CBN Projects Economic Calm in 2024
…Lower Inflation, Forex Pressures Expected
By Patience Ikpeme
A glimmer of hope emerged for Nigerians yesterday as the Central Bank of Nigeria (CBN) predicted a significant drop in inflation and exchange rate pressures in 2024.
Governor Olayemi Cardoso, addressing a joint National Assembly committee, painted a picture of a domestic economy on the mend next year. While acknowledging temporary inflationary hiccups, Cardoso assured Nigerians that both inflation and forex rates would stabilize in the foreseeable future.
“The outlook for the domestic economy remains positive and expected to maintain its upward trajectory in 2024,” he declared. “Inflationary pressures may persist in the short term but are expected to decline significantly. Similarly, exchange rate pressures are also expected to reduce substantially with the smooth functioning of the foreign exchange market.”
Cardoso attributed this optimism to several factors, including the unification of exchange rate windows implemented in June 2023. This move, he explained, aims to curb speculation and stabilize the naira.
Further bolstering the positive outlook is the robust performance of the Nigerian Foreign Exchange Market (NFEM) in the third quarter of 2023. Cardoso revealed total trade during this period reached N18.8 billion, with exports surpassing imports, generating a positive trade balance and potentially boosting reserves.
However, a shadow lurks – a potential dip in oil revenue due to production limitations set at 1.78 million barrels per day (mbpd) in 2024. This falls short of the OPEC quota of 1.8 mbpd and the 2023 budget benchmark of 1.69 mbpd. Cardoso cited crude oil theft, pipeline vandalism, and divestments as key culprits behind this shortfall.
Despite this concerning aspect, the overall message from the CBN is one of cautious optimism. Nigerians can look forward to a 2024 with potentially lower costs of living and steadier exchange rates, offering welcome relief in the face of recent economic turbulence.
Additionally, the CBN urged banks to improve their services and offerings to attract more Nigerians into the formal financial system.** This call comes in light of the 2023 EFInA Access to Finance (A2F) Survey results, which revealed that 26% of Nigerians remain financially excluded, concentrated heavily in the north.
Financial inclusion, the CBN emphasized, is crucial for inclusive economic growth and monetary policy effectiveness. To bridge the gap, the bank encouraged banks and agencies to tailor their products and services to reach currently excluded populations, setting specific targets and dedicating resources to this pursuit.
The journey towards a fully inclusive financial system may be long, but the CBN’s commitment and the gradual progress evident in the A2F survey offer a hopeful sign for the future of Nigeria’s financial landscape.
