The Year Ahead - Caught in currents
While 2024 was a year of elections, conflicts, and economic shifts, this is our 2025 Economic and Political Outlook for Nigeria and Beyond.
Listen to our managing partner, Ikemesit Effiong, and our head of research, Bunmi Bailey, talk about the forecast on our #TheWeekAheadPodcast with host Veronica Igugbe.
Download the complete report (80 pages; forecast from page 71. Guest analysis by Kasim Sodangi on pages 60-63)
2024 has been a record year for elections as almost 80 countries with around four billion people conducted national elections from the presidency to national legislators or local leaders. In Africa, nearly 20 countries also conducted elections.
International and regional political and economic developments also marked the year. It has seen the continuation of major armed conflicts, including the Russian invasion of Ukraine, the Myanmar civil war, the Sudanese civil war, the Islamist insurgency in the Sahel, and the Israel–Hamas war. Additionally, Syria’s nascent government collapsed under the pressure of a lightning attack by Islamist rebels. Apart from the destruction of lives and properties, the conflicts continue to upend geopolitical coalitions, deplete natural resources, and jeopardise the health of our planet.
In November, Donald Trump beat Vice President Kamala Harris, becoming only the second US president to serve non-consecutive terms after Grover Cleveland was elected in 1884 and 1892. For Europeans, it could mean the end of American support for Ukraine in its war with Russia. In the Middle East, it could mark a change from the Biden administration’s seeming ambivalence to Israel’s wars with Hamas in Gaza, Hezbollah in Lebanon, and Iran to full-throated support.
Trump 2.0 is expected to usher in policies that put America first. He will likely focus on strengthening the US dollar, increasing crude oil production, traffic cuts in China, the European Union, Mexico, and Canada, lowering interest rates, and focusing less on renewable energies.
However, a stronger dollar stokes inflation in countries with weaker currencies, especially in Africa. Import costs will continue to rise, and debts denominated in dollars may become more challenging to repay. For West Africa, the impact will likely manifest in reduced engagement, altered trade dynamics, and potential funding cuts for climate and development initiatives.
Earlier in the year, three West African nations governed by military juntas – Niger, Mali, and Burkina Faso – abruptly announced their withdrawal from the Economic Community of West African States, a move that threatens regional stability, economic integration and fragmentation.
The World Bank projects the African economy will rebound to 3.4 percent in 2024, rising from a low of 2.6 percent in 2023. In the first half, inflation in some leading African economies, such as South Africa and Kenya, waned. However, Nigeria and Ghana's inflation picked up for the second month in October, reaching 33.88 percent and 22.1 percent, respectively.
Nigeria's economy slipped from first to fourth place in Africa. Persistent current depreciation and rising energy prices have fuelled its general price level, limiting its economic growth. Since the removal of the petrol subsidy in May last year, fuel prices have increased more than fourfold. Nigerians now pay almost ₦1,200 for a litre of petrol, while electricity tariffs for Band A customers spiked from ₦72.3/kWh in May to ₦209.5/kWh in July.
Two refineries started producing petrol in the last few months of the year. Dangote refinery, one of the continent’s most ambitious infrastructure projects, began in September to reduce the country’s reliance on imported petroleum products. However, Dangote is now facing the challenge of securing additional funds to cover crude procurement and the refinery’s operational costs, which could reach approximately $2 billion every 90 days for a minimum supply of 300,000 barrels per day.
In November, Port Harcourt Refinery came upstream after decades of unfulfilled promises and several missed deadlines since initial rehabilitation efforts commenced in 1999. NNPC claims the plant runs at 70% capacity and can produce 200 trucks worth of products daily. However, many controversies surround its operations and capacity to produce petrol on a large scale. 2024 witnessed more petrol scarcity compared to previous years.
Rising fuel prices and recurring floods affected harvest gains, and food inflation continued its upward trend in October. The World Bank revealed that at least 129 million people are poor. Despite cost-cutting and inflation management measures, Nigerian households spend 97% of everything they earn on food. Recent National Bureau of Statistics data revealed that almost two of three Nigerian households skip meals. The number of households not having enough food to eat doubled to 62.4% in 2023 from 37% in 2019.
The prices of protein sources have increased, causing households to reduce their healthy diet intake. The average healthy diet cost spiked by 113% to ₦1346 in September 2024 from ₦631 in the same month in 2023. Our third quarter Jollof Index showed that the cost of preparing a pot of jollof rice for a family of five rose by 420 percent to ₦21,300 within eight years. In recent years, persistent insecurity, supply chain disruptions, climate change, elevated energy prices, floods, weaker naira, and high farm input costs have reduced the agricultural sector’s capacity to grow above three percent.
A recent Farming Early Warning System Network report suggests an impending deterioration in food security from November 2024 through May 2025, driven primarily by suboptimal harvest yields. This deterioration indicates that food production may decline unless urgent steps are taken to boost production and provide Nigerians with respite, in addition to palliatives and import waivers.
Inflation and the country’s benchmark interest rate (27.50%) continue to dampen business activities in the private sector, affecting job creation and retention. The Tinubu administration has its work cut out—arresting spiralling insecurity, tackling grinding poverty, enhancing economic opportunity, and forging a sense of national consciousness. Nigeria's 2024 was one to reap the benefits of the Renewed Hope Initiative. However, the World Bank recently said it could take at least 10 or 15 years. All we can say is good luck to Nigeria.
Our managing partner, Ikemesit Effiong, was on News Central to discuss this forecast. Watch the video.