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It is often argued that currency devaluation provides opportunities for exporters, making goods cheaper for international buyers and boosting trade. In Nigeria, the naira devaluation over the past 18 months has indeed made Nigerian products more affordable to neighbouring countries. For instance, eggs and grains from northern Nigeria frequently cross the borders into neighbouring markets, while the southern region’s plastic products, carbonated drinks and snacks hold potential for wider export. However, despite this theoretical advantage, manufacturers in Nigeria have struggled to capitalise on the situation due to poor infrastructure and prohibitively high interest rates, which make credit access expensive. These challenges have turned what could have been an economic opportunity into a missed one. The country’s trade policy, which focused more on import substitution than export promotion, compounds this issue. The Export Expansion Grant (EEG), Nigeria’s primary exporter incentive scheme, has faced allegations of corruption and poor management by the Nigerian Export Promotion Council, leaving many exporters disillusioned and unsupported. Despite these setbacks, Nigeria has maintained a positive trade balance since the fourth quarter of 2022, primarily driven by crude oil exports. In the third quarter of 2024, crude oil accounted for ₦13.4 trillion of the ₦20.4 trillion in total exports, representing 65% of Nigeria’s export profile. Non-oil exports, by comparison, contributed only 12.21%. While crude oil exports have been on a downward trend since late 2023, the recent increase in the trade surplus is attributed mainly to the naira’s devaluation. This has resulted in higher naira earnings per dollar for export proceeds, providing some relief to Nigeria’s current account and reducing external financial pressure. Agricultural exports have also recorded remarkable growth, surging by 301.87% to reach ₦884.07 billion. This marks a potential revival for a country that once relied on agriculture as the backbone of its economy before the 1970s oil boom. Legacy regions that once competed in producing world-class commodities such as cocoa, groundnuts and palm oil now have an opportunity to reclaim their prominence. The Tinubu administration has set an ambitious goal of achieving crude oil production of two million barrels per day by 2025. Encouragingly, the relative peace in the Niger Delta region has already led to slightly higher crude production. To achieve this target, the government must address longstanding issues such as infrastructure deficits, vandalism, theft, corruption and militancy, all of which have contributed to production levels falling below one million barrels per day in recent years. Additionally, Nigeria will need to negotiate a higher production quota with OPEC. While there are glimmers of hope in increased activity from the oil and gas sector and the resurgence of agricultural exports, significant work remains to transform Nigeria into a resilient, export-driven economy. Building robust infrastructure, fostering an enabling business environment, and reforming trade policies will be critical steps in ensuring Nigeria fully capitalises on its economic potential.

It was inevitable for OPEC to attempt to moderate oil prices in a year that will be marked by the inauguration of Donald Trump as President of the United States, a development expected to catalyse an increase in US oil production. This shift will introduce a critical variable into an already turbulent global energy landscape. The slowdown in demand from major oil-importing nations like China will add another layer of complexity, signalling a potential recalibration of global energy markets. For Nigeria, which remains heavily dependent on oil revenue, navigating this intricate geopolitical and economic environment without adopting more realistic production and pricing projections is ill-advised. Domestically, the risks are further exacerbated by persistent challenges in the Niger Delta, the epicentre of Nigeria’s oil production. Escalating tensions, including recent unrest in Akwa Ibom State and ongoing financial allocation disputes in Rivers State, undermine the stability required for consistent oil output. These internal disruptions threaten Nigeria’s production targets and erode investor confidence in the country’s oil sector. The compounding effect of these issues heightens the likelihood that Nigeria’s oil production and revenue will fall short of supporting its ambitious budgetary assumptions, necessitating increased borrowing to bridge the fiscal gap. This reliance on debt to sustain expenditure further underscores the urgent need for a pragmatic and grounded fiscal strategy. On the international front, Trump’s energy policies — geared toward maximising US oil production and reducing regulatory barriers — will pose a direct threat to oil-exporting countries like Nigeria. A surge in US oil production is expected to drive down global oil prices and intensify competition in markets traditionally dominated by Nigerian crude. With the US leveraging competitive pricing and higher exports, Nigeria risks losing key markets, further straining its oil-dependent economy. Such dynamics could jeopardise the country’s ability to meet its 2025 oil price benchmark, compounding the anticipated revenue shortfalls. Nigeria must adopt a more conservative approach to its oil price and production benchmarks to mitigate these risks. By aligning budgetary projections with the realities of a volatile global oil market, the country can position itself to absorb potential shocks better. This recalibration should be accompanied by a diversified economic strategy that reduces dependence on oil revenue, enhances domestic energy efficiency, and strengthens non-oil sectors. Additionally, addressing the underlying causes of unrest in the Niger Delta and fostering equitable resource distribution will be critical to ensuring stable production levels. Nigeria’s ability to navigate these domestic and international challenges ultimately hinges on its capacity to balance pragmatism with resilience. Proactive reforms and strategic fiscal planning will shield the economy from the vagaries of the oil market and lay the groundwork for sustainable growth in an increasingly competitive global landscape.

