The refinery being built by Aliko Dangote is the single factor most likely to prevent the naira from falling ever lower, Bhatia says in London. Dangote said in April that he expects refinery commissioning before the end of Muhammadu Buhari’s term as president in 2023.
Once the refinery is fully ramped up, it should make a big difference to the currency, Bhatia says. Nigeria will be able to reduce the number of dollars needed to pay for the import of refined products and has the potential to become a net exporter of such products in West Africa. “It’s definitely a positive step.”
Still, the refinery “on its own won’t change the dynamics of the foreign exchange market,” Bhatia says. “The other answer is ramping up crude export volumes.”
Bhatia points to the fact that Nigeria fell well short of its OPEC production quota in 2021. Security and production problems continue to constrain output
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