Naira Expected to Strengthen to N1,300/$ in 2025 Amid Optimistic Reforms
The Nigerian Economic Summit Group (NESG) has projected a notable appreciation of the naira to an average exchange rate of N1,300 per US dollar in 2025, contingent upon the country adhering to a robust reform agenda. This optimistic forecast is tied to anticipated increases in foreign exchange earnings, driven by higher crude oil sales, improved output in the refining sub-sector, and greater agricultural productivity.
In its 2025 economic outlook released on Thursday, the NESG highlighted the critical need for stability-oriented reforms to sustain this trajectory. The group projected that Nigeria’s real GDP could grow by 5.5% in 2025, provided structural issues in key sectors are addressed. This growth, it said, would represent a significant improvement compared to 2024, where only four of 20 critical sectors achieved growth rates exceeding 5%.
Conditions for Economic Improvement
NESG underscored the importance of cross-sectoral reforms to enhance broad-based growth and tackle Nigeria’s long-standing structural challenges. These reforms are also expected to drive inflation down to 24.7% in 2025, compared to the elevated levels of 2024. The decline assumes effective fiscal and monetary coordination, increased forex supply, and reduced speculative activities.
The group pointed to improved security in farming regions and better access to farmlands as vital for boosting agricultural output. This, in turn, would alleviate food scarcity and stabilize prices, addressing one of the main drivers of inflation.
Olaniyi Yusuf, Chairman of NESG, attributed the steep depreciation of the naira in 2024—closing at N1,536.5 per US dollar, a 41.4% decline—to ongoing adjustments in the foreign exchange market. He emphasized that policies promoting price discovery and bridging the gap between the official and parallel market rates are critical for long-term stability.
CBN Governor Reaffirms Commitment to Reforms
In his remarks, Central Bank of Nigeria (CBN) Governor Olayemi Cardoso expressed optimism about the competitiveness of the naira, attributing recent gains to forex reforms. “We are already witnessing positive outcomes, especially in foreign remittances through international money transfer operators (IMTOs), which have been remarkable,” Cardoso said during a virtual address.
Cardoso acknowledged the challenges of 2024, including dwindling foreign reserves, declining oil prices, and reduced production, but emphasized the importance of innovative solutions. Reforms, he noted, have begun to yield results, bolstering confidence in Nigeria’s economic prospects.
Key reforms introduced by the CBN in 2024 included:
Clearing $7 billion in verified forex backlogs.
Discontinuing quasi-fiscal interventions.
Unifying multiple exchange rate windows to enhance transparency.
Introducing an electronic forex matching system to streamline transactions and improve efficiency.
Cardoso also highlighted the approval of 14 new IMTOs and the launch of a non-resident Bank Verification Number (BVN) initiative, aimed at integrating Nigerians abroad into the financial system.
Economic Milestones in 2024
Despite the year’s challenges, Nigeria recorded significant achievements. Foreign capital inflows exceeded $6 billion, while external reserves rose to over $40 billion. These milestones, Cardoso explained, reflect growing investor confidence.
“While the depreciation of the naira posed challenges for an import-dependent economy, it also presented opportunities,” Cardoso noted. “The adjusted forex rate has made our currency more competitive, attracting foreign investments and boosting export potential.”
A Roadmap for Sustained Reforms
Looking ahead to 2025, the CBN plans to deepen reforms focused on financial inclusion, diaspora engagement, and compliance measures. Cardoso stressed the importance of transparency and accountability in the forex market, warning that non-compliance would attract consequences.
NESG echoed this sentiment, stating that Nigeria needs to commit to at least a decade of sustained reform to achieve enduring economic stability. The group highlighted the need for a consolidated approach involving monetary, fiscal, and regulatory measures to transform the economy.
While challenges such as rising debt, inflationary pressures, and foreign reserve management remain, the optimism surrounding 2025 is palpable. NESG’s projection of a strengthened naira and robust GDP growth offers hope for an economy striving to find its footing amid global and domestic uncertainties.
r an economy striving to find its footing amid global and domestic uncertainties.
Reference
Naira Expected to Strengthen to N1,300/$ in 2025 Amid Optimistic Reforms
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