Nigeria is grappling with its worst economic crisis in recent years, marked by high inflation and a sharp decline in the value of its currency, the Naira. The situation has triggered protests across the country.
According to CNBC, on Thursday (21/02/2024), Nigeria's currency, the Naira, has depreciated by 70% since May 2023 when President Tinubu took office. This depreciation has led to inflation in Nigeria reaching nearly 30%.
"The weakening exchange rate is driving up inflation, which will exacerbate price pressures in Nigeria," said Pieter Scribante, a senior economist at Oxford Economics.
Nigeria boasts the largest economy in Africa and has a population of over 210 million people. However, the country heavily relies on imports to meet the needs of its citizens.
Inflation in Nigeria has soared to 29.9%, the highest since 1966. This surge in inflation is attributed to a 35.4% spike in food prices, fueling public anger, culminating in protests last week.
Furthermore, the plummeting value of the currency has added to the negative sentiment, especially after the government removed gas subsidies, causing gas prices to triple.
In addition to inflation and sharp currency depreciation, Nigeria also grapples with a large national debt, high unemployment, inadequate electricity supply, and declining oil production, which is the country's main export.
According to Oxford Economics, inflation in Nigeria is projected to peak at 33% in the second quarter of 2024, with a possibility of further increases due to unforeseen economic risks in the future.
"Excessive market demand, continued weakening of the exchange rate, and shortages of food and fuel threaten price stability, while inflation risks are increasing significantly," added Pieter Scribante.
President Tinubu announced that the government plans to raise at least $10 billion to boost foreign exchange liquidity and stabilize the Naira, according to several local media reports.
The President also stated that over $666.4 million has been saved from subsidy removal, which will be redirected towards infrastructure investment in the country.
As Nigeria grapples with economic challenges, urgent measures are needed to address inflation, currency depreciation, and other systemic issues. The government's plans to stabilize the currency and invest in infrastructure are crucial steps towards restoring economic stability and fostering long-term growth. However, concerted efforts from both the government and citizens are necessary to navigate through these challenging times and build a resilient economy for the future.