- Experts have made projections about key economic events in 2025
- These events are expected to shape Nigeria’s economic direction in the year
- The policies include naira and forex stability, interest and inflation rates decline, and fuel price reduction
Experts have projected some of the economic realities that will shape 2025 to include stability of the naira and the foreign exchange (forex) market, a decline in the Monetary Policy Rate (MPR) and inflation rate, reduction in fuel price, and growth of other economic indicators.
At the Nigeria Economic Outlook 2025 organised by FirstBank on Wednesday, January 8, with the theme, ‘Nigeria 2025: Path to Economic Rebound & Recovery,’ Olusegun Alebiosu, CEO of FirstBank Group, said there are indicators of potential economic growth in 2025 despite the difficulties experienced in 2024.
Alebiosu highlighted improvements in government revenues and fiscal positions, such as a better revenue-to-debt service ratio at 68 per cent and an increase in foreign reserve balances to over $40 billion as pointers to the prediction.
He said, “Signs have begun to emerge that the reforms pursued by the government are starting to yield the desired results. For example, the improving government revenues and fiscal position (as suggested by the better revenue-to-debt service ratio at 68 per cent and the growth in foreign reserve balances to over $40 billion) are indicators that our optimism as a people may not be in vain after all.”
Economic policies that will shape 2025
1. Naira and forex stability
Experts at the event predicted stability of the naira and the forex market going by the policies introduced by the Central Bank of Nigeria (CBN) to ensure stability and reduce volatility.
These policies include the introduction of the Electronic Foreign Exchange Matching System (EFEMS), which mandated $100,000 as minimum trade for interbank forex transactions to enhance market transparency, ensure efficient trading, and strengthen compliance within Nigeria’s forex market, streamlining trading and reducing risks.
The CBN also granted licenced Bureau De Change (BDC) operators access to purchase forex directly from authorised dealers to meet customers’ needs, ensuring forex stability and reducing market volatility.
Going by these, experts foresee the naira, which lost 43 per cent of its value in 2024, trading at a relatively stable band in 2025.
In his outlook, Biodun Adedipe, founder and Chief Consultant at B.Adedipe Associates Limited, predicts the naira to average N1,574/$ in 2025.
“The naira will lose value but very moderately. We estimate the exchange rate at N1,574.4/$1,” Adedipe said.
2. MPR and inflation rate to decline in 2025
With the inflation rate expected to decline in 2025, experts believe the MPR (interest rate), will follow the same trajectory.
Recall that the CBN’s Monetary Policy Committee (MPC) resolved to maintain its tight monetary stance until the inflation comes down.
The CBN hiked the MPR six times in 2024 from 15.5 per cent in October 2023 to 27.50 per cent in November 2024 aimed at reducing the money supply, and ultimately reining in surging inflation.
However, inflation figures remained defiant, rising from 29.90 per cent in January 2024 to a 28-year high of 34.19 per cent in June 2024 before decelerating two consecutive times in July and August. The inflation rate increased in September and October, surging to a new 28-year high of 34.60 per cent in November.
The Federal Government, however, believes inflation will reduce to 15 per cent in 2025 as contained in the 2025 budget estimates.
Experts and business groups have faulted this, saying it is overly ambitious and unrealistic going by the current economic situation of the country.
Bismarck Rewane, CEO of Financial Derivatives Company, predicts the rate to reduce to between 25 and 27 per cent, and this will push policymakers to lower the interest rate.
Rewane said, “The 15 per cent inflation target is very bullish and aspirational, and everybody is free to have aspiration.
"The moderation in inflation is not going to be as low as we expected. The reality is that we think inflation will reduce to between 25 per cent and 27 per cent in 2025.”
Ifeoluwa Dixon, Head of Fixed Income Solutions at FBNQUEST Asset Management, also expects a slowdown in the interest rate in the mid-third quarter (Q3) of the year.
Dixon said, “We do not expect the hawkish stance of the monetary policy to trend downwards in the first half of the year. We see inflation and interest rate moderating at the later part of 2025, around mid-Q3.”
3. Fuel price is expected to fall
With the emergence of stiff competition in the downstream sector, which led to a marginal reduction in the price of fuel to around N935/litre in December 2024, and the reactivation of the Port Harcourt and Warri refineries, experts expect a further drop in fuel price.
The government’s fuel subsidy removal in May 2023 led to an over 100 per cent increase in fuel prices, with fuel selling at over N1,000 per litre before the slight reduction in December following a pricing war between the Nigerian National Petroleum Company Limited and the Dangote refinery.
4. Increased adoption of renewable energy
In his opinion, Ugodre Obi-Chukwu, CEO of Nairametrics, said that with increased adoption in the energy sector in 2024, more should be expected in 2025, with many business opportunities in the sector.
Obi-Chukwu stressed that the removal of electricity subsidies, which led to an electricity tariff hike, has made Nigerians more conscious of their electricity consumption, prioritising energy efficiency.
He noted that this shift is expected to drive the adoption of renewable energy products, particularly solar power, for both domestic and industrial uses.
Obi-Chukwu said, “What you’re seeing now is people adopting more conscious means of conserving energy, even though we have energy issues in Nigeria, prices are also still higher.
“So we’re going to see an increase in the adoption of renewable energy products, especially solar power, whether it is the smaller ones for domestic use or the larger ones for industrial uses.”
2024 wrapped: Top 5 economic policies of the year in Nigeria
Meanwhile, TheRadar earlier reported that in 2024, Nigeria’s economy was characterised by various policies and events that kept it agog despite its volatile state.
TheRadar highlighted the top five such policies, including the introduction of a cybersecurity levy, minimum wage approval, and the infamous tax reform bills.
