According to the Stanbic IBTC Bank purchasing managers index report, Nigerian private sector activity increased by 1.8 points, rising from 52.7 in December 2024 to 54.5 in January 2025. This marks the second consecutive month above the 50.0 threshold and represents the fastest growth rate since April 2022. By interpretation, a reading below 50 indicates a decline in private sector activity, a reading of 50 reflects stability while a reading above 50 signals expansion and higher productivity. The recovery that began in December gained further momentum in January, driven by increased business purchasing activity, which boosted input acquisition and production. Companies also benefited from faster supplier deliveries and remained optimistic, showing greater confidence than in December 2024. Although inflation remained high due to exchange rate depreciation and rising costs of raw materials and transportation, the increase in PMI suggests that businesses are investing more in inputs and production, which could lead to higher output and employment. Such increased purchasing activity could lead to higher demand for goods and services, which could still put an upward pressure on the prices of goods and services and potentially affect inflation. To sustain this momentum, policy measures such as tax relief and subsidies should be introduced to support small and medium-sized enterprises. Additionally, improving transport and logistics infrastructure would enhance supply chain efficiency and help stabilize costs.

According to the Organization of Petroleum Exporting Countries (OPEC) January Monthly Oil Market Report, Nigeria’s average daily crude oil output stood at 1.485 million in December 2024. The oil output lagged the Federal Government's 2024 budgeted benchmark of 1.78 million bpd and the OPEC quota of 1.5 million bpd. Also, there was a decline in Crude oil prices to US$74.22 in December 2024 from US$75.38 per barrel in November, representing a 1.5% month-on-month decline. The country's inability to meet the government's projected production level can be attributed to multiple factors, including aging infrastructure, underinvestment, and oil theft which continue to result in low production. A combination of low production levels and a decline in crude oil prices would result in lower government finances. Specifically, the country's inability to meet the quotas could have a detrimental impact on national reserves and revenue, reducing resources availability to finance developmental projects in the country. Thus, the government must strengthen efforts against oil theft and bunkering by working with local communities and imposing harsher penalties for unlawful operations in oil-producing communities. The government also needs to strengthen existing investment policies to attract private investors who can invest in modern-day oil facilities or infrastructure to increase oil production.  

According to the Consumer Price Index (CPI) report by the National Bureau of Statistics (NBS), headline inflation rose to 34.8% in December 2024, a 0.20% points increase from 34.60% recorded in November 2024. This is 13.4% points higher than the 21.4% targeted by the Central Bank. On a year-on-year basis, headline inflation was 5.87% points higher in December 2024 compared to December 2023. Urban inflation increased by 6.30% points year-on-year to 37.29% in December 2024 from 31.00% in December 2023. Similarly, on a year-on-year basis, rural inflation rose by 5.37% points to 32.47% in December 2024 from 27.10% in December 2023. Key contributors to the rising inflation include food and non-alcoholic beverages, housing, water, electricity, and gas. However, the year-on-year increase reflects a significant rise in the cost of living compared to the same month in the previous year, driven by economic challenges such as weak currency, high energy costs, and supply chain disruptions. The continued rise in inflation implies a substantial decline in purchasing power, severely affecting low-skill individuals. Additionally, higher inflation rates in urban areas compared to rural areas indicate rising costs of food and essential items and may result in civil unrest. To mitigate these effects, the government should implement temporary subsidies for essential goods, such as food and energy, to cushion the impact on vulnerable households. Furthermore, currency-stabilizing monetary policies are essential to reduce imported inflation caused by currency depreciation

In Q3 2024, total capital importation into Nigeria declined by 51.90%, dropping to $1,252.66 million from $2,604.50 million in Q2 2024. Portfolio investments ranked highest at $899.31 million (71.79%), followed by other investments at $249.53 million (19.92%), while foreign direct investment accounted for $103.82 million (8.29%). Sector-wise, the banking sector led with $579.48 million, followed by financing at $294.55 million and production/manufacturing at $189.22 million.

According to the Central Bank of Nigeria (CBN), the Naira appreciated by 7.62 percent from ₦1661.12 to a US Dollar on 2nd December 2024 to ₦1534.56 to a US Dollar on 3rd January 2025. Since the unification of exchange rates in June 2023, the Naira has been fluctuating. In 2024, the local currency lost about 41 percent of its value against the dollar in the official market, despite a rise in external reserves in the same period. The recent appreciation of the Naira comes a month after the implementation of the Electronic Foreign Exchange Matching System (EFEMS), which was officially launched on 2nd December 2024 to reduce speculation and enhance transparency in Nigeria’s foreign exchange market. With a strengthened domestic currency, it is expected that prices would fall in the short term, especially given that Nigeria is a highly import-dependent country. If the appreciation is sustained over time, it enables the country to concurrently service foreign currency-denominated debts and supply demanded liquidity in the foreign exchange market. To ensure a stable and strong Naira, there is a need to maintain sustainable debt levels, reduce reliance on imports, and boost foreign reserves by increasing exports. Also, there is a need to create a business-friendly climate for foreign investors to attract foreign exchange inflow.