- The Nigerian economy was rife with many policies in 2024
- These policies, from the government and regulatory authorities, shaped the economy in the year
- TheRadar the top five of these policies, including the approval of a new minimum wage and the controversial tax reform bills
In 2024, Nigeria’s economy was characterised by various policies and events that kept it agog despite its volatile state.
As is often the case, these policies impacted the lives and livelihood of Nigerians, ignited agitations, and bumped up the economy in some ways.
TheRadar highlights the top five such policies, including the introduction of a cybersecurity levy, the approval of minimum wage, and the infamous tax reform bills.
5 policies that characterised Nigeria’s economy in 2024
1. Cybersecurity levy
In May 2024, the Central Bank of Nigeria (CBN) announced an increment in the cybersecurity levy on electronic transactions carried out by banks and other financial institutions from 0.005 per cent to 0.5 per cent to combat cyber threats.
The CBN said the levy applied to most electronic transactions but excluded salary payments, loan disbursements, and specific bank transfers.
The announcement drew the ire of Nigerians, who protested against the introduction of the levy because the citizens were already overburdened by different taxes, levies, and charges from the government.
The public outcry led to the temporary suspension of the policy by President Bola Tinubu a few days before it was to be introduced.
However, in September 2024, the CBN reintroduced the levy at its initial rate of 0.005 per cent. The levy was included in the CBN’s 2024-2025 fiscal guidelines, with the CBN reiterating that it is crucial for strengthening cybersecurity.
2. Minimum wage approval
On Tuesday, July 30, 2024, President Tinubu signed into law the new National Minimum Wage Act, which pegs the new national minimum wage at N70,000, bringing an end to months-long negotiation of the tripartite committee comprising organised labour unions, government representatives, and the organised private sector (OPS).
The new minimum wage was arrived at on Thursday, July 18, after members of the tripartite committee haggled the minimum wage from organised labour’s initial N615,000 demand and Federal Government’s N62,000 stance. After days of negotiations and a two-day strike, labour shifted grounds and demanded N250,000 before President Tinubu took over talks with the union and agreed on N70,000.
The new minimum wage of N70,000 is 133 per cent higher than the last minimum wage of N30,000 signed by former President Muhammadu Buhari in 2019.
Though the furore around the new minimum wage may have subsided, Nigerian workers are still awaiting, with bated breath, the implementation of the policy by the federal and state governments.
This is even as analysts believe the policy has long-term impacts, especially on the economy, including increased government borrowing to fund a larger wage bill, heightened inflationary pressure, increased money supply, and possible job cuts.
3. Tax reform bills
In October 2024, President Tinubu sent the four tax bills to the National Assembly for approval, which are the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.
The Nigeria Tax Bill 2024 is expected to provide the fiscal framework for taxation in the country, the Tax Administration Bill will provide a legal framework for all taxes in the country and reduce disputes, the Nigeria Revenue Service Establishment Bill will repeal the Federal Inland Revenue Service Act and establish the Nigeria Revenue Service, and the Joint Revenue Board Establishment Bill is expected to create a tax tribunal and a tax ombudsman.
Among other things, the bills seek to review the sharing formula of the Value Added Tax (VAT) to accommodate what each state gets VAT for what it generates within its territory, as well as remove VAT from essential consumption, education, healthcare, transportation, and accommodation to benefit low-income earners.
However, the bills have been greeted with controversies and criticisms from different quarters, with some calling for wider consultations before passage, while others, like the Afenifere, have endorsed the bills.
During a meeting in October, the Northern Governors Forum said some aspects of the bills, especially the VAT components, are skewed against the interests of the North, even as the National Economic Council challenged the bills, asking President Tinubu to withdraw the bills from the National Assembly for further consultations.
In early December, President Tinubu directed the Federal Ministry of Justice to work with the National Assembly to ensure that “genuine concerns” associated with the Tax Reform Bills are addressed before their passage by the lawmakers, but due to public agitation and objections to the bills, the Senate paused public hearing of the tax reform bills after it passed second reading.
4. Fuel price hike
The ripple effects of the fuel subsidy removal by President Tinubu in May 2023 trailed into 2024, leading to an increase in the price of fuel and other petroleum products. With the increase, costs of transportation and food skyrocketed.
In 2024, the price of fuel increased from an average of N238.11 in May 2023 to over N1,000 as of October 2024.
The increase followed fuel price hikes by the Nigeria National Petroleum Commission Limited (NNPCL), as it increased the price of fuel in its retail outlets twice within two months at approximately N998 in Lagos from N885 and N1,030 in Abuja from N897. The price was also adjusted to N1,025 in Lagos and N1,060 in Abuja in November.
With the coming onstream of the Dangote Refinery and the back and forth with regulatory authorities, Nigerians recorded a reprieve in December 2024 when the refinery partnered with MRS filling station to sell fuel at N935 per litre.
The NNPCL followed suit, cutting down its ex-depot price to N899 to ease the cost of transportation.
With increased competition from the Dangote Refinery, and the coming onstream of the Port Harcourt and Warri refineries, it is expected that the price of fuel and other petroleum products will further reduce in response to the market.
5. Approval of divestment deals
In line with the Petroleum Industry Act (PIA), five local oil and gas companies struck divestment deals with some international oil companies (IOCs) and submitted to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for regulatory approval and ministerial consent.
2024 saw four of the five divestment deals approved, but not without regulatory delays, especially with the Shell Petroleum Development Company (SPDC) and Renaissance Africa Energy Company Limited deal.
In August 2024, Oando Plc took over Nigerian Agip Oil Company (NAOC) from Eni following the acquisition of a 100 per cent shareholding interest in the company for a total consideration of $783 million, which comprises consideration for the asset and reimbursement.
In October 2024, the Federal Government approved the application of a $1.28 billion sale of ExxonMobil Corporation’s onshore assets to Seplat Energy, more than two years after the deal was struck.
Under the agreement, Seplat Energy will acquire 40 per cent of four oil mining leases and associated infrastructure, including the Qua Iboe export terminal and 51 per cent of the Bonny River natural gas liquids recovery plant, previously owned by ExxonMobil’s Nigerian unit, Mobil Producing Nigeria Unlimited (MPNU).
Following the complete acquisition of MPNU from ExxonMobil in a $1.28 billion deal, Seplat Energy Plc became Nigeria’s leading energy company.
In November 2024, Chappal Energies acquired Equinor Nigeria Energy Company (ENEC), a subsidiary of Norway’s Equinor ASA, in an estimated $1.2 billion deal.
With the acquisition, Chappal Energies now controls ENEC, which holds a 53.85 per cent stake in the oil mining lease (OML) 128 oil and gas lease. This includes a 20.2 per cent interest in the Agbami oil field operated by Chevron and the operatorship of OML 129.
In December 2024, the Federal Government reportedly approved the sale of $2.4 billion onshore assets of Shell Petroleum Development Company (SPDC) to Renaissance Africa Energy Company Limited.
Shell had announced its agreement to sell its 30 per cent stake in SPDC to Renaissance for over $2.4 billion to streamline its portfolio and direct disciplined investments toward deepwater and integrated gas ventures in Nigeria.
The assets include an estimated 6.73 billion barrels of crude oil and condensate, along with 56.27 trillion cubic feet of gas.
2024 wrapped: 5 events that shaped Nigeria’s banking sector
Meanwhile, TheRadar earlier reported that the Nigerian banking sector witnessed many events in 2024, which defined the year.
TheRadar highlighted five of them, including the revocation of Heritage Bank’s licence, bank system upgrades, and banks’ rapid expansion.
