The twin policies of petrol subsidy removal and free-float of the naira have combined to wreak havoc on disposable income, with manufacturers left with unsold inventory. The apex bank governor believes Nigeria will turn the corner this year.

Speaking at the Nigerian Economic Summit Group 2024 macroeconomic outlook report, Olayemi Cardoso, Central Bank of Nigeria (CBN) governor, says he is optimistic that the economy would recover and, indeed, grow at 3.75 percent.

He hinged this on more forex being made available to the apex bank by the Nigerian National Petroleum Company and the Ministry of Finance, in addition to increased sales of crude oil. There is also the coming on stream of government’s refineries, in addition to Dangote Refinery, which will expectedly moderate the high fuel prices that have had a major impact on inflation, which currently stands at 28.92percent.

Although the policies announced at the inauguration of the current government have been hailed as bold, they have had an adverse impact on prices of goods and services particularly transportation. With many homes and businesses relying on alternative power provided by generators burning petrol, costs have spiraled. Wages have stagnated, leading to manufacturers recently bemoaning their inability to move goods in warehouses valued at about ₦400billion.

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With many Nigerians wondering what is next, the CBN governor’s assurances may provide a glimmer of hope, as he declares: The outlook for decreasing inflation in 2024 will have a profound impact on businesses providing a more predictable cost environment and potentially leading to lower policy rates, stimulating investment, fueling growth, and creating job opportunities. Additionally, the bank has reverted to the conventional monetary policy approach with a focus on attaining price stability which fosters sustainable economic growth for Nigeria.

Petrol pump price, which rose steeply from ₦165 to ₦600 per litre, has been blamed for the major upheavals the economy has experienced in less than one year in office of the government. Cardoso believes fuel prices would moderate this year. The economic stabilisation or reduction in fuel cost is poised to have far-reaching implications across various sectors, contributing significantly to overall economic efficiency and resilience.

The exchange rate of the naira to the United States dollar also came under the focus of the apex bank governor. The currency was exchanged at about ₦470 to the dollar at the assumption of office of the government last year, and was devalued sharply, swinging widely to ₦900 at the official market and ₦1,375 at the parallel market. In our efforts to stabilise the exchange rate, we must prioritise transparency and create a market environment that creates a fair determination of exchange rates ensuring stability for businesses and individuals alike. Cardoso believes naira is undervalued.

The #NESG 2024 Macroeconomic Outlook emphasised the significance of the government adopting an economic transformation agenda to foster sustained high economic growth.

Download the full report at https://t.co/sBzSXf0yDN#NESGOutlook2024 pic.twitter.com/wKr9Z826no

— Nigerian Economic Summit Group (NESG) (@officialNESG) January 24, 2024

The CBN governor’s optimism may not be misplaced as he finds company in the Nigerian Economic Summit Group (NESG), which also predicted the economy will grow at 3.5 percent this year. The group says inflation will fall to 21.5 percent.

The outlook for 2024 is intricately shaped by a myriad of external and domestic factors, reflecting the dynamic nature of both local and global economic terrains. Real GDP growth is expected to rise rapidly to 3.50 per cent in 2024. Various reform programmes initiated by the government are expected to trigger an uptick in economic growth as strains on investment are addressed, and low productivity in critical sectors is resolved.

The services sector will remain the economy’s key driver, while the anticipated rebound of the country’s oil sector will push stronger real GDP growth in 2024.

Meiza Nigeria