The naira may come under pressure this year given the widening gap between the official and market rate, snapping its rare stability seen last year, according to Bismarck Rewane, managing director of Financial Derivatives Company.
“The gap between the official rate and market rate has begun to widen at N71, suggesting renewed pressure in the FX market,” Rewane said at the economic outlook organised by the Nigerian-British Chamber of Commerce (NBCC). “The naira is expected to weaken to roughly N1,640/$ by the end of 2026.”
The currency had its best year in more than a decade last year, gaining 7.5 percent, compared to a 41 percent loss in value in 2024. The rally was supported by various policies rolled out by the central bank, including the introduction of an Electronic Foreign Exchange Matching System that has helped return transparency to a once opaque market.
The naira depreciated this week by 0.3 percent week-on-week to N1,423.14/$ as demand pressures outweighed supply. But analysts polled by BusinessDay expect the naira to remain broadly stable in the near term, supported by a favourable external position characterised by a sustained current account surplus and strong foreign exchange reserves.
Public debt to hit 40.6% of GDP
Rewane warns that Nigeria’s debt-to-GDP ratio could rise to 40.6 percent this year, stressing that the “slope of this increase will be gentle rather than explosive, so debt will be rising, but not on a clearly unsustainable trajectory in GDP‑ratio terms.”
“Nigeria’s public debt ratio will enter 2026 already elevated and will then move onto a slow upward path,” the renowned economist said.
“Public debt will stand at about 40.6 percent of GDP in 2026 and will edge up each year to roughly 43.5 percent by 2030.”
Read also: Naira still undervalued by 11% – Rewane
Misunderstanding around tax reform biggest risk to Tinubu’s administration
The lack of clarity in Nigeria’s new tax laws has led to widespread misunderstanding and public outcry, that could pose much bigger problems for President Bola Tinubu’s administration, according to Rewane.
“The biggest political risk this administration faces today is the misunderstanding of these tax laws because people believe that they are being violated,” Rewane said.
The renowned economist said the tax reforms have created ‘confusion’ in the minds of the people, describing the laws as ‘too complicated’, urging the government to ‘defer when in difficulty’.
Nigeria kicked off its four harmonised new tax laws in January, as part of the government’s broader reform agenda to simplify and eliminate leakages in tax collection, broaden its tax base while improving its tax revenue to gross domestic product from about 10 percent to 18 percent in the next two years.
Contrary to the fears that Nigerians will be taxed more, authorities said the vast majority of workers will see their taxes dropped as some of the key provisions of the reforms aim to lessen the burden on taxpayers. For instance, workers earning N800,000 and below annually are tax exempt, creating a breather for low-income earners.
Key provisions of the new laws, specifically for entrepreneurs and small businesses, include eliminating CIT for companies with an annual gross turnover of N50 million or less, an exemption from the new 4 percent Development Levy, and exemption from mandatory registration, charging, and remittance of Value Added Tax (VAT).
Abimbola Olashore, president of NBCC, said Africa’s most populous economy stands at a “pivotal juncture” this year as the economy faces both challenges and remarkable opportunities, adding that Nigeria is positioned as one of the best places to invest.
“Given the way the global world is going, the best place to be nowadays must be Nigeria. This is where the action is.”