The International Monetary Fund (IMF) has urged Nigeria to be prudent in spending following the implementation of hard economic reform that has made it save more revenue.
The Director, Fiscal Affairs Department IMF, Vitor Gaspar, said this at a Fiscal Monitor news conference at the ongoing 2025 IMF/World Bank Spring Meetings in Washington D.C. on Wednesday.
He said that there was an urgent need for fiscal authorities and governments to build buffers. According to him, governments need to act urgently and decisively as they face harsh trade offs and painful choices.
He said it was important for policy makers to invest their political capital in building confidence and trust that starts with keeping their own houses in order.
” This is especially important in a situation that tests the resilience of individual economies, not to mention the entire system.
“Putting house in order involves three policy priorities. first, fiscal policy should be part of an overall policies.
“Secondly, fiscal policy should in most countries, aim atreducing public debt and rebuilding buffers to create space to respond to spending pressures and other economic shocks through a credible medium term framework.
“Thirdly, fiscal policy should together with other structural policies, aim at improving potential growth, thereby easing policy trade offs in these times of high uncertainty.
“Fiscal policy must be an anchor for confidence and stability that contributes to a competitive economy, delivering growth and prosperity for all ministers of finance must build trust, tax fairly, spend wisely and take the long team,” the director said.
The Nigerian Division Chief in the Fiscal Affairs Department of the IMF, Davide Furceri, said that Nigeria had been able to make some of those painful choices to have space for fiscal savings but it needs to spend wisely.
“Nigeira managed to do a very difficult reform that was important in delivering fiscal savings.”
Furceri said that the country need to focus on boosting revenue through improved mobilisation efforts, and secondly, scaling up spending in key areas like social protection and investment.
“That said, we understand that many countries, including Nigeria, face pressing spending needs. But spending must be done wisely, this means stronger prioritisation and greater efficiency in how resources are allocated.
“One key message not just for Nigeria, but for many countries, is the importance of strong fiscal institutions. Medium-term fiscal frameworks and solid public financial management systems.are essential.
“They provide a fiscal anchor to guide necessary adjustments and help reduce uncertainty. We want fiscal policy to be a source of stability, not a source of volatility,” he said. #IMF Urges Nigeria to be Prudent in Spending Pension Fund Assets Grows to N23.366 Trillion.
By Olu Anisere, Market Forces Africa
Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts
Thursday, April 24, 2025
Friday, April 11, 2025
Cash-strapped Nigerians turn to YouTube for entertainment
It points to a shifting pattern as Nigerians grapple with one of the toughest economic crises in decades after President Bola Tinubu halted petrol subsidies that kept prices all round low and stopped support for the local currency.
Streaming platforms, cable TV and internet service providers are meanwhile on a price-hiking spree that has put off many clients.
Netflix increased monthly subscription fees twice last year to 7,000 naira ($4.50) from 4,400 naira for its premium package -- a substantial amount in a country where, according to the World Bank, over half of the 230 million people live in poverty.
Many people are slashing their entertainment budget, including cable and streaming subscriptions, according to Lagos-based think tank SBM Intelligence.
Nollywood, Nigeria's massive film industry, releases an average of 50 movies weekly, the second most prolific film industry in the world after India's Bollywood.
Health worker Adeleke Adesola, 31, from the southwestern city of Ibadan, has switched to watching movies on YouTube, driven not just by costs, but for its interactive nature.
"I feel good when I read a comment that speaks my thoughts about a scene or the movie. Also, because I don't have to pay monthly subscription to have access to YouTube movies," she told AFP.
Africa's pay TV giant MultiChoice reported losing nearly a quarter of a million subscribers between April and September 2024.
Streaming platforms, cable TV and internet service providers are meanwhile on a price-hiking spree that has put off many clients.
Netflix increased monthly subscription fees twice last year to 7,000 naira ($4.50) from 4,400 naira for its premium package -- a substantial amount in a country where, according to the World Bank, over half of the 230 million people live in poverty.
Many people are slashing their entertainment budget, including cable and streaming subscriptions, according to Lagos-based think tank SBM Intelligence.
Nollywood, Nigeria's massive film industry, releases an average of 50 movies weekly, the second most prolific film industry in the world after India's Bollywood.
Health worker Adeleke Adesola, 31, from the southwestern city of Ibadan, has switched to watching movies on YouTube, driven not just by costs, but for its interactive nature.
"I feel good when I read a comment that speaks my thoughts about a scene or the movie. Also, because I don't have to pay monthly subscription to have access to YouTube movies," she told AFP.
Africa's pay TV giant MultiChoice reported losing nearly a quarter of a million subscribers between April and September 2024.
Production cuts
Despite an uptick in subscriptions last year, streaming juggernaut Netflix has cut back on commissioning new productions in Nigeria.
Prime Video has also adopted the same approach.
With movie tickets now considered a luxury by millions in the west African economic powerhouse, consumers and filmmakers are veering to YouTube and other cheaper alternatives.
Filmmaker and co-founder of iBAKATV YouTube Channel, Kazeem Adeoti, said the number of full-length movies on YouTube had grown tremendously.
Several top actors own YouTube channels to directly distribute their movies to consumers, he said.
Despite an uptick in subscriptions last year, streaming juggernaut Netflix has cut back on commissioning new productions in Nigeria.
Prime Video has also adopted the same approach.
With movie tickets now considered a luxury by millions in the west African economic powerhouse, consumers and filmmakers are veering to YouTube and other cheaper alternatives.
Filmmaker and co-founder of iBAKATV YouTube Channel, Kazeem Adeoti, said the number of full-length movies on YouTube had grown tremendously.
Several top actors own YouTube channels to directly distribute their movies to consumers, he said.
YouTube movies 'cheaper'
Income from YouTube depends on factors such as watch time, audience engagement, copyright ownership and viewers' location.
"We see consistently high watch time... indicating strong audience interest in Nollywood content," Taiwo Kola-Ogunlade, spokesman for Google West Africa, told AFP.
"This increased watch time not only benefits the creators but also results in higher ad revenue for YouTube."
Seun Oloketuyi, film producer and founder of the Best of Nollywood (BON) awards, said YouTube had become more appealing to filmmakers as there were no specifications on the types of cameras to be used, the quality of costumes or the language mixes.
"Movies shot for YouTube are significantly cheaper than those to be screened at cinemas or on the digital streaming platforms," Oloketuyi said.
"It seems like a win-win for filmmakers who can spend significantly less on production, maintain ownership rights of the movies and still make good money."
