Recent data from the Central Bank of Nigeria (CBN) shows that inter-bank call rates surged to 28.58% in January 2025, a sharp increase from 16.43% in the same month of the preceding year. The increment correlates with the movement in the CBN Monetary Policy Rate from 18.75% in January 2024 to 27.50% in 2025. High interbank rates make banks on lend at a higher rate. This, in turn, raises borrowing costs for businesses, potentially slowing economic activity. While the CBN's monetary tightening aims to curb inflation by reducing excess liquidity, excessively high rates risk stifling investment in critical sectors of the economy, and thus, hampering growth. To address excess liquidity challenges without over-relying on rate hikes, policymakers should consider complementary fiscal measures such as fiscal discipline to eliminate the effect of fiscal deficit financing on rising inflation. The government's efforts should prioritize curbing inflation, which is likely to pave the way for lower monetary policy rates and inter-bank call rates. High interest rate increases cost of borrowing, lowers investment levels and the pace of economic growth. 

The CBN Business Expectations Survey (BES) for February 2025 reflects growing optimism among businesses regarding Nigeria’s macroeconomic environment. The Overall Business Outlook Index for the current month stood at 19.7, with all sectors expressing positive expectations. The industry sector recorded the highest optimism, suggesting strong confidence in future economic conditions. Businesses also anticipate an appreciation of the Naira in the coming months, reflecting improved foreign exchange expectations. Sector-specific indices further reinforce this positive sentiment. The Business Outlook Index for Industry stood at 21.8, followed by Agriculture at 20.9, and Services at 18.1, indicating broad based confidence in business growth. The Business Confidence Index (BCI) further highlights sectoral optimism. Mining and Quarrying recorded the highest confidence at 16.0, followed by manufacturing and agriculture at 6.8 each, Market Services at 4.6, Non-Market Services at 3.1, and construction at 1.8. While the overall outlook remains positive, businesses continue to monitor key economic variables, including inflation and access to credit. Sustaining this optimism will require consistent policy support, structural reforms, and measures to enhance economic stability

According to the IMF World Economic Outlook(WEO) for January 2025, Nigeria’s economic growth forecast was revised upward by 0.1 percentage point, from 3.1% in the October 2024 report to 3.2% in the January 2025 report. However, the forecast for 2026 was downgraded by 0.2 percentage point to 3.0%. Key factors driving this downward projection include the anticipated decline in external financing for many Sub-Saharan African countries, the depreciation of the Naira against the dollar, and tighter global financing conditions, which will exacerbate debt burdens for developing countries including, Nigeria. For Sub-Saharan Africa as a whole, the IMF projects economic growth of 4.2% in 2025, a 0.4 percentage point increase from the 3.8% recorded in 2024. Inflation is also expected to decline, reaching 4.2% in 2025 and 3.5% in 2026. Nigeria’s GDP forecast is 1.1 percentage points below the Sub-Saharan African countries average. While the projected growth rate is positive, it is too low to significantly boost per capita income. The moderate growth projection is likely to be undermined by long-term risks, particularly the unpredictable nature of the exchange rate, which deters investment decisions. Additionally, Nigeria’s public finances remain vulnerable if borrowing costs stay high and revenue generation remains weak. Therefore, the government must carefully manage inflation and strengthen tax administration processes to enhance domestic revenue collection.

According to the latest data from the Money and Credit statistics of the Central Bank of Nigeria (CBN), currency outside banks soared year on year by 44.46%, to ₦4.7 trillion by January 2025 up from ₦3.3 trillion in January 2024. Currency outside the bank represents 12.8% of narrow money in January 2025, an increase from 10.4% in January 2024. Also, currency outside banks as a percentage of total money supply (M3) increased in January 2025 to 4.3% from 3.5% last year. The statistics suggest a growing preference for cash based payments and an expansion of the informal economy.
Moreover, an increase in the proportion of currency circulating outside banks impedes the transmission of monetary policy signals through interest rate adjustments, which is critical for the effectiveness of monetary policies. To address this pressing issue, urgent corrective measures need to be implemented. These measures could include reducing bank charges to incentivize greater participation in the formal banking system, expanding banking infrastructure, especially in underserved areas, and strengthening mechanisms for addressing payment failures associated with interruptions in internet service

