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Over the past year, Nigeria’s economy faced formidable challenges, with inflation hitting a 27-year high of 28.92% in December 2023, coupled with a staggering food inflation rate of 33.93%. The depreciation of the naira by 25% in a single day in June 2023 and the removal of fuel subsidies in May 2023 exacerbated the situation, pushing petrol prices up by 196%.
The repercussions were severe, as accelerated inflation catapulted an additional 24 million Nigerians into poverty within the first five months of 2023, with 63% of the population classified as multidimensionally poor by late 2022. Furthermore, major foreign companies such as Procter & Gamble, GSK, and Bayer scaled back operations, leading to widespread job losses.
However, recent developments suggest a potential turnaround:
- Dangote Refinery’s commencement of diesel sales has significantly increased supply, resulting in a substantial drop in prices from around ₦1,700 per litre to approximately ₦1,350 per litre. Plans to introduce Premium Motor Spirit (PMS) sales by May are anticipated to further reduce prices by at least 25%, potentially reaching ₦400 per litre.
- Air Peace’s breakthrough in aviation reciprocity, supported by Minister of Aviation Festus Keyamo, enabled the airline to commence flights to the UK, causing ticket prices monopolized by British Airways and Virgin Atlantic to plummet by at least 60%.
- The forex market responded positively, with the naira strengthening against the dollar. Experts predict the dollar’s price may dip below ₦1000 in the coming months, providing much-needed relief to Nigerians. The Central Bank of Nigeria could consider reviewing the Monetary Policy Rate (MPR) by Q4.
These developments highlight the pivotal role of the private sector in economic revitalization, exemplified by individuals like Dangote and Onyema. Dr. Olisa Agbakoba emphasizes the urgency of shifting focus from consumption to production and placing the private sector at the forefront of economic development.
While Q4 2024 may hold promise, it is acknowledged that it is still early days in Nigeria’s economic recovery journey.
