By Adedapo Adesanya
Stears, an economic analysis and data-driven insights provider, has forecast that Nigeria’s headline inflation rate may jump as high as 31.85 per cent in 2024 amid the continued effects of policies instituted by President Bola Tinubu.
In its 2024 African Outlook Report, delivering nuanced insights into the continent’s economic landscape, the firm said Nigeria, which is Africa’s largest economy would likely see an average annual inflation rate ranging from 27.59 per cent to a worst-case scenario of 31.85 per cent for 2024.
The report highlighted that inflation on the continent averaged 7.8 per cent in 2023, with a nuanced forecast ranging between 6 per cent and 7.4 per cent for 2024.
Nigeria’s inflation rate rose from 21.34 per cent in December 2022 to 28.92 per cent in December 2023, the highest since August 2005.
According to Stears, the continued rise in inflation will necessitate proactive measures for economic stability.
Last year, President Tinubu embarked on policy reforms, including the removal of fuel subsidies and exchange rate unification to prop up needed revenue and allow for ease in the foreign exchange (FX) market.
Controlling Nigeria’s inflation will be one of the top challenges for the Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, who took over office last year. The banker is yet to hold a rate-setting meeting but said his administration at the apex bank will tackle inflation over the first half of this year.
“While absolute inflation is still rising, the declining rate of growth indicates progress. The CBN is confident that with continued tightening measures for the next two quarters, we will be able to effectively manage inflation,” he said at a bankers’ dinner in November 2023.
According to Mrs Dumebi Oluwole, Stears’ senior economist, “The elimination of petrol subsidies has significantly heightened the cost of living for consumers, leading to an overall uptick in inflation. Coupled with the devaluation of the naira, this has precipitated higher exchange rates, complicating the economic landscape for both consumers and businesses.”
Stears then emphasised the need for strategic interventions to enhance liquidity and stabilise the exchange rate, highlighting the importance of collaborative initiatives between the government, regulatory bodies, and the private sector for sustained economic growth.
In 2024, Stears projected Africa’s overall growth at 4.0 per cent, a notable increase from 3.3 per cent in 2023, positioning it as the second-highest globally, trailing only Asia (4.8 per cent).
It added that East Africa would take centre stage in this growth narrative, exhibiting consistently higher growth rates than the rest of the continent.
Rwanda, Tanzania, Uganda, and Kenya are identified as key drivers, collectively contributing significantly to the region’s economic resurgence.
Modupe Gbadeyanka