Nigeria pumps almost 1.5 million barrels of crude oil a day, making it the continent’s biggest producer. Yet this petrodollar nation faces repeated shortages of hard currency that choke its economy. President Bola Tinubu, who took office in May 2023, has moved to overhaul the country’s foreign-exchange market and attract foreign capital, but the process has been bumpy. The value of the local naira currency has plummeted, driving up inflation, and the central bank has reacted by sharply increasing borrowing costs — at the risk of further stifling business activity.

The country has suffered decades of political and economic mismanagement, its oil riches largely exploited for the benefit of a politically connected elite. Corruption is endemic, many state institutions are dysfunctional, while armed bandits and Islamist militants have free rein across swathes of the country’s north. About 40% of Nigeria’s 200 million people live in dire poverty, according to the World Bank, and the spike in living costs is adding to their ranks. Beside dollar shortages, businesses have to contend with perpetual policy uncertainty and power cuts. The government used 96% of the revenue it collected in 2022 to service its debt, leaving it with little to spend on anything else. Under its previous management, the central bank played a highly unorthodox role, providing loans to small businesses and introducing multiple exchange rates. The system was aimed at improving liquidity and encouraging dollar inflows, but it had the opposite effect and gave rise to a thriving parallel currency market.