In some ways, the use of explosives in conflicts in the Northwest closely resembles the dark days of the Boko Haram insurgency’s peak between 2012 and 2014. Although the group may have been pushed to Lake Chad’s fringes, not only have its networks across the North remained, the bomb-making expertise which the bandits–otherwise known as economic terrorists–require is in high demand. The veteran jihadists’ services to the bandit warlords range from bomb-making advisory to routes to more transnational collaboration. The latter is important as foreign armed groups increasingly seek a foothold in Nigeria’s wild Northwest. Speculations surround the explosive planted in Maru. The Zamfara State Police identified the Lakurawa group as responsible for the recent explosions, marking the second such incident along the Dansadau road within a week, but some other sources attributed the bombings to bandits seeking to avenge the death of their leader, Sani Black. Black, an important figure in the region’s terrorism landscape, was a protégé of Tsoho Buhari and an ally of Halilu Sububu, both prominent criminal leaders, both now dead. Simultaneously, a power struggle is fracturing another bandit and Sububu’s putative successor, Najaja’s, criminal network after the killing of his brother and top commander, Dan’auta, during a confrontation with rival commander Dullu. Leading a faction of approximately 400 armed men, Dullu has long harboured resentment toward Najaja’s leadership, which he views as illegitimate following Sububu’s death. Throughout much of the past year, aside from civilian casualties, insecurity across the North has been primarily defined by a civil war among bandit kingpins spurred by intensified pressure from Nigeria’s security forces. While other factors, such as territorial ambitions, may have fueled this conflict, the alleged dislodgement of the Lakurawa group in Kebbi has added a new layer of complexity. Now resurfacing in volatile areas like Kaduna and Zamfara, the group may seek to exploit the ongoing armed struggles between bandit kingpins to bolster its ranks, potentially driving out the bandits and expanding its caliphate further south along the boundary with Niger State. The immediate danger is the obvious appropriation of a significant chunk of Nigerian territory, almost the size of Italy. Another big consequence would be in the form of the loss of mining opportunities, especially in places like Baggega, a town in the gold mining local government area of Anka, Zamfara, where bandits are trying to augment the stark competition in mining by abducting residents to make up for the shortfall in revenue. In all these, the Nigerian security services have their work cut out for them. Beyond their sluggish response to the Lakurawa, they must exploit these divisions and, very importantly, stop the proliferation of explosives which have bled out the military in Kaduna and crippled power infrastructure across the North.

