Macroeconomic Report & Economic Updates

The National Bureau of Statistics' Consumer Price Index report for May 2025 indicated a notable decline in Nigeria’s headline inflation rate to 22.97%, down from 23.71% recorded in April 2025. This marks a continuation of the disinflationary trend observed in recent months and offers relief to consumers and businesses alike. On a year-on-year basis, the inflation rate showed significant deceleration from the 33.95% recorded in May 2024, representing a 10.98 percentage point drop within the same period. This trend signals a gradual easing of inflationary pressures across key sectors of the economy. Despite this progress, inflation remained elevated above the CBN’s medium-term target (6-9%), with structural issues such as energy costs, insecurity, and transportation bottlenecks still exerting upward pressure on prices. As such, there is a need for continued policy coordination between fiscal and monetary authorities to consolidate gains. Interventions aimed at stabilising power supply, supporting domestic production, and reducing logistics costs are critical in sustaining this downward inflation trend and fostering macroeconomic stability in the months ahead. 

According to the Organisation of Petroleum Exporting Countries (OPEC) monthly report, the global price of crude oil decreased by 7.8% month-on-month in May 2025. The report showed that the OPEC Reference Basket (ORB) value fell by $5.36 to an average of $63.62 per barrel, down from $68.98 in April 2025. Nigeria’s Bonny Light crude also declined by 5.8%, from $68.48 per barrel in April 2025 to $64.55 per barrel in May. Lower Bonny Light prices could reduce oil revenue, thus constraining the government’s ability to implement public spending plans. The report also revealed that Nigeria’s average daily crude oil production (based on direct communication) dropped month-on-month by 2.22%, from 1.486 million barrels per day (bpd) to 1.453 million bpd in May 2025. Moreover, oil production was 3.13% below OPEC’s 1.5 million bpd quota and a significant 30.8% short of the country’s 2025 target of 2.1 million bpd. To address these developments, the Nigerian government should focus on increasing oil production by repairing critical infrastructure, enhancing efficiency, and supporting upstream investments such as exploration and drilling to meet production targets. Furthermore, due to the volatility of the sector, the government should strengthen efforts to diversify the economy by investing in strategic sectors like agriculture, manufacturing, and the digital economy to reduce dependence on oi

In April 2025, the Federation Account Allocation Committee (FAAC) distributed ₦1.7 trillion to Nigeria’s three tiers of government, drawn from a total revenue pool of ₦2.8 trillion available for the month. By tier, the allocation included ₦565 billion to the federal government, ₦556 billion to state governments, and ₦406 billion to local governments, while mineral-producing states received ₦152.6 billion as 13% derivation revenue. Total deductions for collection costs in April stood at ₦101.1 billion, while total transfers, interventions, refunds, and savings amounted to ₦1.07 trillion. Revenue from Value Added Tax (VAT) stood at ₦642.3 billion, representing an increase of ₦4.6 billion from the ₦637.6 billion available in the previous month. The Electronic Money Transfer Levy (EMTL) contributed ₦38.9 billion, distributed as ₦5.8 billion to the federal government, ₦19.4 billion to state governments, and ₦13.6 billion to local governments. The increase in revenue was driven by growth in Petroleum Profit Tax (PPT), Oil and Gas Royalty, EMTL, VAT, Excise and Import duties. However, Company Income Tax (CIT) declined significantly. The rise in VAT and EMTL revenue highlights the growing importance of consumption and digital transaction taxes and signals a potential to rebalance revenue away from overdependence on oil. Therefore, there is a need to expand and improve tax compliance, while reforming CIT frameworks to encourage business formalisation and enhance long-term tax performance.

Data from the Central Bank of Nigeria (CBN) indicated that in May 2025, the Naira averaged ₦1,595 per US dollar in the official foreign exchange market. This reflects a month-on-month stability of the currency against the US dollar, as it averaged about the same amount in April. The relative stability of the Naira against the US dollar is likely caused by the increase in the country’s foreign reserves. In May 2025, the CBN launched the Non-Resident Diaspora Bank Verification Number (NRBVN) platform to enhance financial integration with Nigerians abroad and boost foreign exchange inflows through increased remittances, thus strengthening the Naira. Additionally, the narrowing gap between official and parallel market exchange rates might have significantly contributed to the currency's stability against the USD. However, additional policies are needed to achieve sustained currency stability and strength. Some of these policies include supporting local businesses to produce import substitutes by improving access to credit and technology. Critical investments in the health and education sectors are also essential to reduce the demand for foreign services such as medical tourism, which

Data from the Central Bank of Nigeria (CBN) revealed the Naira exhibited a modest recovery in May 2025, with the average exchange rate settling at ₦1,595.098/$, compared to ₦1,604.70/$ in April 2025. This reflects a month-on-month appreciation of 0.48%, signalling slight improvements in foreign exchange liquidity and easing pressure on the naira. The strengthening can be linked to cautious interventions by the Central Bank. However, on a year-on-year basis, the naira depreciated significantly. The closing rate in May 2024 stood at ₦1,482.98/$, indicating that the naira weakened by 7.39% over the 12-month period. This reflects structural weaknesses in the FX market, including high import demand, limited non-oil exports, and dwindling capital inflows. During the review period, the naira traded within a narrow band, with the lowest rate at ₦1,579/$ (May 23, 2025) and the highest in April at ₦1,644/$ (April 9, 2025), indicating relative stability in May compared to heightened volatility in April. Notably, the naira appreciated for three consecutive days from May 19 21, 2025, suggesting improved market confidence. Despite this temporary easing, exchange rate volatility continues to severely impact consumers and companies through the persistent rise in the prices of goods, services, and input costs. Thus, to ensure long-term currency stability, policymakers must focus on rebuilding external reserves and enhancing non-oil exports by strengthening the manufacturing sector.