….Minister Edun Reports $2.35bn Foreign Reserves Inflow As Taiwo Oyedele Voices Concerns
The Managing Director and Chief Executive Officer of Financial Derivatives Company Limited, Bismarck Rewane, has projected that the Nigerian economy will experience a 3.5 per cent growth by 2026, increasing the country’s Gross Domestic Product (GDP) to approximately $400 billion.
Rewane made this disclosure during the Access Bank Customer Forum held in Lagos on Thursday. He remarked, “The Nigerian economy will grow at 3.5 per cent, approximately $400 billion. Nigeria is on track to becoming the second-largest economy in sub-Saharan Africa.”
Rewane further highlighted that the country’s foreign exchange auction system would become more efficient, with unencumbered foreign reserves projected to reach $20 billion. “There will be an efficient forex auction system, and unencumbered foreign reserves will hit $20 billion,” he stated.
On the issue of inflation, Rewane predicted a significant reduction, with the inflation rate expected to decline to 22 per cent by 2026. He added that the monetary policy rate, MPR, would likely decrease to 20 per cent annually, which would result in fewer bad loans across the banking sector. “We will see inflation drop to 22 per cent, and the MPR is likely to come down to 20 per cent, which will reduce bad loans,” Rewane explained.
However, Rewane also issued a cautionary note, warning that the naira could trade at N1,550 to the dollar in the parallel market by 2026. He attributed the projected exchange rate to factors such as intervention funds, diaspora remittances, and exchange rate policies. “These gains are driven by intervention funds, remittances, and adjustments to exchange rate policies,” he noted.
In terms of overall productivity, he projected that total factor productivity would increase to 2.6 per cent by 2026, up from 2.4 per cent in 2024. He also forecasted that Nigeria’s trade balance would rise from $8.42 billion to $9.3 billion. “Total factor productivity will increase to 2.6 per cent, and our trade balance will grow to $9.3 billion,” he asserted.
Rewane further predicted that petrol prices would stabilise at N900 per litre, citing increased production from the Dangote Refinery and modular refineries as key contributors to steady supply. “We expect petrol to stabilise at N900 per litre due to increased production from Dangote refinery and modular refineries,” he said.
He also forecasted a rise in the Nigerian stock market capitalisation, which he predicted would hit N58 trillion, bolstered by the listing of big-cap companies like Dangote Refinery and the Nigerian National Petroleum Corporation.
Commenting on commodity prices, Rewane predicted that by 2026, a basket of tomatoes would cost N20,000, a bag of rice would sell for N75,000, and a bag of beans would reach N110,000. He emphasised that inflation remained a critical challenge for Nigerian businesses, significantly affecting their operating margins.
Additionally, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, revealed that Nigeria’s foreign reserves had recorded a net inflow of about $2.35 billion into the Central Bank’s coffers. “There has been a net inflow in the first seven months of this year of about $2.35bn every month,” Edun disclosed, attributing the inflow to the stabilisation of the naira in the forex market.
He added, “We also have foreign exchange liquidity. The gross reserves are up,” and credited the growth to government efforts. “On the fiscal side as well, government revenues are growing,” he stated.
Edun pointed out that Nigeria’s tax-to-GDP ratio stood at 10 per cent, with revenue-to-GDP at 15 per cent. He called for increased infrastructure and social safety net spending to address these low figures.
In contrast to Rewane’s projections, Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, expressed concerns. “Our projection is slow, and I do not pray that Bismarck’s projection comes to pass,” Oyedele said.
He noted issues such as divestment, poor education, and rising unemployment. Oyedele pointed out that the Nigerian currency had lost ten times more value than the Kenyan shilling, calling for data-driven decision-making. “We need to use data and evidence so that it can work for us,” he stressed.
Oyedele added that the Federal Government intended to reduce company income tax in the coming years, aiming to reduce the tax burden on businesses while improving collection efficiency to boost government revenues.
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