Lagos, Jan. 13, 2024: The Chief Consultant, B. Adedipe Associates Ltd., Dr ‘Biodun Adedipe, has projected that the Nigeria’s economy will likely grow by 3.74 per cent in the 2024 fiscal year.
He made the projection at a summit, organised by the FirstBank of Nigeria, with the theme; “Nigeria Economic Outlook 2024: Current Realities and Prospects’’, on Friday in Lagos.
Adedipe noted that most entities predict the economy to grow above three per cent in 2024.
“What I see more is an economy that will likely grow at about 3.74 per cent. The World Bank indicated 3.3 per cent. But, we in BA Consult see 3.74 per cent.
“International Monetary Fund probably will come later and revive their own, also in their outlook, and of course, different other entities. But, everybody is projecting this economy to grow at above three per cent this year,’’ he said.
Giving analysis of potential economic trends in Nigeria for 2024, with focus on interest rates, exchange rates, and gross domestic product growth, the Chief Consultant predicted that the Central Bank of Nigeria (CBN) might adopt an orthodox monetary policy approach.
According to him, this can potentially raise the Monetary Policy Rate (MPR) to narrow the gap with inflation.
He said that MPR might not change significantly in the first half of 2024 and with a decrease in the second half.
Adedipe, however, said that President Bola Tinubu’s desire to encourage consumer credit suggested a need for lower interest rates.
On exchange rate, Adedipe noted that some entities like the Economic Intelligence Unit (EIU) had predicted a drastic deprecation of the Naira, due to the unified exchange rate policy.
He said, “on exchange rate, different entities have done expectations for the exchange rate for Nigeria.
“if you look at JP Morgan, if you look at World Bank, IMF, the one that is frightening is EIU because they said if we continue with this unified exchange rate, we may see the Naira get to N2,000 to a dollar.
“But, I now say that it may not necessarily work out that way.’’
Based on various indications, including government pronouncements and budget assumptions, the Chief Consultant said that the official exchange rate was expected to average around N900 to the dollar.
He said, “So, looking at how the market has behaved between June 2023 and beginning of this year, we have an outlook of an average of official rate around N900.
“The pattern is this, typically, anytime there’s a major shift or destruction in any economy, a new equilibrium is created and that was what happened when fuel subsidy removal was implemented.’’
Adedipe also foresees the parallel market rate staying below N1,235 per dollar, saying though occasional fluctuations are possible.
He identified key drivers which are primary factors that would stabilize the Naira to be increased exports, driven by domestic manufacturing and focus on export value chains.
Adedipe painted a positive picture of Nigeria’s business potential, emphasising its large market, favourable trade trends, technological advancement, and mobile-first consumer base.
However, he highlighted the need for businesses to adapt to the changing landscape by embracing digitalisation and innovation.
The Chief Consultant noted that Nigeria’s large and diverse population, ranking sixth globally, offers a strong consumer base for various products and services.
This, he said, could be advantageous for businesses entering the Nigerian market.
He said that the global manufacturing trend, moving towards production in target markets, also presented an opportunity for Nigeria.
According to him, this aligns with the country’s large consumer base, making it an attractive location for companies to set up manufacturing operations.
Adedipe noted that Nigeria’s ICT sector had consistently been a top contributor to Gross Domestic Product (GDP), indicating rapid growth and potential.
He said this would open doors for businesses involved in technology and internet-based services.
He noted that Nigeria has a high smartphone penetration in the country with 94 per cent of internet access.
The financial consultant urged businesses to adapt their strategies to cater to the country’s tech-savvy population.
According to him, mobile-first approaches and digital solutions can be crucial for success.
He urged businesses to embrace digitalisation and incorporate technologies like Artificial Intelligence into their business models.
This, Adedipe said, was essential for remaining competitive in the 21st century.
Besides, he advised companies to look for opportunities to automate processes and digitise end-to-end operations.