |
| 1861
-20 May 1880 |
fixed, bimetallic | United Kingdom, two Orders in Council of 10 June 1843; Sierra Leone, proclamation of 30 September? 1843; these laws reiterated by Gold Coast, governor's proclamation of 5 August 1875, cited in Chalmers (1893: 216) | in practice, Spanish silver $4.80 = UK£1, or Spanish silver $1 = UK 4 shillings 2 pence (50 pence) | Lagos became a British settlement in 1861. It was administratively part of the West African Settlements with Ghana and Sierra Leone from 1866-1874, and part of the Gold Coast (Ghana) from 1874-1886. British coins and French 5-franc silver pieces predominated; certain French, and Spanish coins were also legal tender in British possessions in West Africa. In 1852 US gold coins were made legal tender in British possessions in West Africa (United Kingdom, Order in Council and Proclamation, 20 June 1852), but they were never widely used. Silver Maria Theresa thalers were widely used. |
| 21 May 1880
-25 June 1913 |
fixed; used pound sterling | Gold Coast, Demonetization Ordinance, No. 2, 29 April 1880; Lagos, notice of 11 May 1880; both cited in Chalmers (1893: 216) | The ordinance limited legal tender coins to British coins, plus several foreign gold and silver coins widely used in trade, gold dust, or gold nuggets. Gold dust and nuggets were demonetized by Gold Coast, Ordinance No. 9, 12 April 1889, cited in Chalmers (1893: 215). They do not seem to have been as much used in Lagos (present-day southern Nigeria) as in the Gold Coast (present-day Ghana), though. The predominant coins in use were British silver coins. | |
| 26 June 1913
-30 June 1959 |
fixed (as part of a currency union); West African £1 = UK£1 | United Kingdom, Secretary of State for the Colonies, Memorandum Defining the Constitution, Duties and Powers of the West African Currency Board, 6 December 1912, reprinted in West African Currency Board annual report, 30 June 1914: 7; Order in Council of 7 May 1913, cited in West African Currency Board annual report, 30 June 1914: 4; Secretary of State for the Colonies, Revised Regulation Defining the Constitution, Duties and Powers of the West African Currency Board, 11 July 1924, reprinted in West African Currency Board annual report, 30 June 1924: 5 | The British government gave its West African colonies their own currency. Local proclamations of 26 June 1913 (cited in cited in West African Currency Board annual report, 30 June 1914: 4) allowed the British Order in Council of 7 May 1913 to enter into force. The appreciation of silver against gold up to 1920 caused hoarding and shortages of West African silver coins, even though they were not full-bodied. Technically, West African Currency Board coins were initially redeemable in gold, though in practice, the pound sterling was always the anchor. The currency board constitution was amended in 1924, when Britain was off the gold standard, to allow notes and coins to be directly redeemable in pounds sterling. Manillas (metal pieces used as currency) continued in use in parts of Nigeria until 1949. From 1 October 1948-30 June 1949 they were withdrawn from circulation and exchanged for notes and coins (West African Currency Board annual report, 30 June 1949: 6). The West African pound was named after the pound sterling. | |
| 1 July 1959
-4 June 1962 |
pegged; Nigerian £1 = UK£1 | Nigeria, Central Bank Act, 17 March 1958 , cited in Central Bank of Nigeria annual report, 31 March 1960: 3; see also p. 6 of the same source | Nigeria issued a national currency to replace the West African pound. The currency was issued by a central bank, so the exchange rate changed from fixed to pegged. | |
| 5 June 1962
-17 November 1967 |
pegged; Nigerian £1 = UK£1 = 2.48828g gold = US$2.80 | Nigiera, act of 5 June 1962, cited in BCEAO (1966: 10) | Defined a gold value for the currency. Nigeria registered a gold parity with the IMF on 17 April 1963 (IMF, 36th Schedule of Par Values, 24 June 1963: 3, 17). | |
| 18 November 1967
-22 August 1971 |
pegged; Nigerian £1 = UK£1.16-57/128 = 2.48828g gold = US$2.80 | IMF ARER (1968: 320) | RR: Parallel market premium in mid double digits from July 1970, when data begin. | Did not follow the devaluation of the pound sterling on 18 November 1967. A currency confiscation occurred from 3-12 January 1968 in nine states, and in March or April 1968 in the three states that had broken away as Biafra (Nigeria, Central Bank [Currency Conversion] Decree, No. 51, 30 December 1967; Currency Conversion [South-Eastern and Other States] Decree, No. 11, 14 March 1968; both cited in Central Bank of Nigeria annual report 1968: 30). Old Nigerian notes could be converted into new Nigerian notes at 1-to-1 up to Nigerian £30 for individuals and Nigerian £500 for businesses. Within these limits, Biafran notes were also accepted for conversion into new Nigerian notes at one to one up to Nigerian £10 for individuals and Nigerian £100 for businesses. Amounts exceeding these quantities could be deposited with the exchange control authorities but were subject to confiscation if the authorities found that the funds had been acquired illegally. After the war ended, as a relief measure, each person who deposited Biafran or old Nigerian currency with the central bank received Nigerian £20 |
| 23 August 1971
-31 October 1971 |
pegged, dual rate; official rate Nigerian £1 = UK£1.16-57/128 = 2.48828g gold (nominally) | Central Bank of Nigeria annual report 1971: 12-13 | The rate for nonofficial
transactions was
apparently an
independent float.
