• Naira to trade at N1,574/$
• 2025 is pregnant with opportunities, FirstBank MD assures business owners
Frontline economists, Dr Biodun Adedipe and Bismarck Rewane are bullish about the local economy, saying the converging supply and demand curves suggest less volatile economic rates (talking about inflation, interest and naira exchange value) as 2025 unfolds.
The duo, who many Nigerian operators look up to for market insights, are optimistic that the disturbing headline inflation, which hit a three-decade high in November and was expected to end 2024 at around 35 per cent, will close this year at 27 per cent.
The estimate is nearly 100 per cent higher than the 15 per cent projected by the Federal Government but a modest markdown on last year’s average, which was 33 per cent.
Both analysts, who spoke yesterday at First Bank of Nigeria Limited’s yearly Nigeria Economic Outlook held in Lagos, noted that the key rates are fast approaching equilibrium levels, which suggest less volatility and more stability movement
The Chief Executive Officer of FirstBank Group, Olusegun Alebiosu shared their bullish sentiments and assured the audience that the year “is pregnant with opportunities”.
“Every New Year offers us an opportunity to review the past, reset individual and collective expectations and renew our hopes in the dream for a better future. This deep-seated optimism in the face of harsh realities is probably one of the hallmarks of being a Nigerian… No other time in our recent history has this optimism been seriously tested than in the outgone year.
“Due to the impacts of some of the ‘painful but necessary’ reforms that the government had pursued, inflationary pressures exerted considerable strain on household and corporate incomes in 2024, with the inflation rate reaching a three-decade high of 34.6 per cent in November 2024,” he recalled.
The FirstBank boss said that the improvement in government revenues and fiscal position, as suggested by the better revenue-to-debt service ratio and the growth in foreign reserve balances to over $40 billion, indicates that the current optimism is not misplaced.
“Early signs such as the stability that characterised the foreign exchange market on the back of the introduction of the Electronic Foreign Exchange Matching System (EFEMS) in December 2024, the emergence of competition on the supply side of the downstream sector that is leading to falling prices in premium motor spirit (PMS) and the coming back on the stream of the Port Harcourt and Warri refineries are indicative that there is, indeed, light at the end of the tunnel for us as a country,” Alebiosu noted.
He said FirstBank is poised to walk with its customers through this difficult, yet promising, stage of the national journey, a reason it organised the event, which reflects its understanding of the domestic economic realities and demonstrates its readiness to partner with customers to identify emerging opportunities.
Adedipe said Nigeria would need to address energy, food and manufacturing deficits to bring the inflation rate down to a tolerable level. He pointed out different strands of the food crisis, including storage and processing investment gaps that must be tackled to bring down food inflation.
This, the economist said, should be done alongside other measures to resolve the structural issues that drive high inflation rates. He argued that only 37 per cent of the country’s inflation rate is fuelled by interest rate movement while food, energy and manufacturing deficits are what matter most.
With sufficient energy, he insisted, it would be difficult to achieve “inclusive, sustainable and sustained growth”, hence much of the growth of last year came from services.
To break the jinx of the manufacturing deficit, Adedipe suggested, the country must be deliberate in producing what it consumes and consuming what it produces – a departure from the historical trend.
But there is a silver lining, the expert, who has consulted in different sectors of the economy in the past four and a half, acknowledged.
He pointed at the fast-growing refining as a significant change that would impact the exchange value of the naira positively and stem the exchange rate pass-through effect on inflation.
An improving economic structure, robust foreign reserve, and increase in crude production among others would stabilise naira, which he projected to deprecate moderately to N1574/$ this year.
The local currency witnessed exceptional depreciation last year but started a gradual but steady recovery since the Central Bank of Nigeria (CBN) unveiled what it calls the Electronic Foreign Exchange Matching System (EFEMS).
Adedipe said the naira might not appreciate this year but insisted it would depreciate sharply as witnessed last year.
At a panel, which revolved around inflation, FX, interest and energy themes, Rewane pointed at consumer resistance, exchange rate stability and stable price of fuel as factors that would edge price stability in the year.
With the economy approaching a clearing point, he said, volatility in price movement would ease. Hence, the impacts of reforms would not be significant this year, the analyst insisted.
