Babajide Babatunde M (BBM)
3 min readJan 7, 2024

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Nigeria Economic Outlook 2024 – 12 Months of Abundance or 12 Months of Famine.

For me, the Nigerian economy's outlook for 2024 is mixed, with potential for modest growth alongside significant challenges.

Here's a breakdown of key factors:

GDP:
Growth forecasts: International Monetary Fund (IMF) projects 3% decline. African Development Bank (AfDB) projects 3.3% increase (average for 2023-24).
Drivers: Dangote refinery coming online, boosting trade surplus and reducing imports; Increased non-oil exports; Government spending on infrastructure and social programs.
Challenges: High inflation dampening consumer spending and investment; Tight financial conditions limiting credit access; Fiscal constraints restricting government spending.

Exchange Rate:
The Nigerian Naira was the worse performing currency in Africa in 2023 with 55% devaluation.
Official Market:
- I expect FX to appreciate slightly as inflation moderates and FX market stabilizes.
- Central Bank of Nigeria (CBN) may continue gradual devaluation to boost non-oil exports.
Parallel Market:
- May remain highly volatile due to limited dollar supply and high demand.
- Convergence with the official rate depends on CBN's intervention and forex access improvements.

Monetary Policy (MPR):
The current MPR is 18.75%. There is a possible upward adjustment to curb inflation if it remains stubbornly high and to also attract foreign investment.

Oil Production:
OPEC may raise production quotas, potentially boosting Nigerian output. Also, there will likely be spike in price of oil in the global market as a result of the ongoing war in Russia and Ukraine.
Domestic challenges remain: Oil theft and pipeline vandalism impacting production and the need for investment in exploration and infrastructure upgrades.

FX Reserves:
Expected to stabilize or even increase depending on the export level.
Improved oil revenue and potential IMF loan disbursement could bolster reserves.
Dependence on oil revenue remains a vulnerability.

Market Capitalization:
The NSE achieved a year-to-date growth of 45.90% in 2023, the NGX closed the year on an impressive note, its best return since 2020, when the ASI grew by 50.03%. Hence, I am bullish about the NSE in 2024.
Nigerian Stock Exchange (NSE) performance in 2023 will depend on: global market trends; domestic economic conditions, particularly inflation and currency stability; and corporate earnings and dividend payouts.

Inflation:
Inflation rate in Niger hits 28.9% as at November 2023. It is expected that the inflation rate will keep increasing at a diminishing rate resulting from factors such as Fx rate, imported inflation, loosen monetary policy, low farm produce (food inflation) among others.
Tighter monetary policy and improved agricultural output could contribute to decline.

Direct Investment (DI):
According to Statista, Nov 7, 2023, between April and June 2023, the flow of foreign direct investment (FDI) into Nigeria amounted to some 86.03 million USD. Compared to the previous quarter, this value experienced an increase. For instance, as of Q1 2023, FDI in the country stood at around 47.6 million U.S. dollars.
FDI is forecasted to increase in Nigeria with potential attraction including Dangote refinery; government efforts to improve the business environment; and others.
Challenges persist: Bureaucracy, corruption, and security concerns deterring some investors.

Overall, the Nigerian economy in 2024 is likely to see modest growth, but significant challenges remain. Inflation, exchange rate volatility, and fiscal constraints will be key risks to watch. However, positive developments like the Dangote refinery coming online and potential oil quota increases offer some hope for improvement.

It’s important to note that these are just forecasts, and the actual economic performance in 2024 could be different. The situation remains fluid and will depend on various domestic and global factors.

Disclaimer: Opinions are mine and not a representation related entities.

Babajide Babatunde M (BBM)

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Babajide Babatunde M (BBM)

A seasoned and resourceful tax and financial market analyst, knowledgeable and with great learning skills.