Cocoa and oil have historically been the backbone of Ghana’s economy, providing critical revenue streams and economic stability. Since the discovery of oil in 2011, the sector has enabled Ghana to access significant financing through loans on international capital markets and bilateral arrangements. However, crude oil production has declined in recent years as several exploration companies have exited the sector, citing unfavourable economic and tax regimes. The energy sector has become a financial burden, generating approximately $2 billion in annual debt, primarily from the power subsector. Ghana’s electricity generation relies heavily on thermal sources, which account for 64% of the energy mix. This dependency makes the country a significant consumer of natural gas, costing the state over $1 billion annually. Legacy debts in the gas sector are persistent, with major suppliers like Tullow Oil and the West African Gas Pipeline owed substantial arrears due to state ownership and inefficiencies. Similarly, the cocoa sector, once a stronghold of the economy, is struggling. Production levels have dropped below 500,000 tonnes, hindered by illegal mining activities, crop diseases, adverse weather conditions and rampant smuggling. Smuggling alone is estimated to divert over 150,000 tonnes of cocoa beans annually, undermining Ghana’s ability to meet supply targets. This shortfall has had ripple effects, including increased borrowing costs for cocoa-backed syndicated loans. For instance, Ghana faced higher coupon rates when attempting to secure $1.5 billion in financing this year. As a result, the government had to rely more on domestic financing and upfront payments, compounding fiscal challenges. The local currency, the cedi, heavily depends on cocoa inflows for stability. This year, the failure to meet production and export targets weakened the cedi further, causing it to depreciate against major currencies like the U.S. dollar. The combined challenges in the oil and cocoa sectors have exposed structural weaknesses in Ghana’s economy, underscoring the urgent need for policy reforms and strategic investments to revitalise these critical industries.

The ruling represents a significant victory for equity in taxation and regulatory oversight in Nigeria. The court has prioritised fairness and operational realities by rejecting the requirement for broadcasters to pay 2.5% of their gross annual income as a levy and instead mandating that the levy be based on net annual income. This decision not only provides relief to the broadcasting sector but also challenges broader issues in Nigeria’s approach to revenue generation. The now-invalidated levy, calculated on gross income, imposed a disproportionate burden on broadcasters, regardless of their profitability. It reflects a broader trend in Nigeria’s fiscal policies, where the focus appears to be on aggressive revenue collection rather than fostering an enabling environment for economic growth. While the government’s drive to increase revenue is understandable, given the country’s fiscal pressures, the methods often come at the expense of the private sector. Businesses, especially in high-cost industries like broadcasting, operate in an environment fraught with challenges, including unreliable infrastructure, stiff competition, and high operational costs. Imposing levies disconnected from a company’s financial health only exacerbates these difficulties, stifling innovation and investment. The court’s decision also underscores the importance of curbing regulatory overreach. The National Broadcasting Commission (NBC) had sought broad access to sensitive financial records, including VAT records, FIRS reports, bank statements, and general ledgers. This demand exceeded what is reasonable for calculating levies and signalled a lack of trust in businesses and established tax authorities like the Federal Inland Revenue Service (FIRS). By limiting NBC’s access to audited accounts, the court has reaffirmed the principle of due process, ensuring that regulatory agencies operate within their defined mandates. This ruling provides an opportunity to reflect on Nigeria’s broader economic policies. Revenue generation, while critical, should be tied to creating value and fostering economic expansion. Taxation and levies must be structured to reflect a company’s ability to pay, ensuring businesses are not unfairly penalised. When businesses thrive, they create jobs, invest in innovation, and expand the economy, ultimately leading to higher tax revenues in the long term. By contrast, policies prioritising short-term fiscal gains over sustainability risk undermining the sectors that drive economic growth. In the broadcasting sector, easing the levy burden and ensuring fair regulatory practices could have transformative effects. Broadcasters would be better positioned to reinvest in local content, technology, and infrastructure, enhancing the industry’s competitiveness. At the same time, reducing administrative and financial pressures could attract more investment into the sector, boosting its contribution to the economy. The Nigerian government must recognise that fostering a vibrant economy requires more than aggressive tax policies. Strengthening institutions, streamlining regulatory frameworks, and delivering value to taxpayers are essential for building trust and encouraging compliance. Revenue collection should be a byproduct of economic growth, not a deterrent to it. For instance, broadcasters paying levies should see corresponding infrastructure and industry support improvements, creating a virtuous cycle of investment and growth.