According to the National Bureau of Statistics (NBS), Nigeria’s total merchandise trade reached ₦36,604.83 billion in Q4 2024, representing a 68.3% increase compared to the ₦21,747.40 billion recorded in Q4 2023 and a 2.20% rise from Q3 2024. Exports, which accounted for 54.68% of total trade, stood at ₦20,014.33 billion, reflecting a 57.67% increase from Q4 2023 but a 2.55% decline compared to the ₦20,537.17 billion recorded in Q3 2024. Meanwhile, imports in Q4 2024 amounted to ₦16,590.51 billion, making up 45.32% of total trade. This represented an 8.57% increase from Q3 2024 and an 83.24% surge compared to Q4 2023. The trade surplus for the quarter stood at ₦3,423.82 billion. Despite this positive trajectory, Nigeria's trade remains heavily reliant on crude oil exports. In Q4 2024, crude oil exports contributed approximately 68.87% (₦13.78 trillion) of total exports, while non-crude oil exports accounted for 31.13% (₦6.23 trillion). The continued dominance of crude oil in Nigeria’s trade structure poses significant economic risks, as it makes the economy vulnerable to global oil price fluctuations and external shocks. The non-oil export sector continues to face challenges such as low competitiveness, infrastructure deficits, and limited market access. To enhance and sustain Nigeria’s trade position, economic diversification is essential. Strengthening local manufacturing, improving infrastructure and reducing trade bottlenecks are essential policy steps that can help build a more resilient and balanced trade economy in the long run.

This study employed South African data from 2008Q1 to 2021Q1 and a combination of OLS, FMOLS and threshold regression to test the validity of the existence or absence of a nonlinear Unemployment Invariance Hypothesis across race and gender, with the goal of determining whether the relationship between the unemployment rate and labour force participation rate is dependent on the unemployment regimes. The threshold regression results revealed that the relationship between unemployment and labour force participation varies by regimes. In other words, the impact of unemployment on labour force participation varies by gender and race and depends on the state of unemployment.

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The Monetary Policy Committee of the Central Bank of Nigeria, at its 299th meeting held on February 19th and 20th, 2025, resolved to retain the Monetary Policy Rate (MPR) at 27.50% and maintain the asymmetric corridor around the MPR at +500/-100 basis points. The Cash Reserve Ratio (CRR) for deposit money banks and merchant banks was also maintained at 50% and 16%, respectively, while the liquidity ratio remained at 30%. The committee cited recent positive macroeconomic developments, including improvements in Nigeria’s foreign exchange market and the stabilization of petroleum prices, as key reasons for its decision. Additionally, the recent rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics, aimed at reflecting current economic realities, provided the committee with updated insights on price stability, influencing its decision to hold rates steady. While maintaining the rates could support foreign exchange market stability and attract foreign investment, it also presents potential drawbacks. High borrowing costs may slow economic expansion, particularly for small and medium-sized enterprises. Therefore, while monetary tightening is essential for price stability, a gradual reduction in the Cash Reserve Ratio (CRR) is necessary to enhance liquidity for businesses, stimulate domestic investment, and drive job creation. Furthermore, the government should strengthen non-oil export sectors to reduce import dependency and sustain exchange rate stability.

According to the Organization of Petroleum Exporting Countries’ (OPEC) report, Nigeria’s average daily crude oil production in January (based on direct communications) was 1.539 million bpd, an increase of 54,000 bpd (3.64%) from 1.485 million bpd recorded in December 2024. The report revealed that Nigeria exceeded its OPEC quota (of 1.5 million bpd) by 39,000 bpd. This commendable increase, however, falls short of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) production target, which is set at a minimum of 2.1 million bpd for 2025. A 26.71% increase in crude oil production from the current level is required to meet this NUPRC target. The report further revealed that crude oil prices increased to US$80.14 per barrel in January 2025, up from US$74.22 per barrel recorded in December 2024, representing a 7.98% month on-month increase. With crude oil prices largely determined externally, one way to improve oil revenue (a major source of revenue and FX for the country) is to boost upstream activities and expand the country’s crude oil production capacity. There is a need to sustain and exceed the production level, to demand a higher quota from OPEC. To boost production levels, several policies should be implemented to attract investment, including full implementation of the Petroleum Industry Act (PIA). Also, there is a need to strengthen efforts to curb oil theft and pipeline vandalism by deploying technology such as the Advanced Cargo Declaration regime to track and prevent such activities.

Policymakers in Nigeria grapple with so many uncertainties from multiple directions, which make the prioritization of necessary interventions a daunting task. One of such uncertainties is the current food security situation in the country as a consequence of violent clashes among farmers and herders. The farmer-herder conflict with its far-reaching impact is driven by transhumance and competition over shrinking natural resources, exacerbated by a combination of factors such as climate change, drought, desertification, and growth in human and livestock population. The protracted nature of the clashes has adversely affected both tenure and food securities in northcentral Nigeria, especially in Benue, Plateau, Nasarawa and Niger states (the hub of food production in the country). Aside its extensive impact on food and nutrition security, it is estimated that Nigeria loses about USD 14 billion (N5.04 trillion) annually to the farmers-herders’ skirmishes.

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