Key messages
• Nigeria's exports are recovering from the COVID-19 crisis, but they remain heavily
reliant on raw products, particularly oil and gas, which account for over 80% of export
earnings.
• The country faces challenges in trade competitiveness, including low product
diversification, limited value addition, and inefficiencies in logistics and
infrastructure.
• Stabilizing the national currency and broadening the tax base are crucial for
improving Nigeria’s macroeconomic environment and reducing vulnerability to external
shocks.
• Simplifying trade procedures, improving road quality, and expanding shipping and
logistics services can ease the movement of goods and lower business costs.

AUTHORS

Anthony Okon; Chukwuka Onyekwena ; Bilkis Ceesay and Isatou Jallow 
 

This policy brief was prepared by the participants during a training on Trade Competitiveness and Regional Value Chain Analysis, held in Banjul (The Gambia) from 23 to 27 September 2024.

The Electricity on Demand report by the Nigerian Electricity Regulatory Commission (NERC) revealed that in the third quarter of 2024, energy generation stood at 9,450.76 GWh, marking a 674.21 GWh increase from the 8,776.55 GWh recorded in the previous quarter. Average hourly energy generation also rose by 6.51% quarter-on-quarter, from 4,018.57 MWh in Q2 2024 to 4,280.24 MWh/h. This increase in energy generation was driven by enhanced generation capacity. The average generation capacity of nineteen out of the twenty-eight grid-connected power plants grew by 16.04%, rising from 4,395.77 MW in Q2 2024 to 5,100.90 MW in the quarter under review. This growth is expected to result in improved energy supply, as higher generation capacity can reduce power outages, enhance energy reliability for businesses and households, and promote better utilization of existing infrastructure. It can also stimulate economic growth and foster job creation in related sectors such as construction, manufacturing, and services. In response, the government should review existing laws with a view of amending those that deter private sector participation in the energy sector to boost generation and modernization of the distribution systems. Also, the government need to invest in upgrading and expanding transmission networks to ensure a more reliable electricity supply. Additionally, there is a need to invest in renewable energy projects that promote hybrid (solar, wind, and hydro) energy solutions in grid-connected plants.

The inflation expectations survey report by the Central Bank of Nigeria revealed that 85.1% of households and 80.7% of businesses believe the current inflation rate is high, with households primarily driving this sentiment. Inflation perception refers to how individuals or groups understand, interpret, and feel about the current rate of inflation. It reflects subjective views on how changes in the prices of goods and services affect purchasing power. The report shows that large businesses had the highest inflation perception in November at 87%, followed by micro businesses at 82.3%, medium businesses at 79.4%, and small businesses at 78.4%. By settlement type, urban residents reported a higher inflation perception (85.5%) than rural residents (84.4%). Among households, those earning between ₦100,000 and ₦150,000 per month had the highest inflation perception at 88.7%, while those earning above ₦200,000 had the lowest. Key drivers of inflation perception include rising energy and transportation costs, insecurity, and exchange rate depreciation. High inflation perception can weaken consumer and business confidence, widen income inequality, and exacerbate the rural-urban divide, potentially fueling economic dissatisfaction and social unrest. For businesses, heightened inflation perception could result in job cuts, undermining monetary policy effectiveness and stalling economic growth. To tame inflation expectations, the government needs to prioritize targeted reforms in key sectors including energy and transportation. Additionally, the government needs to implement policies to stabilize the naira and provide support to the most vulnerable households