Amnesty’s report only confirms what many Nigerians saw on social media and, in some cases, on live television. As we highlighted in our appraisal of the protests, the federal government’s heightened rhetoric and activity to scuttle the protests in the lead-up opened up the space for a clampdown. In much of Nigeria’s history, such clampdowns were usually the military’s pastime, especially the army, whose imprints litter much of the country’s record of mass atrocities. However, recent events ranging from military over-engagement in internal security to the growing public disillusionment, even within its own ranks, have seen the police take on a more public role in ‘keeping the peace’. The heavy-handed response to the protests confirmed the shrinking of Nigeria’s civic space and underscored the eroding trust between the government and its people. As Nigeria’s elites continue to preach endurance to citizens while living comfortably, the foundation for trust in government — an essential element of nation-building — grows ever thinner. The police’s alternative version of events further cements the gaslighting policy that has tainted the official government response to civil protests. This is compounded by the regime-protection mentality that still lingers in security agencies, perhaps an after-effect of colonial rule. Consequently, agencies like the police and military are often seen protecting political elites at the expense of ordinary citizens despite being funded by public resources. The 2020 EndSARS protests emboldened security officials, who now know that, as long as they have the backing of politicians, there are no consequences for their actions. This sets a dangerous precedent where Nigerians continue to face harassment and violence at the hands of those meant to protect them. It also fosters an environment where the police, for a few thousand nairas, are willing to harass citizens or demand bribes at security checkpoints. The poor management of large gatherings has serious consequences — it not only detracts from the legitimacy of the protesters’ demands but also establishes the conditions for future confrontations, which will likely continue to undermine national stability. While these issues may seem small, they are far from insignificant. They play a key role in the risk assessments that foreign investors and businesses conduct when evaluating the Nigerian market. May the souls of the departed rest in peace.

In recent years, the dynamics of the Nigerian economy have changed significantly, forcing investors to reconsider their assumptions about Nigerians’ spending capacity and preferences. Nigeria’s challenging business environment, worsened by the removal of the petrol subsidy and naira devaluation, has led to the exit of more multinationals from Africa’s most populous country. The naira, which has weakened by more than 70% since the FX reform in 2023, coupled with the departure of multinationals, helps explain why foreign direct investment (FDI) inward stock fell by 14.9% last year. This decline is more pronounced when compared to 2021, where FDI inward stock fell only marginally by 1.49%. South Africa, which remains the top FDI recipient in Africa, also saw a drop in its FDI stock, falling from $172.2 billion in 2022 to $124.0 billion in 2023. FDI, a key category of cross-border investment, is crucial for spurring economic growth, technological advancement, and job creation. However, over the past few months, there has been a consistent rise in exit plans or reductions in involvement by multinationals, particularly in the manufacturing sector. In the second half of 2023, at least five multinationals — Procter & Gamble, GlaxoSmithKline Consumer Nigeria, Equinor, Sanofi, and Bolt Food — announced plans to exit Nigeria in 2024. The trend continued in 2024, with companies like Kimberley-Clark, Heineken (exiting Champion Breweries), Diageo (exiting Guinness Nigeria), Eni (exiting Nigerian Agip Oil Company), Mobil (exiting Mobil Producing Nigeria), and Pick n Pay also pulling out of the country. The exit of these multinationals weakens Nigeria’s productivity capacity, making achieving a one-trillion-dollar economy by 2030 an uphill task. As Africa’s fourth-largest economy, Nigeria cannot reach this milestone without a strong and thriving manufacturing sector. Challenges such as lingering foreign exchange scarcity, high energy costs, port congestion, multiple taxation, insecurity, and poor infrastructure continue to stifle the sector’s growth. According to the National Bureau of Statistics, the real growth rate of the manufacturing sector in the third quarter of 2024 was just 0.92%, the lowest since 2022’s third quarter when the sector contracted. The Manufacturers Association of Nigeria also reported a 37% drop in job creation during the first half of 2024. Two recessions over the past eight years have hindered Nigeria’s ability to grow beyond $500 billion. The last time Nigeria exceeded that figure was in 2014, when its GDP stood at $574.2 billion, according to the World Bank. By last year, the economy had fallen to $362.8 