Nigeria’s economic trajectory is showing signs of recovery after enduring nearly two years of significant reforms that initially sparked a cost-of-living crisis. While these reforms were challenging, they have set the stage for potential long-term economic stability. As the country works through the aftermath, there is a growing sense of cautious optimism that the recovery will be sustainable, fueled by strategic policy shifts and initiatives to diversify the economy, as reported by Bloomberg.
A boost in security within the country’s key oil-producing region has significantly increased crude oil earnings, which account for about 80% of Nigeria’s foreign exchange inflows. In January, daily crude output averaged 1.54 million barrels—a four-year high—surpassing the nation’s OPEC+ quota. This surge in revenue has contributed to stabilizing the naira, which had plummeted by approximately 70% against the dollar since June 2023 when the central bank introduced a more flexible exchange rate.
Investor confidence is also on the rise. The premium required to hold Nigeria’s dollar-denominated debt has dropped to a five-year low, while the country’s main stock index has surged by 11% since early December—outpacing the MSCI developing-world equities index, which gained only 3% in the same period.
Additionally, Nigeria is poised to reclaim its position as Africa’s largest economy, a title it currently holds in fourth place. The National Bureau of Statistics is set to release rebased GDP figures next month, with projections estimating an upward revision to nearly $500 billion.
Further optimism came with the release of revised inflation data on Tuesday, showing a sharp decline from almost 35% to 24.5%. This could create room for the central bank to consider lowering interest rates in its upcoming meeting on Thursday, potentially stimulating consumer spending and economic growth.
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For President Bola Tinubu, the positive economic indicators offer a much-needed reprieve. His administration’s fiscal reforms, aimed at stabilizing government finances, had led to surging food and fuel prices, worsening the hardship for a population where more than half live below the poverty line.
While challenges remain in sustaining the momentum, Nigeria’s long-struggling economy appears to be on a stronger footing.
