The commencement of domestic production of petroleum products by Dangote Refinery, the restart of Port Harcourt, and Warri Refineries is a glimmer of hope amid the despair Nigerians faced in 2024.
In the past 12 months plus, Nigerians have struggled to cope between economic hardship and hope inspired by President Bola Ahmed Tinubu’s economic reforms.
This is the case as the lagging impact of fuel subsidy removal, Naira floating on June 14, 2023, fiercely pounced on Nigerians.
Similarly, headline and food inflation continue to soar to 34.60 percent and 39.93 percent, respectively, in November 2024 compared to 28.2 percent and 32.84 percent in the same period in 2023.
Consequently, the cost of living became more unbearable for the majority of Nigerians as prices of foods quadrupled.
Hikes in the price of fuel, electricity, Naira fluctuations, and high interest rates were key economic indices that turned the hands of fortunes for Nigerians in 2024.
Meanwhile, with the commencement of petrol rollout at Dangote Refinery on September 15, Port Harcourt Refinery on November 26, and Warri Refinery on December 30, the country’s gross domestic product grew to 3.46 percent in the third quarter.
A minimum wage increase also brought a glimpse to Nigerians in 2024.
On Monday, DAILY POST reported Tinubu saying the restart of Warri Refinery has brought joy to him and Nigerians.
Rising headline, food inflation amid hardship
Nigeria saw worse inflation in the last 11 months of 2024. Available data from the National Bureau of Statistics showed that the country’s inflation grew by 6.4 percent in November 2024 compared to the same month in 2023.
The worst was food inflation at 39.93 percent, representing a 7.09 percent rise on a year-on-year basis compared to 32.84 percent in 2023.
Market realities showed that Nigeria’s food inflation surpassed 50 percent. Insecurity nationwide, which made farmlands unsecured, worsened food scarcity.
This was propelled by increases in prices of the following items: yam, water yam, coco yam, etc. (potatoes, yam & other tubers class); guinea corn, maize grains, rice, etc. (bread and cereals class); beer, pinto (tobacco class); and palm oil, vegetable oil, etc. (oil and fats class). This explains why over 65 persons died in Oyo, Anambra, and Abuja over food stampedes.
Meanwhile, in July and August, 2024, Nigeria recorded declining inflation rates, though it had little effect on commodity prices.
Fuel price hike
Nigeria experienced at least three fuel price hikes at different times in 2024.
On September 3, 2023, the country’s fuel price increased from N617 per litre at the Nigerian National Petroleum Company Limited retail outlets to N897. On September 16, NNPCL announced a new fuel price of N950 per litre in Lagos after lifting PMS from Dangote Refinery.
Available data showed that the price of fuel was later raised to N1,030 at NNPCL filling stations in October 2024.
At the moment, the price of petrol is between N935 per litre to N1,150 in NNPC Retail outlets and other filling stations nationwide.
The spree of fuel price hikes had deeply impacted the country’s inflation. In the last 18 months, fuel prices grew from N198 per litre to between N935 and N1,115 upon fuel subsidy removal.
Naira volatility against Dollar
The ups and downs recorded in the country’s foreign exchange market contributed to the country’s woes.
On December 12, 2023, the official exchange rate for Naira to Dollar stood at N853 but has increased to N1,538.55 as of December 30, 2024. This means the Naira lost, N685.55, in the period under review.
At one time in 2024, the Nigerian Naira became the best currency in April to worst in May.
Interest rate hike
Since Olayemi Cardoso assumed office as the Governor of the Central Bank of Nigeria in September, the apex bank has maintained a hoodwished monetary policy stance.
This comes as the Monetary Policy Committee, headed by Cardoso, consistently raised the interest rate to 27.50 percent from 18.75 per cent in September 2023. This impacted the cost of lending by commercial banks. Meanwhile, Cardoso gave a rising inflation rate as the basis for the interest rate hike.
Nigeria’s Power Sector Review
In April 2024, Nigerians woke up to over 200 per cent electricity price hike for customers described as Band A, expected to have at least 20 hours power supply. The increase resulted in customers paying N225 per kilowatt-hour up from N66. The hike was faced with opposition but the decision was not rescinded.
The development further impacted on households grappling with high inflation, while revenue rose for the 11 electricity distribution companies.
Despite this, Nigeria failed to meet its self imposed 6,000 megawatts electricity generation target.
Recall that the Minister of Power, Adebayo Adelabu had promised to achieve 6000mw of electricity by December end 2024, but that did not come to pass. He recently blamed widespread vandalization for the unmet promise.
Vandalizations of the Transmission Company of Nigeria facility and other factors resulted in at least 13 national grid collapses which plunged the nation into darkness at different times in 2024.
Worse was the prolonged darkness in 19 Northern states in Nigeria and parts of Rivers and Bayelsa states.
The darkness was caused by vandalism, according to TCN.
These are many challenges that marred the power sector in 2024.
However, the liberalisation of the sector, according to the 2023 Electricity Act, granting oversight functions to states, is the silver lining in 2024.
DAILY POST reports that the Nigerian National Electricity Regulatory Commission has transferred oversight to eight states as of December 31, 2024. States such as Ogun, Lagos, Enugu, Kogi, Ondo, Ekiti, Oyo, and Imo have already received regulatory oversight for electricity operations.
