Bismarck Rewane, Managing Director and CEO of Financial Derivatives Company Limited, has projected that the Nigerian economy will grow by 3.5% by 2026, boosting the country’s gross domestic product (GDP) to approximately $400bn. Rewane shared his forecast at the Access Bank Customer Forum in Lagos on Thursday, painting an optimistic picture of Nigeria’s economic trajectory in the coming years.
“The Nigerian economy will grow at 3.5%, reaching around $400bn. Nigeria is on track to become the second-largest economy in sub-Saharan Africa,” Rewane remarked, emphasising the potential for significant expansion.
Rewane predicted that Nigeria’s foreign exchange auction system would become more efficient, with unencumbered foreign reserves increasing to $20bn. “There will be an efficient forex auction system, and unencumbered foreign reserves will hit $20bn,” he noted.
Turning to inflation, he projected a decline to 22% by 2026, alongside a reduction in the monetary policy rate (MPR) to 20%. This, he suggested, would ease the strain on the banking sector by reducing the number of bad loans. “We will see inflation drop to 22%, and the MPR is likely to come down to 20%, which will reduce bad loans,” Rewane explained.
However, despite these positive trends, he issued a cautionary note about the naira, forecasting that it could trade at N1,550 to the dollar in the parallel market by 2026. He cited intervention funds, diaspora remittances, and exchange rate adjustments as key influences on the currency’s valuation.
“These gains are driven by intervention funds, remittances, and adjustments to exchange rate policies,” Rewane added, underscoring the broader economic strategies underpinning his projections.
Looking ahead, Rewane expected total factor productivity to rise from 2.4% in 2024 to 2.6% by 2026, while the country’s trade balance was set to increase to $9.3bn, up from the current $8.42bn.
He also forecasted stability in fuel prices, with petrol expected to stabilise at N900 per litre, thanks to production from the Dangote refinery and modular refineries. “We expect petrol to stabilise at N900 per litre due to increased production from Dangote refinery and modular refineries,” Rewane stated.
Stock market capitalisation was projected to rise to N58tn, driven by the listing of major players such as Dangote Refinery and the Nigerian National Petroleum Corporation (NNPC).
On commodity prices, Rewane offered sobering predictions: a basket of tomatoes would cost N20,000, a bag of rice N75,000, and a bag of beans N110,000 by 2026, highlighting inflation’s continued pressure on food prices.
Despite these positive projections, concerns remain. Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, voiced caution, stating, “Our projection is slow, and I do not pray that Bismarck’s projection comes to pass.” He pointed to issues like divestment, poor education, and unemployment as key obstacles to sustained growth.
The event also heard from Minister of Finance and Coordinating Minister of the Economy, Wale Edun, who revealed that Nigeria’s foreign reserves had seen a monthly net inflow of $2.35bn in the first seven months of 2024. “There has been a net inflow in the first seven months of this year of about $2.35bn every month,” Edun noted, crediting this improvement to the government’s fiscal efforts.
Edun further stressed the importance of infrastructure investment and expanding social safety nets, particularly as the country’s tax-to-GDP ratio stood at a modest 10%, with revenues to GDP at 15%.
Despite Rewane’s optimistic forecast, the path forward remains fraught with challenges, as inflation, currency instability, and the need for deeper reforms weigh on the outlook.