RR: Parallel market premium in mid double digits. |
Gold convertibility for all countries ended in practice when the United States abandoned the gold standard on 15 August 1971. The official rate remained Nigerian £1 = US$2.80, but the rate for nonofficial transactions floated, hence the only full, working pegged rate in this period was with the pound sterling. |
| 1 November 1971
-22 December 1971 |
pegged; Nigerian £1 = US$2.80 = 2.48828g gold (nominally) | Central Bank of Nigeria annual report 1971: 12-13 | RR: Parallel market premium in mid double digits. | Nigeria ceased to use the pound sterling as its anchor currency, switching to the US dollar, and abolished the short-lived dual exchange rate. |
| 23 December 1971
-31 December 1972 |
pegged; Nigerian £1 = US$3.04 = 2.48828g gold (nominally) | Central Bank of Nigeria annual report 1971: 12-13; IMF ARER (1972: 329) | RR: Parallel market premium in mid double digits. | Did not follow the devaluation of the US dollar against gold on 18 December 1971. Nigeria retained the old par value of its currency in terms of gold, which had been in abeyance during the previous period. Nigeria subsequently adopted wider margins. |
| 1 January 1973
-14 February 1973 |
pegged, 1 Nigerian naira = US$1.52 = 1.24414g gold (nominally) | Central Bank of Nigeria annual report 1972: 37; 1973: 44 | RR: RR: Parallel market premium 30-100%. Managed float. | Introduced a decimal currency at 2 Nigerian nairas = Nigerian £1. Naira is an alteration of "Nigeria." Nigeria was among the last countries in the world to decimalize. |
| 15 February 1973
-31 March 1974 |
pegged; 1 Nigerian naira = US$1.52 = 1.11973g gold (nominally) | Central Bank of Nigeria annual report 1973: 14 | RR: Parallel market premium in mid double digits. | Devalued against gold after the United States devalued the US dollar against gold on 12 February 1973, but left unchanged the cross rate with the pound sterling. |
| 1 April 1974
-31 March 1978 |
managed? float (IMF: not maintained within relatively narrow margins; managed float category did not exist until data for 1982); inoperative gold parity 1 Nigerian naira = 1.11973g gold (nominally) | Central Bank of Nigeria annual report 1974: 13-14; IMF ARER (1975: 363) | RR: Parallel market premium typically in mid double digits, but with peaks over 100%. | Floated to stem inflationary pressure from the depreciating US dollar. |
| 1 April 1978
-28 September 1986 |
managed float (IMF: managed float category did not exist until data for 1982) | International Monetary Fund, Board of Governors, Resolution No. 31-4, 30 April 1976 ("Second Amendment"); IMF ARER (1983: [page on Nigeria's managed float, in Appendix]) | RR: Parallel market premium gradually rising to over 200%. Freely falling from April 1983. Parallel market premium reached 457% in December 1983. | The system of gold par values officially ended by agreement of IMF members. A currency confiscation occurred over a period of 10 days in April 1984. Notes were allowed to be exchanged at 1-to-1 up to 5,000 Nigerian naira per person; the excess had to be deposited in a bank. |
| 29 September 1986
-31 March 1993 |
independent float, dual rate | Central Bank of Nigeria annual report 1979: 11; IMF ARER (1988: 368); Central Bank of Nigeria annual report 1989: 12; IMF ARER (1990: 355; 1991: 362) | RR: Parallel market premium typically in mid double digits but with peaks over 100%. Official rate applied only to some government transactions. Managed float to January 1987; freely floating / freely falling February 1987-December 1989; managed float January 1990-May 1991; freely falling / managed float June 1991-March 1993. | As part of a package of economic reform measures, Nigeria established a "second-tier" market with a more flexible rate than the main rate. Despite unifying the first- and second-tier markets on 2 July 1987, and further unifying the market on 9 January 1989, a dual rate persisted because a difference remained between the auction rate for sale of official receipts and the exchange rate for resale of foreign exchange. Some liberalization of the foreign-exchange market occurred on 14 December 1990. |
| 1 April 1993
-31 December 1998 |
pegged, dual rate; official rate 21.90 Nigerian nairas = US$1(see Remarks) (IMF: pegged to a single currency, reclassified as managed float 31 December 1997) | IMF ARER (1994: 371, 1998: [page]) | On 16 September 1994
foreign-exchange
bureaus were allowed
to buy and sell foreign
notes at 10% above the
official rate. Starting in
1997, the official rate
remained, but the rate
in the foreign-exchange market
became more flexible
in practice (IMF
ARER 1998: 667).
