Predicting the future is always tricky, but peering into the political and economic landscape for 2024 reveals a complex picture. Challenges abound within the political economy, especially with regards to tackling problems of insecurity, socio-economic issues, especially cost of living crisis, caused by worrisome inflation that has pushed a lot of people below the poverty line.

The Federal government faces some tough decisions to tackle economic problems and security this year, with the possibility of President Bola Ahmed Tinubu and top echelons of the military, police force and security services going into serious dialogue and engagements with traditional rulers, elders and other stakeholders.

Tinubu needs to act swiftly. The more farmlands are destroyed and farmers killed or abducted, the more poverty worsens. This will negatively affect the nation’s Gross Domestic Product. Therefore, the government is left with no choice but to contain insecurity as terrorist groups like Boko Haram and bandits seem to have sprung up anew.

Governance outlook

The Governors Forum has a lot of job and creative thinking to do this year to enable the gains of the Federal government policies to reach the people. So also will attention of prominent national leaders be needed in the course of the year.  Among these are prominent individuals like former President Olusegun Obasanjo, Chief Ayo Adebanjo, General T.Y. Danjuma, General Abdulsalam Abubakar,  Chief Edwin Clark, the Sultan of Sokoto, the Ooni of Ife, Bishop Matthew Hassan-Kukah, Sheik Muhamad Gumi, Chief Emmanuel Iwuayanwu. Apart from these prominent people, traditional rulers , across the country, opinion leaders and youth leaders will also play some roles.

These leaders and nationalists will feature prominently on national stage this year as Nigeria grapples with numerous challenges within the socio-economic and security arenas. Their support and working with government stands as a way to curb terrorism, kidnapping and sundry crimes in the land. This is for the simple reason that these leaders symbolise unity and peace in the country and are closer to the people.

Sadly, the operations of these terrorist groups have been claiming many lives in recent times. The main motives of these assailants are to destroy property, kidnap loved ones and leave families in unending grief, with many farmers driven out of their farms.

Northern states have exposed to these more than other parts of the country. And this is affecting farming and food production in the region where the bulk of food production take place.

With the ugly scenario, analysts are of the view that the Federal Government will take some proactive measures to tackle this menace. According to them, this will involve giving some engagements with communities and traditional rulers.

This means co-opting traditional fathers, village heads and others with local security experts. The traditional rulers allocate vacant land and forest.  Knowing full well that some of the vacant lands are being used by kidnappers as hideouts, the government will work with the traditional rulers and the emirs, in the case of the North, to track and locate some of these terrorists wreaking havoc in such lands.

“Instead of sacrificing the lives of unrelenting soldiers on a daily basis, President Bola Tinubu should summon a meeting with traditional fathers, especially with the emirs of northern states

From time immemorial, emirs have been the great rulers in their local communities/districts and people accord them greater respect than political office holders.

Economic outlook

Many economists project Nigeria’s economic growth this year 2024 to be modest, likely ranging between 2.5% and 3.5%. While this falls short of the government’s target of 4.6%, it still represents a positive trajectory. The success of government policies, the global economic climate, and unforeseen events will ultimately determine the actual outcome.

Recently, the Nigerian National Bureau of Statistics reported that Nigeria’s real GDP was 2.9 percent year-on-year last year, which was in line with the market consensus and slightly lower than the official target of about 3 percent. The showing is not too bad if compared with the IMF’s forecast of 3 percent growth for the global economy last year. However, the biggest challenge Nigeria faces is not about figures, but the generally low degree of confidence inside and outside the country.

Headwinds:

• Global Slowdown
•  Inflation
• Nigeria’s debt burden: debt-to-GDP ratio
• Exchange Rate Pressures

The International Monetary Fund (IMF) predicts a global economic slowdown in 2024, impacting growth in emerging markets like Nigeria. Persistent inflation continues to butt at the country. Inflation remains stubbornly high, currently hovering around 28%, eroding purchasing power and dampening consumer confidence. The country is carrying a lot of debt burden  Its debt-to-GDP ratio continues to rise, raising concerns about fiscal sustainability and limiting the government’s ability to invest in critical sectors. Exchange rate pressures are impacting Naira. In recent times, the country has faced depreciation pressures, impacting import costs and adding to inflationary woes.

Nigeria’s economic performance in the past year had been somewhat surprising to the rest of the world. Initially, there was speculation that the country was returning to appreciable growth of  pre-COVID-19 period of early 2020 and that it would quickly lift the nation’s economy. Indeed Nigeria’s economic performance in the first quarter of last year was close to market expectations, with real GDP rising by about 1,2 percent from a year earlier,

However, Nigeria’s momentum slowed in the third quarter, with the removal of fuel subsidy by President Bola Ahmed Tinubu on May 29, 2023.  Since then, news of sluggish consumption, declining exports, a struggling property market , a  rising debt burden, part of which is commercial loans.

Exposure  to commercial foreign loans is heavy. Local debts have continued to rise as well. Data from the Debt Management Office (DMO) further put Nigeria’s public debt at N87.91trillion or US$114.35 in September 2023. Total external debt stood at N31.98trillion  or US$41.6. And domestic debt amounted to N55.93trillion .

All these have continued leading other countries to adopt a conservative attitude toward Nigeria’s economic outlook, with pessimistic predictions becoming mainstream.

Nigeria growth target for this year is similar to last year’s, as policymakers aim to boost investors’ confidence as the target is made with the 2024 budget. However, the biggest problem and a hidden concern for Nigeria’s economy is not about the give or take of one or two percentage points in the GDP growth target, but a question of overall confidence in the country.

