Naira Could Weaken to N1,993/$1 – Report

The Naira is expected to depreciate to N1,993 per US dollar by 2028, according to a forecast by BMI Research, a subsidiary of Fitch Solutions.

The report highlights concerns over the impact of this depreciation, particularly on the import of critical medical supplies into Nigeria.

It suggests that the weakening Naira, coupled with ongoing structural challenges within the healthcare system, will create significant constraints on medical device imports. The projected exchange rate of NGN1,993/USD by 2028 is anticipated to exacerbate these difficulties.

In the report titled “Weak Naira and Structural Challenges to Constrain Nigeria’s Medical Devices Market Growth”, BMI Research projected that, despite expectations of an economic rebound, Nigeria’s medical devices sector will continue to face significant operational and demand challenges in the near term.

The report highlighted that Nigeria depends on imports for over 95% of its medical devices, leaving the country highly vulnerable to fluctuations in exchange rates.

“Continued weakness of the naira will increase medical device import costs and erode consumer purchasing power. Similar to other markets in sub-Saharan Africa, Nigeria heavily relies on medical device imports, with reliance of over 95 per cent.

“We expect that the naira will end 2028 at N1,993/$ from N306/$ in 2018. As the naira weakens, the cost of importing medical devices will continually increase, eroding both the health system and patient purchasing power especially to invest in essential medical technologies given underfunding of the public health sector.

“This would particularly affect high-cost demand for devices such as diagnostics, orthopaedics and dental products. On the export front, a weaker naira will enhance the competitiveness of locally manufactured medical devices, fostering growth in the sector,” the report stated.

Despite the significant depreciation of the Naira in recent months, with the currency losing 70% of its value from around NGN600/USD to NGN1700/USD over the past 13 months, BMI’s projection of NGN1993/USD by 2028 suggests a much slower rate of depreciation moving forward.

This indicates a degree of stabilization in the exchange rate, with only a modest decline expected in the next four years.