Nigeria’s economy is showing signs of strong recovery, with inflation easing to 24.5% in January and a steady rise in Foreign Direct Investment (FDI). The Central Bank of Nigeria (CBN), led by Governor Olayemi Cardoso, kept interest rates unchanged, bolstering investor confidence. This policy, along with a robust GDP expansion, has sparked positive momentum in Nigeria’s Eurobond market. In February, Nigeria’s Eurobond yield dropped to 8.80%, signaling strong foreign interest as the country outperformed the regional market in Sub-Saharan Africa.
The recent rebasing of Nigeria’s GDP has further boosted economic prospects by incorporating fast-growing sectors such as fintech, e-commerce, and digital services. This has led to a larger and more diversified GDP, offering a clearer picture of economic strength. Analysts predict this shift will attract more foreign investment into sectors that were previously underreported. The rebasing also promises improvements in economic indicators, such as a better debt-to-GDP ratio and increased per capita income, although inflation remains a challenge.
The CBN’s decision to maintain interest rates at 27.5% is seen as a stabilizing force for Nigeria’s forex market. It also aids in managing inflation and supporting a stronger naira, which appreciated by nearly 7% in February. The CBN has committed to further transparency and liquidity in the forex market, with continued intervention to support the economy. Meanwhile, the government’s fiscal policies, including a proposed N49.7 trillion budget for 2025, are expected to enhance economic stimulus and alleviate implementation challenges, reinforcing a positive outlook for Nigeria’s growth.
Increased remittance inflows, rising by 79.4% to $4.18 billion in 2024, and the lifting of restrictions on certain goods have also boosted investor sentiment. Analysts view these reforms, coupled with ongoing forex stability measures, as key to Nigeria’s long-term economic resilience. With strong fundamentals and strategic policy adjustments, Nigeria is positioning itself as an attractive destination for investment, despite challenges like inflation.
SOURCE: THE SUN