The African Development Bank (AFDB) has projected the GDP growth in Nigeria to improve to 3.2 percent and 3.4 percent in 2024 and 2025 respectively.
Jacob Odour, lead economist, Nigeria country department at AFDB, gave the report on Thursday during the launch of the AfDB Nigeria Country Focus Report 2024.
The report noted, however, that the growth was still lower than that of Africa, which is projected to stabilise at 4 percent by 2024 and 2025.
According to the report, poverty remains high with 63 percent of Nigerians still multidimensionally poor.
“18 out of the 36 states recorded poverty levels that are above the national average, but generally, growth is expected to improve in 2024 to 3.2”, he said.
The report further projected fiscal growth to improve, supported by increased non-oil revenues, while the fiscal deficit will narrow to 4.3 percent of GDP in 2024 and 4.1 percent in 2025.
The report warned about risks such as insecurity, lower oil production, rising fuel and food prices, and further exchange rate depreciation.
Read also: Nigeria growth projection threatened by rising inflation, food prices — AfDB
“Specific risks that we need to look out for are the perennial ones, including insecurity which is affecting agricultural production in particular, and oil production.
“We have persistently rising food prices and inflation, fuel prices have risen which affect transportation costs not just for food, but also for general consumption.
“We also expect to see further pressure on exchange rates to weaken which have implications.”
The report noted that financial inflows, including official development assistance (ODA), foreign direct investment (FDI), portfolio flows and remittances to Nigeria have been erratic.
Stating that Nigeria faces rising financial costs in global markets, with its 30-year bond trading at a double-digit yield of 11.11 percent in 2023(10.58 percent in April 2024) compared to 8.5 percent in 2021.
The report, therefore, suggested that reforms of the global financial architecture should support increasing external flows to finance Africa’s economic transformation.
“The tight monetary policy in place should be maintained but just cautiously not to increase the monetary policy rate too fast and too further because that has implications on credit and that feeds back into production costs.
“And then secondly, as the reforms take shape, there is a need to also for social protection, referencing, those who are vulnerable and those who are adversely affected, but here also targeting of beneficiaries is important to ensure social benefits only go to those who may need it
“And then in the medium term, as has started tax administration reforms, particularly with digitalisation is key to increase those on the tax packet.
“Improving security becomes paramount for food production in the medium term, and of course, as I said before for oil increased oil production for products earnings in support of the naira.
“And then in the long term, infrastructure development, particularly in energy supply is going to be something that is so important.”