RR: Parallel market premiums in low to mid triple digits until December 1998, when data end. Freely falling to March 1996; managed float thereafter. Parallel market premium consistently above 250%. |
Pegged to the US dollar. The central bank suspended sales of foreign exchange on 17 December 1993, resuming on 17 February 1994 (IMF ARER 1994: 371; 1995: 366). As of 1995, IMF ARER (1996: 358) lists the exchange rate as 22 Nigerian nairas = US$1. |
| 1 January 1999
-2001 |
managed float, dual rate | IMF ARER (2000: 664) | An unofficial parallel market also existed by 2000 (IMF ARER 2001: 668). | Moved to a managed float. IMF ARER classifies the exchange rate unified during this period, but I continue to classify it as a dual rate because rates in the interbank market could differ from those in the weekly foreign-exchange auctions by the central bank, though the rates were usually close. IMF ARER (2001: 668) classifies Nigeria as having a dual rate from 2000. |
| 2001
-31 January 2005 |
managed float, multiple rates | IMF ARER (2002: 702) | The unofficial parallel market rate bore a premium of 5-14.5% over the official rate (IMF ARER 2002: 702). By 2004 the average premium was 5.5% (IMF ARER 2005: 708). | Sometime during 2001, the two official rates became three. They were the interbank rate for dealings with the central bank; the rate at which banks traded among themselves; and the exchange bureau (bureau de change) rate. There was also an unofficial parallel market rate. Starting 22 July 2002, the central bank began conducting regular auctions for foreign exchange (IMF ARER 2003: 720). The number of official exchange rates varied in later years. Effective 1 January 2004 Nigeria began participating in the West African Monetary Zone Exchange Rate Mechanism II, which at the time required a band of no more than +/-15% around a central rate. However, the central bank did not immediately implement measures to make participation effective (IMF ARER 2005: 713). |
| 1 February 2005
-present (2005) |
band, multiple rates; official rate about 132 Nigerian nairas = US$1 (IMF: managed float) | Central Bank of Nigeria, Communiqué No. 42 of the Monetary Policy Committee, 2 February 2005, in Central Bank of Nigeria Web site, viewed 20 December 2005; IMF ARER (2005: 713) | Adopted a policy band of +/-3% around the central rate. The central bank adopted this band to comply with the West African Monetary Zone Exchange Rate Mechanism II, which required a band of no more than +/-10% around a central rate. IMF ARER (2005: 708) calls the exchange rate a managed float but mentions a band. |
Exchange rate arrangements: Biafra (1968-1970)
| Dates | Official arrangement | Source | Unofficial arrangement, if different | Remarks |
| 10 January 1968
-8 January 1970 |
pegged; Biafran £1 = US$2.80 (=Nigerian £1); | Pick's Currency Yearbook (1970: 377) | In practice, it seems likely that the exchange rate was a managed float or that a parallel market existed, but information is scarce. | The Biafran pound was apparently introduced at Biafran £1 = Nigerian £1. It was not a decimal currency. The Biafran pound was named after the Nigerian pound. After the war with Nigeria ended in the defeat of Biafra, Nigeria allowed an exchange of a flat Nigerian £20 per person of Biafran notes at 1-to-1. Information on the Biafran pound is scarce; I have not seen the book by Symes (2002b). |