Netflix and Prime say they don't plan on exiting Nigeria, but the contract terms for Nigerian filmmakers have now changed.
Nigerian films to which Netflix has screen rights are restricted to African viewers, leaving YouTube as the major alternative for the diaspora.
Income from YouTube depends on factors such as watch time, audience engagement, copyright ownership and viewers' location.
"We see consistently high watch time... indicating strong audience interest in Nollywood content," Taiwo Kola-Ogunlade, spokesman for Google West Africa, told AFP.
"This increased watch time not only benefits the creators but also results in higher ad revenue for YouTube."
Seun Oloketuyi, film producer and founder of the Best of Nollywood (BON) awards, said YouTube had become more appealing to filmmakers as there were no specifications on the types of cameras to be used, the quality of costumes or the language mixes.
"Movies shot for YouTube are significantly cheaper than those to be screened at cinemas or on the digital streaming platforms," Oloketuyi said.
"It seems like a win-win for filmmakers who can spend significantly less on production, maintain ownership rights of the movies and still make good money."
Netflix and Prime say they don't plan on exiting Nigeria, but the contract terms for Nigerian filmmakers have now changed.
Nigerian films to which Netflix has screen rights are restricted to African viewers, leaving YouTube as the major alternative for the diaspora.
Tuesday, April 1, 2025
Video - Food prices drop in Nigeria, but many remain cautious
Experts attribute the decline in food prices to enhanced security for farmers in rural areas. While this reduction offers some relief in a country grappling with high inflation, many still feel that prices remain prohibitively high for the average person.
Monday, March 17, 2025
Video - Nigeria sets ambitious 7% GDP growth target for 2025
Achieving this goal will require significant policy changes, private-sector expansion, and increased investment in key sectors. Experts warn that reducing dependence on imports and improving local production will be essential for sustainable growth.
Video - Nigeria's rice prices skyrocket, outpacing minimum wage
The cost of a 50kg bag has jumped from $16 to $60, far surpassing the country's minimum wage. With local production falling short and insecurity hindering supply, many Nigerians find rice unaffordable despite slight price drops.
Friday, February 28, 2025
Nigerians displaced as rents double in inflation-hit Lagos
Nigeria's economic crisis is hitting renters in Lagos hard as landlords pass down the costs of spiralling inflation -- pushing residents further out, upending children's education and adding to workers' already infamous commutes.
With a population of more than 20 million, the country's sprawling, ever-growing economic capital has for years struggled to keep up with housing demand, with some 3,000 people added to its population per day.
But government-led economic reforms, including the floating of the naira currency and the removal of a fuel subsidy, have sent a shock through the economy.
In a city that scions of oil wealth, a solid middle class and millions of informal workers all call home, rents are spiking on both Lagos' richer islands and the cheaper -- and poorer -- mainland.
"I might just have to find a way to plead with my landlord," said Yemisi Odusanya, a 40-year-old cookbook author and food blogger.
After giving birth to twins last year, she's doubtful she can find a better deal elsewhere for her family of seven, even after her landlord in Lekki raised the rent 120 percent.
"I'm planning to pack out," Bartholomew Idowu, a transportation worker, said emphatically, though he wasn't sure where he and his children would move.
The mainland resident's landlord hit him with a 28-percent rent increase, from 350,000 naira ($232) per year to 450,000 -- a significant sum in a country where the GDP per capita is $835.
Nicholas Roll and Tonye Bakare, Fort Bend Herald
With a population of more than 20 million, the country's sprawling, ever-growing economic capital has for years struggled to keep up with housing demand, with some 3,000 people added to its population per day.
But government-led economic reforms, including the floating of the naira currency and the removal of a fuel subsidy, have sent a shock through the economy.
In a city that scions of oil wealth, a solid middle class and millions of informal workers all call home, rents are spiking on both Lagos' richer islands and the cheaper -- and poorer -- mainland.
"I might just have to find a way to plead with my landlord," said Yemisi Odusanya, a 40-year-old cookbook author and food blogger.
After giving birth to twins last year, she's doubtful she can find a better deal elsewhere for her family of seven, even after her landlord in Lekki raised the rent 120 percent.
"I'm planning to pack out," Bartholomew Idowu, a transportation worker, said emphatically, though he wasn't sure where he and his children would move.
The mainland resident's landlord hit him with a 28-percent rent increase, from 350,000 naira ($232) per year to 450,000 -- a significant sum in a country where the GDP per capita is $835.
- Children changing schools -
The government recently revised its inflation data, knocking down official year-on-year inflation in January to 24.48 percent, from December's 34.80 percent figure.
That's been of little consolation to ordinary Nigerians.
"The way out at the moment is to look for a way to pay," said Dennis Erezi, a journalist, noting that his 31-percent rent increase is still cheaper than moving.
Jimoh Saheed, a personal trainer, had to leave his one-room flat in a middle-class neighbourhood in Ikoyi when his landlord more than doubled his rent to 2.5 million naira a year and a half ago.
Moving to the mainland meant he was further from his clients and his two children had to change schools and now pay for transport since they no longer live close enough to walk to class.
Late last year, his new landlord raised his rent by 25 percent.
"This is affecting me emotionally, it's affecting me mentally, and in fact, physically," said the 39-year-old, who said his earnings have not kept up with the pace of inflation despite taking on more work.
Lawyers say that rent hikes cannot be unilaterally imposed and are supposed to be negotiated between parties.
But laws are rarely enforced without the threat of a lawsuit, attorney Valerian Nwadike told AFP, noting an uptick in tenant-landlord disputes in the past year.
The government recently revised its inflation data, knocking down official year-on-year inflation in January to 24.48 percent, from December's 34.80 percent figure.
That's been of little consolation to ordinary Nigerians.
"The way out at the moment is to look for a way to pay," said Dennis Erezi, a journalist, noting that his 31-percent rent increase is still cheaper than moving.
Jimoh Saheed, a personal trainer, had to leave his one-room flat in a middle-class neighbourhood in Ikoyi when his landlord more than doubled his rent to 2.5 million naira a year and a half ago.
Moving to the mainland meant he was further from his clients and his two children had to change schools and now pay for transport since they no longer live close enough to walk to class.
Late last year, his new landlord raised his rent by 25 percent.
"This is affecting me emotionally, it's affecting me mentally, and in fact, physically," said the 39-year-old, who said his earnings have not kept up with the pace of inflation despite taking on more work.
Lawyers say that rent hikes cannot be unilaterally imposed and are supposed to be negotiated between parties.