Tax bills controversies
The four tax reform bills awaiting national passage are another significant moment in the year under review.
President Tinubu transmitted the bills to the National Assembly in October; however, Northern governors, the National Economic Council, and other northern heavyweights rejected the bills.
The bills have remained subject of discussion. However, the decision the lawmakers take on the bills would significantly impact the country’s economic outlook in 2025, with Tinubu maintaining the bills were needed to retool the economy.
Recently, in Bauchi State, Bala Mohammed accused Tinubu of scheming to impoverish the North with the tax reform bills.
Rising debt profile, servicing
In 2024, Nigeria’s debt stock witnessed a significant rise to over N134 trillion at the end of the fourth quarter.
In the first quarter of 2024 alone, Nigeria’s debt rose by 22.99 percent to N121.67 trillion compared to N97.34 trillion recorded on December 31, 2023.
In the first nine months of 2024, Nigeria spent $3.57 billion to service its foreign debt, which is a 39.7 percent increase from the same period in 2023.
This comes as the Federal Government plans to spend N15 trillion on debt servicing in the 2025 appropriation bill before the National Assembly.
Financial experts, such as Director of the Centre for the Promotion of Private Enterprise, CPPE, Muda Yusuf, have condemned the country’s rising debt profile.
Also, ex-president Olusegun Obasanjo decried Nigeria’s debt profile without commensurate infrastructural development.
Economic feats in 2024
2024 is not all filled with despair; there are quick wins achieved by Nigeria.
The coming on board of three refineries in Nigeria is one of the milestone achievements.
First it was the Dangote Refinery, then the restart of operations at the Port Harcourt and Warri Refineries.
With competition interplay in the downstream oil and gas sector, fuel prices dropped in recent weeks to between N935 and N1,115 per litre from N1060 and N1,300.
Also, President Bola Ahmed Tinubu’s signing of N70,000 minimum wage could pass as economic landmarks in 2024.
Also significant is the gradual stabilisation of the Naira at the FX market with the introduction of the Electronic Foreign Exchange Matching System (EFEMS) as the FX rate stood between N1,540 and N1,660 at official and black markets, respectively, from over N1,700 per dollar.
This comes amid a marginal growth in Nigeria’s Gross Domestic Product, GDP, which grew by 3.46 percent from 2.9 percent in 2023.
The Nigerian government achieved another feat over the clearance of a $7 billion foreign exchange backlog.
Economic Outlook for 2025
2025 holds hopes for better Nigeria with the yet-to-be-passed budget of N49.7 trillion annual expenditure and improved economic realities.
The director of CPPE, Yusuf has projected that inflation may moderate slightly in the coming year.
President of Retail Outlets Owners Association of Nigeria, Billy Gillis-Harry, forecast further fuel price drop amid competition between Dangote Refinery and NNPCL.
2025 a Mix of Hope, despair – Oyedokun
Popular economists believe that the emergence of domestic refineries and improved fiscal policies present an optimistic outlook for the Nigerian economy in 2025.
Prof. Godwin Oyedokun, a don at Lead City University in Ibadan, spoke to DAILY POST in an exclusive interview on Monday.
According to him, 2024 has been a year of stark contrasts for the Nigerian economy- a year of both significant challenges and a glimmer of hope.
Speaking on low points in the year under review, Oyedokun identified fuel and electricity woes.
“The year was plagued by persistent fuel scarcity and soaring fuel prices, crippling businesses and exacerbating inflationary pressures.
“Frequent power outages further hampered economic activity and stifled productivity across sectors.
“Inflationary Spike: Double-digit inflation eroded purchasing power, squeezed household budgets, and increased the cost of doing business.
“High-Interest Rate Environment: The Central Bank of Nigeria’s aggressive monetary tightening policy, with interest rates reaching a multi-year high of 27.5 percent, significantly increased borrowing costs for businesses and individuals, hindering investment and consumption and exchange rate volatility.
“The Naira experienced significant depreciation against major currencies, further fuelling inflation and increasing the cost of imports,” he stated.
On the flip side, he said the high points of Nigeria’s economy in 2024 include resilient economic growth, stressing that “despite the headwinds, the Nigerian economy demonstrated resilience, recording a 3.46 percent GDP growth in the third quarter of 2024.
“This growth, while moderated by challenges, showcased the underlying strength of the Nigerian economy.
“The emergence of domestic refineries, the commissioning of the Dangote Refinery in Port Harcourt, and the recent inauguration of the Warri refinery marked significant milestones in Nigeria’s efforts to reduce fuel imports and enhance energy security.
“These developments hold the potential to alleviate fuel scarcity and stabilise fuel prices in the long term.”
Speaking on the Economic Outlook for 2025, Oyedokun described it as a mix of hope and despair.
“The economic outlook for 2025 remains uncertain, fraught with both potential opportunities and significant risks.
“The Nigerian economy faces a complex and uncertain path in 2025. While the emergence of domestic refineries and continued economic growth offer reasons for optimism, significant challenges remain, including high inflation, unemployment, and political uncertainty.
“The success of the Nigerian economy in 2025 will depend on the government’s ability to address these challenges effectively, implement sound economic policies, and create an enabling environment for businesses to thrive,” he told DAILY POST.
[DailyPost]