In a recent report released by the Economist Intelligence Unit (EIU) in March 2024, the economic future of Nigeria is painted with uncertainties as the country faces five critical risks that could jeopardize peace, economic progress, and overall development in the coming months.
The EIU report highlights the potential dangers of Nigeria rushing into market reforms, warning that such haste could lead to social unrest, forcing the government to reconsider its reform policies. Additionally, concerns are raised about possible labor union strikes that could bring the economy to a standstill.
One of the most alarming predictions in the report is the anticipated depreciation of the Nigerian Naira, with the EIU projecting that it will hit a new low of N2,000 per dollar by the end of 2024. This significant drop is attributed to various factors, including the risks of Boko Haram activities spreading from the Northeast to central Nigeria.
Despite the grim outlook, the EIU revised its economic growth prediction for Nigeria upward from 2.2% to 2.5%. This adjustment is based on higher-than-expected crude oil production and the expected impact of the Dangote refinery. The group also envisions a faster growth rate of 3.5% in 2025.
However, the report indicates that inflation will see a reduction to 20% in 2025 and further to 17.4% in 2026 before reaching 11.7% two years later. The EIU also foresees additional devaluation of the naira in the coming years.
The report acknowledges the challenges Nigeria faces, describing it as the joint-largest economy in Africa marked by insecurity in many regions. Security agencies are noted to be overworked in countering multiple crises effectively.
Highlighting the potential political stability risks, the report emphasizes that high inflation, low economic growth, and unpopular market reforms could trigger labor unions to take action, posing a significant risk to the economy.
As Nigeria grapples with these economic challenges, the nation's leaders and policymakers face the complex task of steering the country toward stability and sustainable growth.