But laws are rarely enforced without the threat of a lawsuit, attorney Valerian Nwadike told AFP, noting an uptick in tenant-landlord disputes in the past year.
- Luxury market -
The government hopes its economic reforms will eventually pay dividends, but for nearly two years Nigerians have slogged through the worst economic crisis in a generation.
There are also structural issues at play: high interest rates mean mortgages are out of reach for most, and developers face a bureaucratic regulatory environment, said housing analyst Babatunde Akinpelu.
Lagos is also home to an outsize number of Nigeria's jobs -- leading to an unending stream of people pouring in.
Even as cranes and construction sites whir across the city, many new developments are targeted to the high-end market -- foreigners, Nigerians in the diaspora or oil sector workers, many of whom earn in dollars.
The result is a bifurcated housing market, where increased supply in the luxury sector doesn't trickle down to the rest of the housing stock, said economist Steve Onyeiwu.
"Most of (Lagos's) landlords are exposed to dollar-denominated expenses," like loans or mortgages for properties abroad, even as the naira's value has collapsed, said a director at Island Shoreline, a property management company, adding his own landlord recently tried to raise his rent 100 percent.
Improved public transit, such as the new rail line connecting Lagos and Ibadan, might alleviate pressure but for now there's a "snowball effect" of rising prices, he noted, asking that his name not be used given the sensitivity of rent hikes.
With leases typically paid up front for anywhere between one and three years, both landlords and renters try to negotiate a good deal to hedge against inflation.
But the current spike in rents is "alarming," said real-estate agent Ismail Oriyomi Akinola, noting 200 percent jumps on the wealthy Victoria Island.
"Good shelter is very key to every individual," he said. "Not only for the rich."
The government hopes its economic reforms will eventually pay dividends, but for nearly two years Nigerians have slogged through the worst economic crisis in a generation.
There are also structural issues at play: high interest rates mean mortgages are out of reach for most, and developers face a bureaucratic regulatory environment, said housing analyst Babatunde Akinpelu.
Lagos is also home to an outsize number of Nigeria's jobs -- leading to an unending stream of people pouring in.
Even as cranes and construction sites whir across the city, many new developments are targeted to the high-end market -- foreigners, Nigerians in the diaspora or oil sector workers, many of whom earn in dollars.
The result is a bifurcated housing market, where increased supply in the luxury sector doesn't trickle down to the rest of the housing stock, said economist Steve Onyeiwu.
"Most of (Lagos's) landlords are exposed to dollar-denominated expenses," like loans or mortgages for properties abroad, even as the naira's value has collapsed, said a director at Island Shoreline, a property management company, adding his own landlord recently tried to raise his rent 100 percent.
Improved public transit, such as the new rail line connecting Lagos and Ibadan, might alleviate pressure but for now there's a "snowball effect" of rising prices, he noted, asking that his name not be used given the sensitivity of rent hikes.
With leases typically paid up front for anywhere between one and three years, both landlords and renters try to negotiate a good deal to hedge against inflation.
But the current spike in rents is "alarming," said real-estate agent Ismail Oriyomi Akinola, noting 200 percent jumps on the wealthy Victoria Island.
"Good shelter is very key to every individual," he said. "Not only for the rich."
Nicholas Roll and Tonye Bakare, Fort Bend Herald
Thursday, February 13, 2025
Video - Nigeria’s GDP per capita falls to U.S. $835
Nigeria’s GDP per capita has dropped to 835 U.S. dollars, a significant decline from its 2023 range of 1,597–2,460 dollars, according to the International Monetary Fund. The sharp decrease reflects the impact of inflation, a weakening naira, and widening fiscal deficits on the country's economy.
Thursday, February 6, 2025
President Tinubu increases 2025 budget to $36.4 billion
Nigeria's President Bola Tinubu has increased the size of the 2025 budget to 54.2 trillion naira ($36.4 billion) from 49 trillion naira, he said in a letter to the Senate published on Wednesday.
The president said the increase was due to additional revenue from the government's revenue collecting agencies, such as the tax authority, customs and other agencies.
He added that extra revenue from Federal Inland Revenue Service (FIRS) was 1.4 trillion naira while Nigeria Customs Service fetched 1.2 trillion naira and other agencies got 1.8 trillion naira.
In December, the government said the 2025 spending plan included a budget deficit of 3.89% of gross domestic product, approximately 13.0 trillion naira.
The president said the increase was due to additional revenue from the government's revenue collecting agencies, such as the tax authority, customs and other agencies.
He added that extra revenue from Federal Inland Revenue Service (FIRS) was 1.4 trillion naira while Nigeria Customs Service fetched 1.2 trillion naira and other agencies got 1.8 trillion naira.
In December, the government said the 2025 spending plan included a budget deficit of 3.89% of gross domestic product, approximately 13.0 trillion naira.
Monday, February 3, 2025
Dangote’s decisions projected to reduce the cost of living in Nigeria
“In a bold move to drive economic relief for Nigerians, Dangote Petroleum Refinery has reduced the ex-depot price of Premium Motor Spirit, commonly known as petrol, from N950 to N890 per liter, effective from Saturday,” the Group’s Chief Branding and Communications Officer, Anthony Chiejina, stated.
“This price adjustment is in response to favorable developments in the global energy sector and a significant decline in international crude oil prices.
Dangote refinery’s decision reflects its commitment to aligning with market realities and ensuring that consumers benefit from changes in international crude oil prices,” he added.
This as expected has sent shockwaves across the oil market, which currently averages around N970 to N990 as PMS price.
A report by the Punch newspaper highlights this fact, having spoken to some mjaor players in the country’s oil sector.
Marketers told the aforementioned outlet that the Dangote refinery's abrupt price cut was likely brought on by recent warnings that specific marketers were planning on importing PMS if the foreign product remained lower than the ex-depot pricing of locally refined goods.
In response, the Dangote refinery moved to proffer competitive rates.
This, according to marketers could present some challenges as well as opportunities.
IPMAN's opinion on Danagote's price cut
“For instance, maybe a marketer purchased some product on Friday. I am sure the marketer would not have sold it before the new reduction happened.
That is the negative aspect of it. But, we have to abide by it. We have to live with it. That is the beauty of deregulation,” the Vice President of the Independent Petroleum Marketers Association of Nigeria, Hammed Fashola, stated;
“So, we have to be careful when we purchase our product. Where we purchase it from and the price we are getting it. And we must have adequate information on what is going on. So that we will not be losing money every day,” he added.