According to the Organisation of Petroleum Exporting Countries' (OPEC) November Monthly Oil Market Report, Nigeria's average daily crude oil output increased by 9,000 bpd, from 1.324 million bpd in September to 1.333 million bpd in October, representing a 0.68 percent gain.3 This is a positive development for Nigeria. However, the rise in oil output is 167,000 bpd below OPEC's 2024 production quota of 1.5 million bpd and 447,000 bpd lower than the Federal Government's 2024 budgeted benchmark of 1.78 million bpd. The country's inability to meet OPEC's quota, as well as the government's projected quota for 2024, can be attributed to multiple factors, including oil theft and the inability of relevant stakeholders or players in the oil industry to act in a timely manner (for example, in procurement), which continue to impede the achievement of both quotas. Such developments could impact the economy negatively, particularly government finances. Specifically, the country's inability to meet the quotas could have a detrimental impact on national reserves and revenue, reducing capital 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 data from the Central Bank of Nigeria (CBN), Nigeria's total foreign reserves stood at $40.79 billion on December 19, 2024, up 1.24% from $40.29 billion on the same day the previous month. Compared to December 19, 2023, the nation's reserves increased by 24.36 percent from $32.8 billion in the same period in 2024. The data also shows that the reserves hit its highest level on December 10, 2021, when it was at $40.89 billion. This gain in foreign reserves follows a drop below $34 billion earlier in 2024, when reserves were adversely affected by foreign exchange market pressure and global oil market uncertainty. The CBN's policy reforms to increase remittance inflows, as well as its engagements with International Money Transfer Operators (IMTOs) and Nigeria's diaspora, all contributed considerably to the increase in reserves. While an increase in reserves is crucial for economic development, a continuous increase at a desirable level is required to signal the nation's financial strength and stability to investors, resulting in increased foreign investment and economic progress. To boost external reserves, the government must expand exports, maintain sustainable levels of foreign debt, and improve its investment climate.

Free Trade Agreements (FTAs), such as the African Continental Free Trade Area (AfCFTA), can significantly influence biodiversity conservation based on their design and implementation. While AfCFTA may encourage countries to strengthen environmental regulations in line with international agreements like the Convention on Biological Diversity (CBD) and CITES, there are concerns that economic goals might overshadow ecological considerations. This could lead to industrial growth in agriculture and mining, risking deforestation, soil erosion, and water pollution. Using a combination of qualitative and quantitative methods, this study employs the Energy-Environment Integrated CGE (EEICGE) Model to analyze AfCFTA’s impacts on Africa's biodiversity. Simulation results for Nigeria indicate a rise in fossil fuel demand and carbon emissions. Stakeholder insights reveal that increased trade may drive intensified land use, contributing to deforestation and biodiversity loss. The study underscores that the impact of AfCFTA on biodiversity is contingent on specific provisions, enforcement capacities, and implementation contexts. To ensure FTAs support sustainable development, strategic measures are vital, including robust environmental regulation enforcement, local community engagement, and investment in renewable energy to meet rising energy needs while adhering to global commitments like the Paris Agreement.

AUTHORS: Augustine Iraoya, Chukwuka Onyekwena, David Okorie, Adedeji Adeniran

This paper was first published HERE

The National Bureau of Statistics' report showed that in the third quarter of 2024, Gross Domestic Product (GDP) grew by 3.46%, representing a 0.92 percentage point rise from the 2.54% recorded in Q3 2023. The non-oil sector, the largest contributor to GDP, grew by 3.37% in Q3 2024. Growth in the non-oil sector was driven by financial institutions, information and communication technology, agriculture, and trade, among other sectors.

In Africa, the digital economy, which refers to all economic activities facilitated by digital technologies and big data, is booming. This is a result of digital technology’s capability to transform economies and societies, influencing how we work, live, and interact. Africa’s digital economy is a boost to the continent’s economy. International Finance Corporation (2020) reveals that Africa’s digital economy grew from $100 billion to $115 billion, representing a 15% increase between 2019 and 2020. It further projects that Africa’s digital economy has the potential to contribute $180 billion and $712 billion to the continent’s gross domestic product (GDP) by 2025 and 2050, respectively.

The role of data, in the public and private sectors, is central to informing strategy, shaping decision and policy-making, creating value, driving innovation, sustaining profit-making and promoting economic development.

This Brief was written by Kunle Balogun

The National Bureau of Statistics' Liquefied Petroleum Gas (LPG)/Cooking Gas Price Watch for October 2024 showed a 3.2% month-on-month increase in the average cost of refilling a 5 kg cylinder, from N6,699 in September to N6,915 in October. Similarly, the average retail price of refilling a 12.5 kg LPG cylinder rose by 2.58%, from N16,313 in September 2024 to N16,743.55 in October 2024. According to state-level analysis, Borno state recorded the highest petrol prices at N7,939, followed by Yobe state at N7,580, and Benue state at N7,578, while Katsina state had the lowest prices at N6,270, followed by Zamfara state at N6,410, and Delta state at N6,427. The month-on-month increase in petrol prices can be ascribed to global market fluctuations and supply chain interruptions, which have increased the cost of importing LPG. This increase in cooking gas costs has a detrimental impact on household welfare nationwide, particularly for low- and middle-income families that spend a significant portion of their income on cooking fuel.