billion, down from $477.4 billion in 2022. Multinationals have historically been major contributors to Nigeria’s GDP and earnings. Before the exits of major multinationals this year, many manufacturers, particularly in the fast-moving consumer goods industry, had either left the country or stopped producing certain products due to the difficult operating environment. Earlier this year, President Bola Tinubu claimed that his reforms had attracted $30 billion in FDI into the economy within one year. However, in the second quarter of 2024, the National Bureau of Statistics reported that FDI dropped to $29.8 million — the lowest figure since the agency began compiling data in 2013. This decline highlights a growing trend of joint ventures between Chinese companies and African nations. Companies like Huaxin Cement, which acquired cement firms in Tanzania, Zambia, South Africa, and Mozambique since 2020, and West China Cement, another major player, have expanded into countries such as the Democratic Republic of the Congo and Mozambique. Huaxin’s majority stake in Lafarge Africa, if completed next year, could further boost Lafarge’s market capitalisation and financial performance. In the first nine months of 2024, Lafarge reported a 53% growth in earnings, reaching ₦60.1 billion from ₦39.3 billion in the same period last year, while Dangote Cement saw a slight profit increase of 0.58%, amounting to ₦279.1 billion. However, BUA Cement’s earnings fell by 36% to ₦48.9 billion. Despite Lafarge’s impressive earnings growth, its profit is smaller than Dangote’s. The Nigerian cement market, dominated by three major players — Dangote Cement, BUA Cement, and Lafarge — faces increased competition, especially with the Chinese acquisition. If successful, this acquisition could position Huaxin as a top contender in the market. As the world’s top cement producer, China’s entry into the Nigerian market could intensify competition, with companies vying for customers through lower prices and higher-quality deals. The cement subsector is one of the three largest contributors to Nigeria’s manufacturing sector. While many FDIs from Europe and North America have pulled out, others from Asia are stepping in. The Nigerian building materials and cement industries remain robust, but the growing competition in these sectors is causing margins and growth opportunities to shrink, leading investors like Holcim to reconsider their positions in the market.

A decade ago, many Nigerians believed that their country’s natural wealth, if shielded from corruption, could guarantee widespread prosperity. This conviction was rooted in the country’s vast resources — oil, gas, minerals, and a large, youthful population. However, the harsh realities of the present economic landscape have shattered this illusion, revealing a more profound crisis of mismanagement, inefficiency and unproductivity. Nigeria’s economy presents a stark paradox: a resource-rich country grappling with widespread poverty, inadequate infrastructure and a significant fiscal deficit. As is now usual with the MTEF, the assumptions it presents are divorced from reality. For a document meant to provide the long-term horizon for the country’s fiscal planning, it is hard to see how it provides a realistic framework for budgeting beyond meeting the legal requirements that it must be sent as a precursor to the budget. For context, the proposed ₦47.9 trillion expenditure for 2025, when converted using the Federal Government’s exchange rate of ₦1,400/$, amounts to $34.2 billion. This figure is alarmingly tiny for a country of Nigeria’s size and potential. To put it in perspective, Kenya — a nation with half the GDP and a quarter of Nigeria’s population — has proposed a budget of nearly the same size. This stark comparison highlights Nigeria’s fiscal inefficiencies and underscores the need for urgent reforms to diversify revenue sources, improve productivity and prioritise investments in critical sectors. Nigeria’s economic challenges are not merely a function of global factors but also the result of decades of policy missteps and over-reliance on oil revenue. Despite being one of Africa’s largest economies, the country has struggled to translate its resources into equitable development, widespread employment or sustainable infrastructure. While sometimes necessary, the dependence on borrowing to plug fiscal gaps underscores the urgent need for long-term solutions such as tax reform, industrialisation and digital transformation. On a more optimistic note, the recent success of Nigeria’s Eurobond issuance signals a potential turning point. Although the coupon rates are significantly higher than those of its West African neighbours — Benin Republic secured $750 million for 12 years at a 7.96% rate, while Côte d’Ivoire raised $2.6 billion with 9- and 13-year maturities at 6.3% and 6.85% respectively — the outcome reflects growing investor confidence in Nigeria’s economic reforms. The bond’s pricing — 9.625% for 6.5 years and 10.375% for 10 years — indicates that while borrowing costs remain high, the global financial community