He also noted that when prices fall, the only alternative for a marketer is to lower the price to liquidate old stockpiles, or they will be left with no buyers.
“When this happens, the only option a marketer has is to bring down the price. Because if you don’t do that, the competition will set in.
Some marketers in your neighborhood might be lucky to get their product tomorrow at N890. So, if you have a N950 product with you, within two to three days, you will not have an option but to bring it down.
That is the situation marketers are facing now, but we have to cope with it. It is the marketer who bears the losses,” he stated.
“I am happy it is happening this way. We believe that how can imported PMS be cheaper than Dangote’s PMS that is refined here locally? We know crude is being purchased here in naira, not in dollars; though we know that it is going to be in the official exchange rate, but we won’t be looking for dollars. The issue of transportation will not be there and some other charges too,” he added.
“For instance, maybe a marketer purchased some product on Friday. I am sure the marketer would not have sold it before the new reduction happened.
That is the negative aspect of it. But, we have to abide by it. We have to live with it. That is the beauty of deregulation,” the Vice President of the Independent Petroleum Marketers Association of Nigeria, Hammed Fashola, stated;
“So, we have to be careful when we purchase our product. Where we purchase it from and the price we are getting it. And we must have adequate information on what is going on. So that we will not be losing money every day,” he added.
He also noted that when prices fall, the only alternative for a marketer is to lower the price to liquidate old stockpiles, or they will be left with no buyers.
“When this happens, the only option a marketer has is to bring down the price. Because if you don’t do that, the competition will set in.
Some marketers in your neighborhood might be lucky to get their product tomorrow at N890. So, if you have a N950 product with you, within two to three days, you will not have an option but to bring it down.
That is the situation marketers are facing now, but we have to cope with it. It is the marketer who bears the losses,” he stated.
“I am happy it is happening this way. We believe that how can imported PMS be cheaper than Dangote’s PMS that is refined here locally? We know crude is being purchased here in naira, not in dollars; though we know that it is going to be in the official exchange rate, but we won’t be looking for dollars. The issue of transportation will not be there and some other charges too,” he added.
How Dangote could affect cost of living
Additionally, the National President of the Petroleum Products Retail Outlet Owners Association in Nigeria, relayed that this sort of move could improve the overall quality of life in Nigeria.
“The reduction in PMS ex-depot price is expected to have a far-reaching impact on the lives of Nigerian citizens.
With a decrease in the cost of petrol, the prices of goods and services are likely to decrease, leading to a reduction in the overall cost of living.
This, in turn, will provide relief to households, who will have more disposable income to allocate towards other essential needs,” he said.
“The reduction in PMS price will also have a positive impact on the economy. A decrease in transportation costs will lead to increased economic activity, as businesses will be able to transport goods and services more efficiently and at a lower cost.
Additionally, the reduction in PMS price will lead to an increase in demand for goods and services, which will have a positive impact on economic growth and development,” he added.
Additionally, the National President of the Petroleum Products Retail Outlet Owners Association in Nigeria, relayed that this sort of move could improve the overall quality of life in Nigeria.
“The reduction in PMS ex-depot price is expected to have a far-reaching impact on the lives of Nigerian citizens.
With a decrease in the cost of petrol, the prices of goods and services are likely to decrease, leading to a reduction in the overall cost of living.
This, in turn, will provide relief to households, who will have more disposable income to allocate towards other essential needs,” he said.
“The reduction in PMS price will also have a positive impact on the economy. A decrease in transportation costs will lead to increased economic activity, as businesses will be able to transport goods and services more efficiently and at a lower cost.
Additionally, the reduction in PMS price will lead to an increase in demand for goods and services, which will have a positive impact on economic growth and development,” he added.
By Chinedu Okafor, Business Insider Africa
Friday, January 31, 2025
Nigeria Needs Much Higher Power Prices, President's Adviser Says
Nigeria’s power prices need to rise by about two thirds for many customers to reflect the cost of supplying it and an increase can be expected within months, President Bola Tinubu’s special adviser on energy said.
Higher electricity tariffs, which need to be balanced by subsidies for less-affluent consumers, are required to fund the maintenance needed to improve reliability and to attract private investors into power generation and transmission, said the adviser, Olu Verheijen.
“One of the key challenges we’re looking to resolve over the next few months is transitioning to a cost-efficient but cost-reflective tariff,” Verheijen said in an interview in Dar es Salaam, Tanzania, this week. This is needed “so the sector generates revenue required to attract private capital, while also protecting the poor and vulnerable,” she said.
Tinubu has already taken a number of steps to ease the burden on state finances and encourage private investment since taking office in May 2023, including removing subsidies on motor fuel. Power prices were already tripled for some customers last year.
While Nigeria, a nation of about 237 million people, has an electricity access rate of around 62%, an erratic grid supply limits productivity and disrupts daily life.
The move to raise tariffs comes amid mounting pressure from Nigeria’s debt-burdened electricity distribution companies for tariffs to be cost-reflective so they can improve their finances.
The country privatized generation and distribution in 2013, yet prices set by the government’s Nigeria Electricity Regulatory Commission don’t cover the suppliers’ costs. Government subsidies cover some of the difference, but profitability is hard to achieve.
Verheijen was in Tanzania attending a World Bank-backed conference where Nigeria presented a $32 billion plan to boost electricity connections by 2030. Private investors are expected to contribute $15.5 billion and the rest will come from public sources, including the World Bank and African Development Bank.
Nigeria’s power industry needs significant investment to achieve its development aims, Verheijen said. Of the country’s 14 gigawatts of installed power, only 8 gigawatts can be transmitted around the country and just four or five gigawatts can be directly delived to homes and businesses, she said.
Sign up here for the twice-weekly Next Africa newsletter
Siemens AG is working with the government on a $2.3 billion project to improve transmission and distribution, while more than 7 million Nigerians in rural areas have been given access to power via decentralized renewable projects.
“Your energy policies have to be closely linked with your own ambition for your country,” Verheijen said.“ Our own ambition is to be a $1 trillion economy in five years and to move to an upper-middle income country in 25 years.”
Nigeria’s gross domestic product is currently just under $200 billion, according to the International Monetary Fund.
By Antony Sguazzin, Bloomberg
Higher electricity tariffs, which need to be balanced by subsidies for less-affluent consumers, are required to fund the maintenance needed to improve reliability and to attract private investors into power generation and transmission, said the adviser, Olu Verheijen.
