2024 has begun with a bang. The Senate finally approved the securitisation of the Nigerian Ways and Means loan balance. This move helps reduce the interest paid on the debt.
Looking forward, Nigeria is set to continue experiencing the effects of the “economic liberalisation” policies instituted by the new government.
The major highlights going into the year would be inflation, energy prices, and startup funding.
Interest rate, inflation and monetary policy orthodoxy
Nigeria has faced persistently high inflation over the past eight years, and 2024 will continue that trend. However, the new CBN administration has promised a return to orthodox monetary policy measures in its fight against inflation. This means no more farmer loans and intervention funds, as seen during the Meffy years. They will now focus on tools like open market operations, money supply and interest rate management to drive their inflation agenda.
The hope is that this will promote monetary policy transparency and improve the responsiveness of the economy to CBN monetary policy (i.e. interest rates).
Energy Prices and Refinery Capacity
Since the removal of fuel subsidies, Nigerians have not been the same. The immediate price increase has led to increases in the cost of transportation and energy. Going into the new year, the revival of the Port Harcourt refinery and the coming online of Dangote’s refinery are expected to help regularise petrol prices and drive local production.
The refineries will reduce the dollars demanded to import petrochemicals and boost FX supply. It will also boost domestic economic activities.
Venture Debt and Startup Resilience
Africa experienced a significant slowdown in VC funding in 2023, with total funding falling 39 percent from 2022. This trend will continue into the new year as traditional investment vehicles (stocks and bonds) in the United States continue to provide attractive returns, reducing the money available to venture capital and other alternative investments.
One notable spotlight shaping funding for startups in 2024 is venture debt. Venture debt is debt provided by venture capitalists instead of banks. Venture debt as a source of funding grew 47 percent in 2023. This means there are still funding opportunities for startups, but the focus will remain on profitable entities that can repay debt, not just fast-growing companies.
Election Election Elections
2024 will be a huge year for democracy worldwide, with over 50 nations going to the polls this year, most notably Ghana, South Africa, Senegal, Togo and the USA. There are some off-cycle elections in Nigeria, too, with Edo and Ondo going to the polls to elect new governors.
The African elections, especially Ghana, Togo and Senegal, are critical to protecting democracy in West Africa and the continent, with the recent coups in Chad, Burkina Faso and, more recently, Niger. Credible elections that inspire citizen confidence and promote government legitimacy are central to promoting peace.
2024 is shaping up to be an important year. It is the first full year of Tinubu’s administration as we continue to see and feel the impact of his reforms. It is also the final year of Biden’s first term. A lot is bound to happen, and we at Analyst Digest will be here to bring you what truly matters.
I can't wait!