Naira seen appreciating to 1,300/$ in 2025

…Nigerian currency is competitive – Cardoso

The Nigerian Economic Summit Group (NESG) on Thursday projected a notable appreciation of the naira to an average exchange rate of N1,300 to the US dollar in 2025, provided the Country adheres to an optimalstabilisation pathway.

The optimistic forecast is anchored on expected increase in foreign exchange earnings driven by higher crude oil sales, revitalised manufacturing output from the oil refining sub-sector, and improved agricultural productivity. With crude oil remaining Nigeria’s largest export, stable global demand and enhanced local production are anticipated to bolster export revenues significantly.

In its 2025 economic outlook released on Thursday, NESG projected the real GDP growth to soar to 5.5% in 2025, contingent on the implementation of comprehensive stabilisation reforms.

These measures aim at addressing both cross-sectoral and sector-specific challenges while enabling broad-based sectoral growth. NESG noted that this would mark a departure from the limited sectoral expansion seen in 2024, where only four out of 20 key sectors recorded growth rates exceeding 5% The Group said that such reforms would not only stimulate growth but also tackle structural issues that have hindered economic development.

NESG also projected a significant decline in inflation to 24.7% in 2025, reflecting improved macroeconomic stability. This forecast assumes effective coordination between fiscal and monetary policies, enhanced forex market stability due to increased supply, and reduced speculative demand.

The expected increase in agricultural output, driven by better security in farming regions and improved access to farmlands, is predicted to play a critical role in addressing food scarcity and easing price pressures. “Increased food production will alleviate scarcity and help stabilise food prices, which remain a key driver of inflation in Nigeria,” NESG stated.

Olaniyi Yusuf, Chairman of NESG, noted the steep depreciation of the official naira-to-dollar exchange rate by 41.4% to close at N1,536.5 per US dollar in 2024. He highlighted the Central Bank of Nigeria’s (CBN) commitment to policies fostering price discovery and narrowing the gap between official and parallel market exchange rates.

Yusuf stated, “The optimal pathways to stabilisation policies envision a consolidation of monetary, fiscal, sectoral, social safety, trade, and regulatory frameworks, paving the way for the consolidation phase of the economic transformation roadmap in the next twelve months.”

Speaking virtually, Olayemi Cardoso, Governor of the CBN expressed confidence in the naira’s competitiveness, crediting forex reforms for driving stability.

“I am very, very confident that we are going to see a very positive outcome. In fact, we are already seeing the impact, especially in terms of foreign remittances. The inflows through international money transfer operators (IMTOs) have been remarkable,” Cardoso said.

He acknowledged the severe economic challenges of 2024, including dwindling forex reserves, declining oil prices, and reduced oil production, but emphasised the importance of innovative solutions. “Rather than lament our difficulties, we had to explore new ways and opportunities, and the results have been encouraging. The reforms are yielding positive outcomes,” he added.

Cardoso highlighted key reforms introduced by the CBN in 2024, including clearing $7 billion in verified forex commitments, discontinuing quasi-fiscal interventions, and unifying multiple exchange rate windows. He stated that these measures were pivotal in stabilising the naira and enhancing Nigeria’s global economic credibility.

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“Our focus has been on market-oriented policies to address Nigeria’s unique challenges while boosting investor confidence,” he explained.

Other significant initiatives included reforms in the forex market and remittance systems, the introduction of foreign exchange codes, and the launch of the electronic forex matching system. These measures were designed to enhance market efficiency, reduce the disparity between Bureau De Change and official exchange rates, and foster stability.

The bank also granted approval to 14 new international money transfer operators and launched a non-resident BVN initiative to enable Nigerians abroad to access banking services seamlessly.

“This is a clear example of how we are responding to the needs of Nigerians overseas while addressing opportunities for economic growth,” Cardoso noted.

Reflecting on 2024’s economic milestones, Cardoso revealed that Nigeria recorded over $6 billion in foreign capital inflows, with external reserves exceeding $40 billion.

“These achievements signify growing investor confidence in our economy. Our efforts have not only increased the quantity of reserves but also improved their quality,” he remarked.

Cardoso noted the competitive advantages arising from the adjusted forex rate. “Yes, the depreciation has its challenges, especially for an import-dependent economy like ours. However, it also presents significant opportunities. Our currency is now more competitive, which is attracting foreign investors and boosting export potentials. The implications for productive activity are substantial,” he said.

As Nigeria progresses into 2025, the CBN is set to deepen and strengthen these reforms, focusing on enhancing financial inclusion, diaspora engagement, and compliance measures. Cardoso reiterated the importance of transparency and market efficiency, stating, “We will remain vigilant, ensuring all market participants adhere to best practices. Those who fail to comply will face appropriate consequences.”