2024: The year Nigeria’s economy went on a rollercoaster 

In 2024, Nigeria’s economy experienced notable developments influenced by reforms by Federal Government, external pressures, and ongoing challenges. WESTERN POST brings major development that include some big companies exiting and incoming firms that have opted to invest in the Africa’s largest economy.

Firstly, President Bola Tinubu presented ‘Budget of Renewed Hope’ to joint assembly with   an aggregate expenditure of N27.5 trillion in 2024, of which the non-debt recurrent expenditure was N9.92 trillion while debt service is projected to be N8.25 trillion and capital expenditure is N8.7 trillion.

According to him, the budget deficit was projected at N9.18 trillion in 2024 or 3.88 per cent of Gross Domestic Product (GDP). This is lower than the N13.78 trillion deficit recorded in 2023 which represents 6.11 per cent of GDP.

“The deficit will be financed by new borrowings totalling N7.83 trillion, N298.49 billion from Privatization Proceeds and N1.05 trillion drawdown on multilateral and bilateral loans secured for specific development projects,” he said.

Nigeria GDP growth, sectoral performance:

Nigeria’s GDP grew modestly, with projections of 3.1per cent growth for the year, driven by reforms in ICT, manufacturing, and recovering oil production. The financial and insurance sectors also contributed to early-year growth​

The latest report by National Bureau of Statistics (NBS) In Q3 2024, had revealed Nigeria’s GDP grew by 3.46per cent in real terms, an improvement over the 2.54per cent recorded in Q3 2023 and slightly higher than the 3.19per cent recorded in Q2 2024.

The growth was primarily driven by the services sector, which expanded by 5.19per cent, contributing 53.58per cent to the overall GDP. Significant contributions also came from agriculture, industry, and telecommunications​

​The oil sector saw a modest growth rate of 5.17per cent, which, while higher than the negative growth in Q3 2023, was a decline from the 10.15% recorded in Q2 2024. Average daily oil production increased slightly to 1.47 million barrels per day​.

​Non-oil sectors remained dominant, accounting for 94.43per ent of the GDP, with notable growth in telecommunications, trade, and real estate. In nominal terms, GDP reached N71.1 trillion, representing a 17.26per cent year-on-year increase​. This growth reflects Nigeria’s ongoing efforts to diversify its economy and improve infrastructure across various sectors.

Inflation Rate and Monetary Policy

According to NBS, inflation surged to 34.6per cent as of November 2024, marking a near 30-year high.

This reflects a significant increase from 28.9per cent at the end of 2023. The primary drivers of this inflation include rising food prices, transportation costs, and the depreciation of the naira. Food inflation alone climbed to 39.93per cent year-on-year in November, driven by higher prices for staples like rice, yams, and vegetable oil​.

​Urban areas experienced a higher inflation rate of 37.1per cent, compared to 32.27per cent in rural regions. While monthly inflation rates have slightly eased in recent months, persistent economic challenges, including structural issues and insecurity, continue to exert upward pressure on prices​

The Central Bank of Nigeria (CBN) has maintained a hawkish stance to curb inflation, raising its benchmark interest rate to 27.5per cent. Policymakers remain cautious, with expectations that inflation may begin to slow in early 2025 due to base effects and anticipated improvements in economic stability​.

The CBN raised the Monetary Policy Rate (MPR) to 27.50 per cent in 2024 to combat inflationary pressures​

Fiscal Reforms and Revenue Boost:

In 2024, the Federal government implemented several fiscal reforms aimed at addressing structural challenges, improving revenue generation, and stabilizing the economy. These reforms were part of President Bola Tinubu’s administration’s strategy to reset Nigeria’s fiscal landscape. Major key reforms include the removal of fuel subsidy,  which had historically drained public finances. This move was expected to save over N4 trillion annually, redirecting funds to infrastructure, education, and healthcare​

​Also, the CBN unified the multiple exchange rate system, allowing market-driven rates for the naira. This aimed to improve transparency and attract foreign investments, though it initially caused inflationary pressures​

The government introduced measures to expand the tax base, reduce tax evasion, and increase compliance. Efforts included digitization of tax administration and stricter enforcement on corporate and personal taxes​ Reforms in customs processes were introduced to enhance efficiency and reduce smuggling, aiming to boost non-oil revenue. This included leveraging technology for faster clearance and improved tracking of goods​

On debt, the government sought to restructure its debt portfolio by negotiating with creditors and introducing initiatives to limit borrowing costs. Emphasis was placed on maximizing internally generated revenue (IGR) to reduce reliance on external debt​

Economic Challenges:

Persistent insecurity, high food and fuel prices, and naira depreciation were key hurdles. Despite these, the government maintained a focus on diversification and structural reforms to strengthen the economy​

In 2024, several notable companies exited the Nigerian market due to challenging economic conditions, currency instability, and regulatory hurdles.  For instance, Microsoft Nigeria, PZ Cussons Nigeria Plc, Diageo Plc, Pick n Pay, Sanofi, among other exit Nigeria economy.

Major players like Microsoft Nigeria had closed its Africa Development Center in Lagos as part of global restructuring, redirecting investments to other African countries like Kenya, while PZ Cussons Nigeria transitioned operations citing difficulties in the business environment.

Diageo  sold its majority stake in Guinness Nigeria to Tolaram Group as part of its strategic focus elsewhere, as  Pick n Pay, a South African grocery retailer exited after struggling to gain traction in the Nigerian retail market. These exits highlight ongoing challenges such as high inflation, foreign exchange shortages, and broader macroeconomic instability, impacting investment and operations in the country.