“One of the key challenges we’re looking to resolve over the next few months is transitioning to a cost-efficient but cost-reflective tariff,” Verheijen said in an interview in Dar es Salaam, Tanzania, this week. This is needed “so the sector generates revenue required to attract private capital, while also protecting the poor and vulnerable,” she said.
Tinubu has already taken a number of steps to ease the burden on state finances and encourage private investment since taking office in May 2023, including removing subsidies on motor fuel. Power prices were already tripled for some customers last year.
While Nigeria, a nation of about 237 million people, has an electricity access rate of around 62%, an erratic grid supply limits productivity and disrupts daily life.
The move to raise tariffs comes amid mounting pressure from Nigeria’s debt-burdened electricity distribution companies for tariffs to be cost-reflective so they can improve their finances.
The country privatized generation and distribution in 2013, yet prices set by the government’s Nigeria Electricity Regulatory Commission don’t cover the suppliers’ costs. Government subsidies cover some of the difference, but profitability is hard to achieve.
Verheijen was in Tanzania attending a World Bank-backed conference where Nigeria presented a $32 billion plan to boost electricity connections by 2030. Private investors are expected to contribute $15.5 billion and the rest will come from public sources, including the World Bank and African Development Bank.
Nigeria’s power industry needs significant investment to achieve its development aims, Verheijen said. Of the country’s 14 gigawatts of installed power, only 8 gigawatts can be transmitted around the country and just four or five gigawatts can be directly delived to homes and businesses, she said.
Sign up here for the twice-weekly Next Africa newsletter
Siemens AG is working with the government on a $2.3 billion project to improve transmission and distribution, while more than 7 million Nigerians in rural areas have been given access to power via decentralized renewable projects.
“Your energy policies have to be closely linked with your own ambition for your country,” Verheijen said.“ Our own ambition is to be a $1 trillion economy in five years and to move to an upper-middle income country in 25 years.”
Nigeria’s gross domestic product is currently just under $200 billion, according to the International Monetary Fund.
Thursday, January 23, 2025
Nigeria needs to double economic growth within a year or two, finance minister says
Nigeria needs to double economic growth within the next year or two from an annualized rate of 3.5% in the third quarter to lift its population out of poverty, its finance minister told Reuters on Thursday at the World Economic Forum's annual meeting.
Finance Minister and Coordinating Minister for the Economy Wale Edun said Nigeria was on the path to growth after a year of tough economic reforms that sent inflation soaring, but should open the door for more investment.
Edun said he had been meeting in Davos this week with business leaders in the areas of consumer goods, food and beverages, financial services and infrastructure to promote investments, he said in a Thursday interview.
"It's a steady trickle now. What we want is a stream and at the end of the day a flood of investment," he said.
Nigeria has been trying to encourage private investment rather than rely on borrowing to create jobs, as the government searches for a solution to sluggish growth, double-digit inflation and a heavy debt burden.
President Bola Tinubu has vowed to expand the economy by at least 6% a year, create jobs and unify the exchange rate, while also tackling rampant insecurity.
Tinubu scrapped a popular but costly petrol subsidy and lifted foreign exchange trading restrictions. That contributed to consumer inflation, but Edun expressed confidence that Nigerians would soon be past their cost of living crisis.
Central Bank Governor Olayemi Cardoso on Thursday said he expected the economy to expand by 4.17% this year, driven by ongoing reforms and stabilising inflation.
By Chijioke Ohuocha, Reuters
Finance Minister and Coordinating Minister for the Economy Wale Edun said Nigeria was on the path to growth after a year of tough economic reforms that sent inflation soaring, but should open the door for more investment.
Edun said he had been meeting in Davos this week with business leaders in the areas of consumer goods, food and beverages, financial services and infrastructure to promote investments, he said in a Thursday interview.
"It's a steady trickle now. What we want is a stream and at the end of the day a flood of investment," he said.
Nigeria has been trying to encourage private investment rather than rely on borrowing to create jobs, as the government searches for a solution to sluggish growth, double-digit inflation and a heavy debt burden.
President Bola Tinubu has vowed to expand the economy by at least 6% a year, create jobs and unify the exchange rate, while also tackling rampant insecurity.
Tinubu scrapped a popular but costly petrol subsidy and lifted foreign exchange trading restrictions. That contributed to consumer inflation, but Edun expressed confidence that Nigerians would soon be past their cost of living crisis.
Central Bank Governor Olayemi Cardoso on Thursday said he expected the economy to expand by 4.17% this year, driven by ongoing reforms and stabilising inflation.
UN seeks $910 million for humanitarian crisis in Nigeria
The United Nations will this week appeal for $910 million to help tackle a humanitarian crisis in northeastern Nigeria, which has been in the grip of an Islamist insurgency since 2009 and was hit by flooding last year, documents showed on Wednesday.
The UN documents seen by Reuters showed that 7.8 million people need help in the three northeastern states of Adamawa, Borno and Yobe, and the UN aims to help 3.6 million of them.
At $910 million, it is the most expensive humanitarian crisis in West and Central Africa, ahead of Chad, Mali, Burkina Faso, Niger, the documents showed.
Nigeria is also grappling with a cost of living crisis that has seen inflation accelerate to its highest level in nearly three decades, propelled by skyrocketing food prices.
The UN has previously said Nigeria's northeast risks becoming a forgotten crisis as the humanitarian focus has shifted to crises elsewhere such as Ukraine, Gaza and Sudan.
A joint report by the government and UN in November said Nigeria faces one of its worst hunger crises with more than 30 million people expected to be food-insecure this year.
President Bola Tinubu's economic reforms, including scrapping a fuel subsidy and foreign exchange controls, have been blamed for worsening Nigeria's economic troubles. He says the reforms will put the economy on a stronger path to growth.
By Ope Adetayo, Reuters
The UN documents seen by Reuters showed that 7.8 million people need help in the three northeastern states of Adamawa, Borno and Yobe, and the UN aims to help 3.6 million of them.
At $910 million, it is the most expensive humanitarian crisis in West and Central Africa, ahead of Chad, Mali, Burkina Faso, Niger, the documents showed.
Nigeria is also grappling with a cost of living crisis that has seen inflation accelerate to its highest level in nearly three decades, propelled by skyrocketing food prices.
The UN has previously said Nigeria's northeast risks becoming a forgotten crisis as the humanitarian focus has shifted to crises elsewhere such as Ukraine, Gaza and Sudan.
A joint report by the government and UN in November said Nigeria faces one of its worst hunger crises with more than 30 million people expected to be food-insecure this year.
