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Nigeria’s reforms seen improving GDP growth to 3.1% in 2024 – UN

Nollywood, music sector boom adds N1.97 trillion to GDP

Nigeria is projected to see a slight improvement in its Gross Domestic Product (GDP) growth to 3.1 percent in 2024 from an estimate of 3.0 percent in 2023 on the back of its policy reforms, according to the United Nations (UN).

This was revealed in its latest 2024 World Economic Situation and Prospects report. The report comes amid stark global economic inequalities and high geopolitical tensions.

“Policy reforms enacted by the Government of Nigeria in 2023, especially in the hydrocarbon sector, have contributed to a moderate improvement in the country’s growth prospects for 2024, with GDP growth forecast at 3.1 percent,” the report said.

It said, however, that ballooning public debt, persistent inflation and a rising cost of living, together with a weak business environment, will pose a downward risk to growth prospects.

“Efforts to increase in-country oil refining capacity would likely reduce domestic fuel costs in 2024 and beyond. Energy subsidy reforms in Nigeria, Angola and Gambia, as well as tax hikes in Kenya, Ghana and South Africa, aim to provide the Government with some relief from tight fiscal spaces.”

The intergovernmental organisation added that economic growth in Africa is estimated to have decelerated from 3.5 percent in 2022 to 3.3 percent in 2023.

“Most countries in the region experienced a significant economic slowdown, including major economies such as Egypt, Nigeria, Kenya, Ghana and South Africa,” it said.

Last year was tough for Africa’s most populous nation as naira scarcity, the removal of petrol subsidy and naira devaluation increased inflation pressures, poverty and unemployment in the country.

The country’s GDP rose marginally by 2.54 percent (year-on-year) in the third quarter of last year from 2.51 percent in Q2 and 2.25 percent in the same period of 2022, according to the National Bureau of Statistics.

Headline inflation rose to an 18-year high of 28.2 percent in November from 27.33 percent in October. In Q2, the unemployment rate rose to 4.2 percent from 4.1 percent in Q1.

Foreign investments plunged to $654.7 million in Q3, the lowest in at least 11 years, from $1.03 billion in the previous quarter. The country’s currency depreciated by 49.1 percent to N907.1 at the end of 2023 from N461.6 in 2022 on the official market.

“African economies faced significant inflationary pressures in 2023, resulting in an inflation rate higher than the recent average. The exchange rate pass-through from substantial currency depreciations raised the domestic prices of imports and increased inflationary pressures,” authors of the UN report said.

They added that moreover, high fuel prices resulted in higher transport costs, which were passed on to consumers in the form of higher local prices for essential items such as food.

“Food inflation remained elevated (above 30 percent) for some of the larger economies, including Nigeria, Egypt and Ghana. In 2023, the three major international credit rating agencies downgraded some of the major economies in Africa, including Nigeria, Ghana, Egypt, Kenya and Morocco.”

UN highlighted that the African Union is working on establishing an independent credit rating modality that will provide balanced and comprehensive risk evaluations for African countries to lower their borrowing costs in international financial markets.