Africa’s top export-import bank, AFREXIMBANK, is praising Nigeria’s economy for its ability to recover from the COVID-19 recession, but it also notes that given the nation’s challenges in slowing population growth, more work needs to be done to achieve faster economic growth.
The Cairo-based organisation that promotes trade and economic expansion throughout the continent stated in its most recent country brief that Nigeria’s growth potential is indicated by “this recovery, driven by favourable crude oil prices, growth in non-oil sectors such as agriculture and services, and increased public and private consumption.”
“Forecasts suggest that economic growth will continue at an average of 3.1% in 2024 and 2025, supported by rising global oil prices, improved oil production, sustained growth in agriculture and services, currency stability, and the government’s efforts to strengthen fiscal policies,” the report states, despite the current economic hardship.
AFREXIMBANK stated, “However, it is critical to stress that the rate of economic growth must be substantially faster, especially given Nigeria’s rapidly rising population. While GDP grows at a rate of roughly 3% per year, demographic trends reveal that the economy is struggling to keep up with population expansion, which might stymie overall socioeconomic progress and worsen unemployment and poverty. Sustainable economic growth necessitates specific measures to combat unemployment and poverty. Nigeria’s comeback from the recession is a promising start.”
It continued by saying that, given the expanding population, it would be essential to reduce the high cost of living brought on by the conflict in Ukraine and achieve strong and inclusive economic growth in the most populous nation in Africa.
The continental banking organisation stated that loose financial conditions and supply chain disruptions are to blame for Nigeria’s recent severe inflationary pressure.
The amount of people’s disposable income has been destroyed by inflation, which increased to 33.95% in May 2024 from 28.9% in December 2023 and 21.3% in December 2022, primarily affecting the impoverished.
The inflation basket’s most important component, food inflation, has Due to favourable crude oil prices, expansion in non-oil industries including services and agriculture, and rising public and private consumption, Nigeria has seen a recovery that has raised its potential growth from 23.75% in December 2022 to 33.9% in December 2023 and 40.66% in May 2024.
According to the research, the strong US currency bolstered by strict US monetary policy, poor foreign reserves, weak investment inflows, and a high and growing demand for the US dollar to pay for imports have all contributed to the Nigerian Naira’s recent high volatility on the foreign exchange market.
