THE Managing Director and Chief Executive Officer of Financial Derivatives Company Limited, Bismarck Rewane, has forecasted a 3.5 percent growth for the Nigerian economy by 2026, elevating the country’s gross domestic product to roughly $400 billion.
He made this announcement yesterday during the Access Bank Customer Forum in Lagos.
“The Nigerian economy is projected to grow at 3.5 percent, reaching approximately $400 billion. Nigeria is on course to become the second-largest economy in sub-Saharan Africa,” stated Rewane.
He also mentioned that the country’s foreign exchange auction system is expected to operate more efficiently, with unencumbered foreign reserves projected to reach $20 billion.
“There will be an effective forex auction system, and unencumbered foreign reserves will amount to $20 billion,” he noted.
Regarding inflation, Rewane anticipates a decrease to 22 percent by 2026, predicting that the monetary policy rate would drop to 20 percent annually, which would in turn reduce the incidence of bad loans within the banking sector.
“We expect inflation to fall to 22 percent, and the monetary policy rate is likely to decrease to 20 percent, which will lead to a reduction in bad loans,” he explained.
Despite these positive developments, Rewane cautioned that the naira is likely to trade at N1,550 to the dollar in the parallel market, attributing this to factors such as intervention funds, diaspora remittances, and exchange rate policies.
He credited these improvements to intervention funds, remittances, and adjustments in exchange rate policies.
“These advancements are driven by intervention funds, remittances, and policy adjustments regarding exchange rates,” he noted.
Rewane projected that total factor productivity would rise to 2.6 percent by 2026, up from 2.4 percent in 2024, and that the country’s trade balance is expected to increase to $9.3 billion from $8.42 billion.
“Total factor productivity will improve to 2.6 percent, and our trade balance will grow to $9.3 billion,” he stated.
He predicted that petrol prices would stabilize at N900 per litre, supported by consistent production from the Dangote refinery and modular refineries.
“We anticipate that petrol will stabilise at N900 per litre due to increased output from the Dangote refinery and modular refineries,” he said.
Rewane also estimated that stock market capitalization could increase to N58 trillion with the listing of major companies like Dangote Refinery and the Nigerian National Petroleum Corporation.
In terms of commodity prices, he forecast that a basket of tomatoes will be priced at N20,000, a bag of rice will cost N75,000, and a bag of beans will reach N110,000 by 2026.
The FDC CEO underscored that inflation continues to pose a significant challenge for Nigerian businesses, directly impacting their operating margins.
Meanwhile, the Minister of Finance and Coordinating Minister of the Economy, has stated that Nigeria’s foreign reserves have experienced a net inflow of roughly $2.35 billion into the Central Bank’s accounts.
“There has been a net inflow of about $2.35 billion each month over the first seven months of this year,” Edun noted, adding that this increase has been crucial in stabilizing the naira in the forex market.
“We also have enhanced foreign exchange liquidity, and gross reserves are on the rise,” the minister continued.
He attributed this progress to the government’s initiatives, mentioning, “On the fiscal side, government revenues are increasing.”
Edun pointed out that the tax-to-GDP ratio for the country stands at 10 percent, while revenue to GDP is at 15 percent, advocating for increased spending on infrastructure and social safety nets to address these low figures.
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, expressed concerns over the current economic forecasts, indicating that he hopes Rewane’s projections do not materialize.
“Our forecast is conservative, and I do not wish for Bismarck’s projections to come true,” Oyedele remarked, highlighting issues such as divestment, inadequate education, and rising unemployment, while noting that the Nigerian currency has depreciated significantly more than the Kenyan shilling.
He stressed the necessity for data-driven decision-making.
“We must rely on data and evidence to guide our actions,” he asserted.
Oyedele stated that the Federal Government aims to reduce company income tax in the coming years, emphasizing that the government seeks to alleviate the tax burden on businesses while prioritizing efficiency in tax collection to enhance government revenues.