President Bola Tinubu's economic reforms, including scrapping a fuel subsidy and foreign exchange controls, have been blamed for worsening Nigeria's economic troubles. He says the reforms will put the economy on a stronger path to growth.
Nigeria's new BRICS partner status sparks economic optimism, debate
Nigerian authorities said this week that the nation’s new partnership status with the BRICS bloc could unlock critical opportunities in trade, investment and agriculture.
Nigerian President Bola Tinubu’s special adviser told Lagos-based Channels Television that the partnership, which became official Friday, is pivotal to promoting trade, investment, food security, infrastructure development and energy security.
The adviser, Daniel Bwala, said the pact enables Nigeria to forge deeper strategic relationships with BRICS members beyond traditional bilateral partnerships.
BRICS — an acronym for the founding members of Brazil, Russia, India and China, with South Africa added a year later — is a political and economic bloc. BRICS introduced the "partner country” category in October. Partner nations are a step below full membership.
Economist Emeka Okengwu praised the arrangement.
"Look at the members of BRICS and the economies that they bring to the table. Brazil is probably the biggest producer of livestock and its products globally, then to aircraft, aviation and renewable energy,” Okengwu said. “Look at Russia, India, China and South Africa, Egypt and Ethiopia. These are big populations.
If you put them together, they probably bring 10 times the value of whatever Europe and America can give to you," he said.
In total, the 10 BRICS member states make up 40% of the global economy and 55% of the global population.
In a statement, Nigeria’s Foreign Affairs Ministry said that the country’s participation in BRICS reflects its commitment to leveraging global economic opportunities to advance national development goals.
Last December, Nigeria intensified efforts to join not only BRICS but also the G20 organization of the world’s major economies and the BRICS New Development Bank.
Okengwu said the partnership will help Nigeria at "being productive, taking goods and services in there, being able to meet global standards and being competitive.”
“It would've been horrible if Nigeria was not in BRICS and then we would've been left hanging with all these challenges we're having with our neighbors in the Sahel," Okengwu said.
Despite the optimism, analysts say Nigeria faces significant hurdles.
The country’s struggling economy and inadequate infrastructure raise concerns about its capacity for meaningful growth through BRICS. There's also concern about how Nigeria will balance its alliances with Western nations while deepening ties with BRICS.
However, Ndu Nwokolo, an economist with Nextier, suggested the challenge is manageable.
"It's about how smart you are to benefit from everybody,” Nwokolo said. “With what we're seeing by some of the pronouncements of [U.S.] President [Donald] Trump, Nigeria may benefit from it because already Trump is talking about increasing taxes [tariffs] even within ally states.
“So, if he's going to do that with countries we think are traditional partners, so who's telling you that he will not do more with countries that he considers outsiders,” he said. “So, we're looking at a situation where countries that are not originally traditional allies of America will try to pull together, and Nigeria may benefit from that.”
By Timothy Obiezu, VOA
Nigerian President Bola Tinubu’s special adviser told Lagos-based Channels Television that the partnership, which became official Friday, is pivotal to promoting trade, investment, food security, infrastructure development and energy security.
The adviser, Daniel Bwala, said the pact enables Nigeria to forge deeper strategic relationships with BRICS members beyond traditional bilateral partnerships.
BRICS — an acronym for the founding members of Brazil, Russia, India and China, with South Africa added a year later — is a political and economic bloc. BRICS introduced the "partner country” category in October. Partner nations are a step below full membership.
Economist Emeka Okengwu praised the arrangement.
"Look at the members of BRICS and the economies that they bring to the table. Brazil is probably the biggest producer of livestock and its products globally, then to aircraft, aviation and renewable energy,” Okengwu said. “Look at Russia, India, China and South Africa, Egypt and Ethiopia. These are big populations.
If you put them together, they probably bring 10 times the value of whatever Europe and America can give to you," he said.
In total, the 10 BRICS member states make up 40% of the global economy and 55% of the global population.
In a statement, Nigeria’s Foreign Affairs Ministry said that the country’s participation in BRICS reflects its commitment to leveraging global economic opportunities to advance national development goals.
Last December, Nigeria intensified efforts to join not only BRICS but also the G20 organization of the world’s major economies and the BRICS New Development Bank.
Okengwu said the partnership will help Nigeria at "being productive, taking goods and services in there, being able to meet global standards and being competitive.”
“It would've been horrible if Nigeria was not in BRICS and then we would've been left hanging with all these challenges we're having with our neighbors in the Sahel," Okengwu said.
Despite the optimism, analysts say Nigeria faces significant hurdles.
The country’s struggling economy and inadequate infrastructure raise concerns about its capacity for meaningful growth through BRICS. There's also concern about how Nigeria will balance its alliances with Western nations while deepening ties with BRICS.
However, Ndu Nwokolo, an economist with Nextier, suggested the challenge is manageable.
"It's about how smart you are to benefit from everybody,” Nwokolo said. “With what we're seeing by some of the pronouncements of [U.S.] President [Donald] Trump, Nigeria may benefit from it because already Trump is talking about increasing taxes [tariffs] even within ally states.
“So, if he's going to do that with countries we think are traditional partners, so who's telling you that he will not do more with countries that he considers outsiders,” he said. “So, we're looking at a situation where countries that are not originally traditional allies of America will try to pull together, and Nigeria may benefit from that.”
Related story: Video - Nigeria joins BRICS as ninth partner country
Thursday, January 16, 2025
Video - Experts urge diversification of Nigeria’s economy
Under its crude-for-loan arrangements, Nigeria allocated 272,500 barrels of oil daily to service debts until 2029. While these deals provided much-needed liquidity after the naira's devaluation, they limit oil available for domestic consumption, sparking concerns.
Nigerian inflation rises for fourth straight month in December
Nigeria's inflation rate rose for the fourth straight month in December, advancing to 34.80% in annual terms (NGCPIY=ECI) from 34.60% in November, data from the statistics agency showed on Wednesday.
The agency said in a report that the uptick in December was due to increased demand associated with the festive period. Food and non-alcoholic beverages contributed the most to price pressures.
Inflation rose sharply after President Bola Tinubu devalued the naira currency and cut subsidies in 2023 to try to lift economic growth and shore up public finances.
It started to ease in July last year as the impact of the naira devaluation began to fade, before a series of petrol price increases again spurred inflationary pressures, exacerbating the worst cost of living crisis in decades in Africa's most populous nation.