sees promise in Nigeria’s reform trajectory. Endorsements from the IMF and World Bank have undoubtedly played a role in bolstering this confidence. If these reforms are sustained and deepened, Nigeria could see a reduction in borrowing costs in the future, enabling the government to allocate more resources to critical sectors. However, relying solely on external debt is neither sustainable nor sufficient. The government must address systemic inefficiencies that drain public resources. For instance, reforming the tax system to ensure equitable contributions from all sectors and individuals is long overdue. Nigeria’s current tax-to-GDP ratio remains among the lowest globally, limiting the government’s capacity to invest in public goods and services. Expanding the tax base, combating tax evasion and simplifying tax compliance are essential to fiscal sustainability. In addition, boosting productivity across key sectors such as agriculture, manufacturing, and technology is crucial. Nigeria’s vast youth population remains a largely untapped resource. By investing in education, vocational training, and technology, the government can create an environment where innovation and entrepreneurship thrive. This, in turn, can reduce unemployment, improve living standards and increase the tax base. While the successful Eurobond issuance is a positive signal, it should not overshadow the urgency of addressing Nigeria’s structural economic weaknesses. Borrowed funds must be judiciously deployed to projects that deliver measurable impacts, such as energy infrastructure, transport systems and social services. The focus should be on creating a multiplier effect that stimulates economic growth and sustains revenue to service debts. In summary, Nigeria stands at a critical juncture. The reforms initiated are steps in the right direction, but their success depends on consistent implementation, transparent governance and a clear focus on improving the lives of ordinary Nigerians. As the country navigates its fiscal challenges, it must balance short-term measures like borrowing with long-term strategies to build a productive, inclusive, resilient economy.

The suspension of action on President Bola Tinubu’s proposed tax reform bills highlights the complexity of implementing fiscal changes in a politically and economically challenging environment. While the bills aim to reduce the tax burden for 90% of Nigerian workers and streamline tax administration, their temporary hold reflects the Senate’s effort to balance reform with public concerns. If implemented, these reforms could provide much-needed relief for low and middle-income earners by reducing tax pressures, potentially improving disposable incomes and consumer spending. This is especially critical in a country grappling with inflation and high living costs. The creation of specialised bodies like the Nigeria Revenue Service and Joint Revenue Board is poised to modernise tax collection and curb leakages. These reforms could enhance government revenue without overly relying on crude oil earnings, aligning with Tinubu’s broader push for economic diversification. Furthermore, by reducing tax evasion and making compliance easier, these bills could broaden Nigeria’s tax base and fund infrastructure, healthcare and education. However, this hinges on efficient implementation and public buy-in. Nonetheless, important risks remain. The interplay between federal and state tax systems remains a critical hurdle. A streamlined framework must account for Nigeria’s diverse and decentralised tax administration, ensuring compliance without alienating state governments. Taxation and distribution of tax proceeds are always guaranteed to be a contentious issue. It was inevitable that the discussions would be politicised. Already, some states and federal lawmakers in key state economies are baulking at some of the radical proposals, raising the stakeholder engagement issue. The pause in legislative proceedings suggests significant public scepticism or knowledge gaps about the reforms’ details. As the Senate has now suspended hearings until the new year, it gives time for the necessary political engagements and horsetrading to pass the bills. The political authorities — the presidency, the coordinating minister of the economy, everyone, need to be overt and clear to get the consultations through and support the work Mr Oyedele has done to finetune the bill and pass it. Engaging stakeholders more thoroughly could bolster public trust in Tinubu’s administration or highlight latent opposition, depending on how concerns are addressed. The formation of a bipartisan special committee indicates that the Senate is cautious, likely due to the high stakes of fiscal reforms amid economic challenges. Moving forward, the success of these bills will depend on transparent communication of their benefits, adjustments to accommodate public input, and the government’s ability to address systemic inefficiencies. Aso Rock has an opportunity to redefine Nigeria’s fiscal landscape, but its ability will rest on balancing urgency with inclusivity.