PricewaterhouseCoopers (PwC) has projected a marginal decline in inflation and 3.1 percent rise in Nigeria’s gross domestic product (GDP) in 2024.
The leading professional services firm, in its Nigeria Economic Outlook 2024 report released yesterday also notes that achieving sustainable growth in 2024 requires balancing ambitious fiscal reforms with effective budget implementation. It stresses the importance of aligning fiscal and monetary policy to stabilise prices and reach target goals.
The report looks at seven trends that will shape Nigeria’s economy in 2024, including, Executing fiscal reforms; Evolving monetary policy stance; a cautiously optimistic Investors; Undulating pathways to unlocking productivity in the economy and Persisting vulnerability to external pressures with potential of ‘shocks.
Others are that consumers may likely adjust better to the evolving policy and macro realities and Improved sectoral development riding on reforms.
It says Nigeria’s ambitious revenue targets for 2024 depend heavily on oil prices and reform implementation. According to the report, “Historically, actual revenue realised has averaged less than 70 percent of the total budget. “Achieving budgeted oil revenue in 2024 will depend on OPEC oil production quota, international oil prices, improved security in the oil-producing regions, and geopolitical factors.
“The proposed fiscal reforms have potential to boost non-oil revenue and shape the economy, but success hinges on effective budgeting and execution.
On evolving monetary policy stance, the report said finding the right framework and instruments to achieve price stability will be key to success.
“CBN has deployed several monetary policy tools and instruments to achieve price stability. Despite the deployment of monetary policy tools, the inflationary pressure has persisted. To succeed, the Central Bank of Nigeria (CBN) must independently pursue inflation goals, emphasising inflation control, and maintaining a stable financial system,” the report said.
“Finding coherence and alignment between fiscal and monetary policy to stabilise prices may enable the achievement of statutory and policy targets in 2024. CBN clarity of policy, transparency of market operations and consistent communication will enhance stability to exchange rate price discovery and market activities.”
Nigeria has struggled with high inflationary rate and exchange volatility that has forced many businesses to shut down and scared away foreign investors.
PwC in the report said Foreign portfolio investment flows to the capital market may remain cautious due to residual challenges.
It says, “Investors’ outlook may be dampened by downgrades from FTSE Russell and MSCI, specifically due to delays in capital repatriation. Despite this, Moody’s, Fitch, and S&P maintained a speculative credit rating due to drawbacks on reforms and several fiscal challenges that persist.
“FDI flows are expected to improve in 2024 driven by notable expansion in the growing ICT and Manufacturing sectors.”
The report said that limited fiscal space for public investment and difficulty attracting private investments constrain the ability to make essential infrastructure improvements.
“Infrastructure funding may remain insufficient in 2024. The allocated infrastructure spending budget for 2024 is ₦1.32 trillion, falling short of both the World Bank’s suggested 70 percent infrastructure-to-GDP benchmark (currently at 30 percent ) and the yearly $150 billion requirement specified in the National Integrated Infrastructure Master Plan for 2021- 2025.