Food inflation was 39.84% year-on-year in December, compared with 39.93% the previous month (NGFINF=ECI), due to price rises for items such as yam, sweet potatoes, beer, corn, rice and fish, the National Bureau of Statistics said.
The central bank hiked interest rates six times last year to try to get inflation under control.
Nigeria's government expects inflation to fall to 15% this year, helped by lower imports of petroleum products, Tinubu said during a budget speech in December.
By Chijioke Ohuocha and Mohd Shamsuddin, Reuters
The agency said in a report that the uptick in December was due to increased demand associated with the festive period. Food and non-alcoholic beverages contributed the most to price pressures.
Inflation rose sharply after President Bola Tinubu devalued the naira currency and cut subsidies in 2023 to try to lift economic growth and shore up public finances.
It started to ease in July last year as the impact of the naira devaluation began to fade, before a series of petrol price increases again spurred inflationary pressures, exacerbating the worst cost of living crisis in decades in Africa's most populous nation.
Food inflation was 39.84% year-on-year in December, compared with 39.93% the previous month (NGFINF=ECI), due to price rises for items such as yam, sweet potatoes, beer, corn, rice and fish, the National Bureau of Statistics said.
The central bank hiked interest rates six times last year to try to get inflation under control.
Nigeria's government expects inflation to fall to 15% this year, helped by lower imports of petroleum products, Tinubu said during a budget speech in December.
Wednesday, January 15, 2025
Islamic police in Nigeria round up children living on streets to put them in camp "for their rehabilitation"
Authorities in northern Nigeria's largest city have begun evacuating more than 5,000 street children seen as a "security threat" and a growing concern as an economic crisis forces more to fend for themselves. The Hisbah, a regional police force tasked with enforcing Islamic Sharia law, have carried out midnight raids on motor parks, markets and street corners in the regional capital, Kano, since the beginning of the year, evacuating children as they sleep.
"We have so far mopped up 300 of these boys from the streets and taken them into a camp provided for their rehabilitation," Hisbah's director-general Abba Sufi told AFP. "Their continued living on the streets is a huge social and security threat because they are potential criminal recruits."
"They are a ticking time bomb that needs to be urgently defused with tact and care," said Sufi.
In November, Kano State governor Abba Kabir Yusuf set up a committee to rid the city of the street children, most of whom are boys. Many sleep in the open and have no access to education or parental care.
With the highest divorce rate in Nigeria, according to official figures, Kano is dealing with a surge in children from broken homes.
Largely left to fend for themselves, the boys roam the city, begging, selling items at traffic lights and scavenging for scrap metal to sell to get money to feed themselves.
The west African economic powerhouse faces its worst economic crisis in decades, with inflation soaring to 34.6 percent in November, leaving many struggling to eat.
Nigeria has 18.5 million out-of-school children, with Kano State accounting for 1.9 million, the highest rate in the country, according to the United Nations Children's Fund (UNICEF) in a 2022 survey.
The Kano figure accounts for 39% of the total number of children living in the state, the 2022 Nigeria Multidimensional Poverty survey said.
Officials told AFP that many of the children in Kano city came from neighboring states.
"Some of them are from Kano, while others are from other states," said Hisbah commander Aminu Daurawa. "The first step is profiling them and identifying where they came from."
Some were sent from villages to learn how to read the Koran at informal Islamic religious schools called almajiri. Residents said many students of the Koranic schools beg for food and alms between classes.
Attempts by authorities and local groups to intervene and support the age-old almajiri system have faced opposition from traditional clerics.
The Hisbah police plan to provide "psychosocial" support and counselling to the children before enrolling those who show interest in school, Sufi said, adding that others will be given seed money to start a trade of their choice.
Daurawa told AFP that out-of-state children will be repatriated after their rehabilitation.
Previous attempts to clear the city of street children have failed.
Between 2017 and 2018, the Hisbah evacuated some 26,000 children and reunited them with their parents in and outside Kano, but they returned to the streets after a lull, according to Daurawa.
During the COVID-19 pandemic, authorities in Kano shut almajiri schools and transported the pupils to their states, but they returned when the schools reopened.
"We want to avoid a repeat of the past experience, which is why we changed approach by camping the children and rehabilitating them before sending them back into the society," Sufi said.
"We have so far mopped up 300 of these boys from the streets and taken them into a camp provided for their rehabilitation," Hisbah's director-general Abba Sufi told AFP. "Their continued living on the streets is a huge social and security threat because they are potential criminal recruits."
"They are a ticking time bomb that needs to be urgently defused with tact and care," said Sufi.
In November, Kano State governor Abba Kabir Yusuf set up a committee to rid the city of the street children, most of whom are boys. Many sleep in the open and have no access to education or parental care.
With the highest divorce rate in Nigeria, according to official figures, Kano is dealing with a surge in children from broken homes.
Largely left to fend for themselves, the boys roam the city, begging, selling items at traffic lights and scavenging for scrap metal to sell to get money to feed themselves.
The west African economic powerhouse faces its worst economic crisis in decades, with inflation soaring to 34.6 percent in November, leaving many struggling to eat.
Nigeria has 18.5 million out-of-school children, with Kano State accounting for 1.9 million, the highest rate in the country, according to the United Nations Children's Fund (UNICEF) in a 2022 survey.
The Kano figure accounts for 39% of the total number of children living in the state, the 2022 Nigeria Multidimensional Poverty survey said.
Officials told AFP that many of the children in Kano city came from neighboring states.
"Some of them are from Kano, while others are from other states," said Hisbah commander Aminu Daurawa. "The first step is profiling them and identifying where they came from."
Some were sent from villages to learn how to read the Koran at informal Islamic religious schools called almajiri. Residents said many students of the Koranic schools beg for food and alms between classes.
Attempts by authorities and local groups to intervene and support the age-old almajiri system have faced opposition from traditional clerics.
The Hisbah police plan to provide "psychosocial" support and counselling to the children before enrolling those who show interest in school, Sufi said, adding that others will be given seed money to start a trade of their choice.
Daurawa told AFP that out-of-state children will be repatriated after their rehabilitation.
Previous attempts to clear the city of street children have failed.
Between 2017 and 2018, the Hisbah evacuated some 26,000 children and reunited them with their parents in and outside Kano, but they returned to the streets after a lull, according to Daurawa.
During the COVID-19 pandemic, authorities in Kano shut almajiri schools and transported the pupils to their states, but they returned when the schools reopened.
"We want to avoid a repeat of the past experience, which is why we changed approach by camping the children and rehabilitating them before sending them back into the society," Sufi said.