Recently , a slew of economic data  accompanying the GDP figures showed a mixed view of the economy and suggested a fragile recovery ahead, as weak domestic consumption, low employment and further weakening of the property market continue to be key risks to country’s economy this year, and a downturn in the manufacturing sector. There is frightening rise in infrastructure deficit, unemployment, grinding poverty, socioeconomic distortions, all crystallising in some disquiet in many parts of the country. Longer-term, Nigeria is confronted with another urgent issue and that is insecurity in the land, evidenced by frequent herders/farmers clashes.

As such, fiscal and monetary policy support remain crucial to Nigeria’s economic woes, but unfortunately the measures Abuja has offered so far have not be able to turn around the country’s economy fast. From agro-business value-chain to manufacturing and to property sector. For example, last year saw land sales being quite low, falling property investment and tepid sales growth. The weak fundamentals are likely to stay unimproved this year. Coupled with the external environment growing increasingly uncertain and the withdrawal of some crucial foreign  manufacturing companies from the country’s economy in 2023. And no appreciable foreign capital came into the country.

Tailwinds:

The global oil prices could benefit Nigeria, if there’s a global price rally above 80 dollar for much parts of the year, boosting government revenue and foreign exchange inflows. Non-oil sector is recording some improvement.  Diversification efforts could  bear fruit, with sectors like agriculture, manufacturing, and services showing promising growth potential. In regards to structural reforms, Nigerian government is implementing various reforms, including trade facilitation and ease of doing business initiatives,that could attract investment and stimulate economic activity. Nigeria has strong population power. It boasts a young and growing population, offering a vast pool of labor and a vibrant consumer market.

Key areas to watch:

• Inflation control
• Exchange rate stability
• Economic Diversification away from oil dependence.
• Governance and transparency

Bringing inflation under control is crucial for stabilizing the economy and boosting consumer confidence. The continuous depreciation of the naira, petrol subsidy removal, and insecurity have contributed to the persistent rise in inflation. Those tasked with the management of the economy appear bereft of ideas on how to tame the surging inflationary pressure.

The excessively high rate has been partly blamed for Nigeria’s deepening poverty. Between January and May 2023, inflation plunged an estimated four million people into poverty, per the World Bank. It stated that the continued spike in inflation would push a further 2.8 million people into poverty by 2023’s end.

The bank said, “Sluggish growth and rising inflation have increased poverty from 40 per cent in 2018 to 46 per cent in 2023, pushing an additional 24 million people below the national poverty line.”

On its part, the IMF said, “Growth in Nigeria is projected to decline from 3.3 per cent in 2022 to 2.9 per cent in 2023 and 3.1 per cent in 2024, with negative effects of high inflation on consumption taking hold.”

In the immediate, the main triggers of the high rate are government’s unification of the naira rates and the removal of subsidy on petrol, which led to an instant increase in fuel and commodity, as well as goods and services’ prices without a corresponding rise in income.

The unification of the different exchange rates has failed to achieve the desired effects of eliminating the need to navigate through various rates and associated complications by allowing the CBN to better manage inflation, interest rates, and money supply, thereby fostering economic stability and predictability.

The naira opened at 464.51 per dollar on May 26, three days before President Bola Tinubu was sworn in. At the parallel market, a dollar sold for N780 on May 28, 2023. On January 23, the official exchange rate of the US dollar to the naira was N900.26 and N1,365 at the parallel market.

The weakening naira and forex fluctuations, as well as insecurity are causing multinationals to divest from the country at a very alarming rate.

So far, most of the knee-jerk interventions it has applied are not working. Olayemi Cardoso, the CBN Governor, said, “Inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, which aims to rein in inflation to 21.4 per cent.” This is overly optimistic.

Analysts say government must re-strategise and implement robust solutions to attain this target, adding that President Tinubu needs to constitute a solid Economic Management Team to rejuvenate the economy by promoting productivity, cutting down on wastage, and catalysing employment through the private sector.

Productivity is severely hampered by the miserable power supply of around 4,500 megawatts, with manufacturers relying heavily on self-generated electricity. The tariff on the little being generated keeps rising.

They point out that inflation rose worldwide after COVID-19, but it is tapering down elsewhere, Nigeria should not be an exception. The government is going to rely heavily on borrowings to fund the promised increment in workers’ salaries, and this can only mean one thing: the road ahead is long, winding, and uncertain.

The Central Bank of Nigeria needs to pay serious attention to its core mandate of maintain stability, in the two spheres of the term-price stability and exchange rate stability. In the first sphere, CBN needs to do serious inflation targeting. The apex bank’s recent interest rate hikes are a step in the right direction, but continued vigilance is needed. It should also pay attention to exchange rate stability. Stabilizing  the Naira is essential for promoting investment and trade. The Central Bank’s interventions and efforts to boost non-oil exports and the SMEs could play a critical role here. Moving away from oil dependence and nurturing other sectors like agriculture and manufacturing is vital for long-term economic resilience. Improving governance and transparency and tackling corruption will boost investor confidence and attract much-needed foreign capital.

Nigeria’s economic future in 2024 hangs in the balance. While challenges persist, growth opportunities also exist. The government’s commitment to sound policies, effective implementation, and fostering a conducive environment for businesses will be crucial in determining whether Nigeria navigates the headwinds and unlocks its full economic potential.

This year faces even more difficulties and risks a downward trend for another year unless Abuja greatly and effectively expands its policy support.