The Impact of Refinery Operations and Exchange Rates on Nigeria's Economy

Feranmi Olaseinde

Hatched by Feranmi Olaseinde

Oct 11, 2023

4 min read


The Impact of Refinery Operations and Exchange Rates on Nigeria's Economy


In recent news, two significant topics have emerged in Nigeria - the commencement of operations at the Port Harcourt Refinery and the growing gap between official and black market exchange rates. These issues hold immense importance for the country's economy and have garnered attention from analysts and citizens alike. In this article, we will explore the potential consequences of refinery operations and the implications of the changing exchange rates on Nigeria's economic landscape.

The Port Harcourt Refinery and its Impact:

The announcement of the Port Harcourt Refinery's commencement of operations by December has sparked discussions among experts and citizens. Many have questioned why the refinery was not revived earlier, especially considering the trillions of naira invested in it and its slow pace of progress. Some argue that if the Port Harcourt Refinery had been revived before removing subsidies, it could have helped reduce inflation and stabilize commodity prices. Additionally, it is believed that if the Port Harcourt Refinery becomes operational before the Dangote Refinery, it could potentially make Dangote a price taker for his products. On the other hand, if Dangote Refinery resumes operations first, it will have the authority to fix prices, which may not come down even with the Port Harcourt Refinery's revival. These observations highlight the interconnectedness of various factors and the influence of refinery operations on the economy.

The Exchange Rate Dilemma:

Another concerning issue that has caught the attention of analysts is the widening gap between official and black market exchange rates. The Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) and the Investors' and Exporters' (I&E) FX Window Spot Rates, which previously relied on indicative quotes from market participants, will now be calculated using actual FX market transaction data. This shift aims to provide a more accurate representation of the true exchange rates. However, the growing disparity between official and black market rates raises concerns about the stability and fairness of the currency market.

Connecting the Dots:

While seemingly unrelated, the refinery operations and exchange rate issues share common points that can be connected to gain a comprehensive understanding of Nigeria's economic landscape. The revival of the Port Harcourt Refinery has the potential to influence inflation rates and commodity prices, which, in turn, can impact the overall economy. On the other hand, the exchange rate dilemma affects trade, foreign investment, and the purchasing power of citizens. Both factors contribute to the larger picture of Nigeria's economic health.

Actionable Advice:

  • 1. Prioritize Refinery Revival: To mitigate the impact of inflation and stabilize commodity prices, it is crucial for the government to prioritize the revival of refineries. By ensuring that these facilities are operational and efficient, Nigeria can reduce its reliance on imports and promote local production, leading to a more sustainable economy.
  • 2. Address Exchange Rate Disparities: The widening gap between official and black market exchange rates calls for measures to promote transparency and fairness in the currency market. The government should work towards creating a more unified and stable exchange rate system by implementing policies that reduce speculation and encourage foreign investments.
  • 3. Enhance Collaboration and Accountability: To prevent future damage to the economy, it is essential for stakeholders, including politicians, labor unions, and citizens, to come together and work towards shared goals. Collaboration, transparency, and accountability are crucial in ensuring that decisions and policies are made in the best interest of the Nigerian people.


The commencement of operations at the Port Harcourt Refinery and the growing gap between official and black market exchange rates are two significant factors that impact Nigeria's economy. The revival of the refinery holds the potential to stabilize inflation and commodity prices, while addressing the exchange rate disparities can foster foreign investment and economic stability. By prioritizing refinery revival, addressing exchange rate disparities, and enhancing collaboration and accountability, Nigeria can pave the way for a more prosperous and sustainable future. It is imperative for all stakeholders to recognize the interconnectedness of these issues and work towards holistic solutions that benefit the entire nation.

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