In 2024, Nigeria’s economy experienced mixed outcomes. While it avoided a full-blown recession, the country continued to face serious macroeconomic challenges rising inflation, a weakening currency, high interest rates, and slow growth in key sectors. These factors created a tough environment for households, businesses, and investors.
Read More: 2024 Nigeria Property Price Index Report
Inflation: A Key Pressure Point
Inflation remained a major issue throughout the year. It started at 29.9% in January 2024, rising from 28.92% in December 2023. Compared to January 2023 (21.82%), this was a 37% increase year-on-year. Prices continued to rise each month until July 2024, when inflation dropped to 33.4%, driven by a small reduction in food prices and the effects of government policies.
However, this improvement was short-lived. By October 2024, inflation rose again by 3.6%, reflecting continued challenges like higher production costs and supply disruptions. Overall, high inflation reduced consumer spending and slowed growth in important sectors like construction and real estate.
Currency Weakness and Interest Rate Hikes
The naira lost significant value in 2024. It fell by 24.3%, from ₦1,413/$1 in January to ₦1,757/$1 in December. This depreciation added more pressure to inflation and created uncertainty in the economy.
To control inflation and stabilize the currency, the Central Bank of Nigeria (CBN) raised the Monetary Policy Rate by 875 basis points, from 18.75% in January to 27.50% in November. While this helped slow inflation slightly, it also made borrowing more expensive, limiting access to credit for businesses and consumers.
GDP Growth: Some Signs of Recovery
Despite these challenges, the economy showed some growth. After slowing to 2.98% in Q1 2024, GDP rose to 3.46% in Q3 2024, compared to 2.54% in Q3 2023. The services sector led this growth, contributing 53.58% to total GDP. The oil sector also recovered, growing by 5.17%, as daily production increased to 1.47 million barrels per day.
The non-oil sector was the largest contributor, making up 94.43% of GDP, with strong performance in financial services, telecommunications, and agriculture. However, construction and real estate remained weak. Construction fell from 3.70% in Q4 2023 to -2.14% in Q1 2024, while real estate slowed to 0.68% in Q3 2024.
Read More: 2024 Nigeria Property Price Index Report
Capital Inflows: High Growth, But Uneven
Foreign investment remained uneven. Nigeria attracted $2.6 billion in capital inflows in Q2 2024, down 22.85% from Q1, but up 152.8% compared to Q2 2023. However, Foreign Direct Investment (FDI) was very low, just $29.83 million, or 1.15% of the total.
Only Lagos, Ekiti, and Abuja received capital inflows, with Lagos remaining the top destination. The United Kingdom, Netherlands, and South Africa were the top sources of investment. However, many investors remained cautious due to foreign exchange instability and the high cost of doing business.
Read More: 2024 Nigeria Property Price Index Report
Outlook
Nigeria’s economy made some progress in 2024, but key challenges remain. High inflation, a weak naira, and low investor confidence must be addressed to unlock stronger growth.
The federal government has shown interest in attracting investment into sectors like infrastructure, oil and gas, agriculture, and renewable energy. However, to achieve lasting stability, Nigeria needs long-term reforms that promote business growth, improve productivity, and build investor trust.
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