Monday, December 30, 2024
Friday, December 27, 2024
Video - Weak economy in Nigeria dampening festive spirit, hurting retailers
Record inflation, a petrol subsidy removal, the devaluation of the local currency, and several other issues combined to keep shoppers at home and cash registers quiet during the holiday season.
Tuesday, December 24, 2024
President Tinubu Defends Reforms Blamed for Hardship
Nigerian President Bola Tinubu defended sweeping economic reforms implemented since he took power in May 2023 as necessary to prevent a national crisis.
“We were spending our future, we were spending our generation’s fortune,” he told a rare media briefing in Lagos, the commercial capital, on Monday. “Why should you have expenditure that you do not have revenues for?”
The leader of Africa’s most populous nation has undertaken a number of measures, including devaluing the naira, abolishing a complex multiple exchange-rate system and scrapping costly gasoline subsidies since taking office.
‘Father Christmas’
Tinubu said that Nigeria had been playing “Father Christmas” to its neighbors by subsidizing gasoline. “I do not have any regrets whatsoever in removing the subsidies,” he said.
While the International Monetary Fund and World Bank have welcomed the reforms, they has triggered soaring inflation and led to a cost-of-living crisis, worsening the plight of millions of Nigerians who live below the poverty line.
In August, demonstrators took to the streets in frustration over the tough living conditions in protests that were met by deadly force by police.
More from Tinubu’s briefing:
. The president said he will not back down on his proposed tax changes, but signaled he could make concessions on value added tax to advance the overall measures, without being specific.
. Importing 2,000 tractors into Nigeria to encourage mechanized farming and increase agricultural output that can be sold for export.
. Tinubu says he does not believe in price controls and the market should be allowed to determine prices.
Friday, December 20, 2024
President Tinubu unveils “ambitious” budget
Nigeria’s President Bola Tinubu presented a 47.9 trillion naira ($30 billion) budget for 2025 to parliament on Wednesday.
The bill, Tinubu’s second as president, assumes a benchmark oil price of $75 per barrel and production of just over 2 million barrels per day — an output level some analysts say would be hard to achieve. Nigerian budgets are anchored on oil sales which make up around 90% of foreign exchange earnings.
The budget also assumes inflation will fall from over 34% currently to 15% next year. It is an “optimistic forecast,” says Ibukun Omoyeni, an economist at Lagos-based Vetiva Capital. He believes inflation “may be much higher” than the government’s estimate and that a supplementary budget would need to be issued at some point.
Tinubu, who has largely stuck by a policy agenda that has sharply raised the cost of living during his tenure, said the latest budget was “ambitious but necessary” for the country’s future. Defense and security will take 10% of the proposed spending, while education and health account for 7 and 5% respectively.
The proposal projects that Nigeria’s economy will grow 4.6% next year, above recent estimates from Washington.
According to the IMF, Nigeria’s economy will grow next year by 3.2% after finishing this year with 2.9%. The World Bank’s growth projection for Nigeria for the next three years is an average of 3.7%.
Earlier this month, Nigeria issued a $2.2 billion eurobond partly to raise money needed to make up for this budget’s 3.9% deficit. Central Bank governor Yemi Cardoso described the bond sale as a measure of “growing confidence of investors and the resilience of the Nigeria credit, and evidence of our improved liquidity position.”
The bank under Tinubu’s direction has managed to stabilize the naira currency after a free fall at the beginning of the year following two devaluations. Next year’s budget is anchored on an exchange rate of 1,500 naira to the dollar, an estimate that isn’t far off the naira’s current position of 1,538.
But even if the exchange rate projection is feasible, Tinubu’s spending plan is “not realistic at all” based on its projections for inflation and oil revenues, says Basil Abia, co-founder of economic policy consultancy Veriv Africa. The firm’s best-case scenario projection for inflation next year is 31% — and that is if Nigeria produces at least 1.8 million barrels per day at $90 or more. But Nigeria’s output has been below that mark in the last half decade with insecurity in oil producing communities limiting production.
And Nigeria’s oil earnings next year could be affected by geopolitical factors beyond its control. “A Trump presidency means more American oil in the global market,” raising the prospect of prices going below $70, Abia said.
By Alexander Onukwue, SEMAFOR
The bill, Tinubu’s second as president, assumes a benchmark oil price of $75 per barrel and production of just over 2 million barrels per day — an output level some analysts say would be hard to achieve. Nigerian budgets are anchored on oil sales which make up around 90% of foreign exchange earnings.
The budget also assumes inflation will fall from over 34% currently to 15% next year. It is an “optimistic forecast,” says Ibukun Omoyeni, an economist at Lagos-based Vetiva Capital. He believes inflation “may be much higher” than the government’s estimate and that a supplementary budget would need to be issued at some point.
Tinubu, who has largely stuck by a policy agenda that has sharply raised the cost of living during his tenure, said the latest budget was “ambitious but necessary” for the country’s future. Defense and security will take 10% of the proposed spending, while education and health account for 7 and 5% respectively.
The proposal projects that Nigeria’s economy will grow 4.6% next year, above recent estimates from Washington.
According to the IMF, Nigeria’s economy will grow next year by 3.2% after finishing this year with 2.9%. The World Bank’s growth projection for Nigeria for the next three years is an average of 3.7%.
Earlier this month, Nigeria issued a $2.2 billion eurobond partly to raise money needed to make up for this budget’s 3.9% deficit. Central Bank governor Yemi Cardoso described the bond sale as a measure of “growing confidence of investors and the resilience of the Nigeria credit, and evidence of our improved liquidity position.”
The bank under Tinubu’s direction has managed to stabilize the naira currency after a free fall at the beginning of the year following two devaluations. Next year’s budget is anchored on an exchange rate of 1,500 naira to the dollar, an estimate that isn’t far off the naira’s current position of 1,538.
But even if the exchange rate projection is feasible, Tinubu’s spending plan is “not realistic at all” based on its projections for inflation and oil revenues, says Basil Abia, co-founder of economic policy consultancy Veriv Africa. The firm’s best-case scenario projection for inflation next year is 31% — and that is if Nigeria produces at least 1.8 million barrels per day at $90 or more. But Nigeria’s output has been below that mark in the last half decade with insecurity in oil producing communities limiting production.
And Nigeria’s oil earnings next year could be affected by geopolitical factors beyond its control. “A Trump presidency means more American oil in the global market,” raising the prospect of prices going below $70, Abia said.
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