Nigeria In 2025: A Deepening Cycle Of Poverty

Nigeria In 2025: A Deepening Cycle Of Poverty

This is not the end. It is not even the beginning of the end. But it is perhaps the end of the beginning.” — Winston Churchill (1874-1965), British Prime Minister…READ MORE… 

Since the inception of this series four years ago, projecting the landscape for 2025 has proven to be particularly challenging. The preceding year has already presented significant difficulties, marking the first full year of President Tinubu’s administration, during which his government’s fiscal and monetary management strategies have come to light.

The year 2025 will reveal the true commitment of the government to its “RENEWED HOPE” agenda, after which it may become easier to anticipate future developments based on the groundwork established this year.

In many ways, 2024 has been shaped by eight key economic variables:

• Budget for 2024
• Exchange and interest rates
• Fuel availability and pricing
• Crude oil production and exports
• Inflation
• Food supply
• Manufacturing
• Cash flow

As the year comes to an end, these factors have posed significant challenges to economic growth and social progress. It is clear that as 2024 concludes, Nigerians will collectively find themselves worse off than at the year’s start.

What is truly alarming is that this trend of increasing impoverishment for the majority coincides with a widening gap as the wealthy are getting even richer. The top 1% of the population continues to extract resources from the remaining 99% while expecting public applause.

Banking, originally intended to foster economic growth and distribute wealth, has largely transformed into an institution that primarily enriches bankers. Reports indicate that banks are becoming financial oases in a nation parched for economic opportunity.

Furthermore, it is disheartening to see some banks effectively robbing their depositors while celebrating massive profits.

Review of the Outgoing Year and Our Predictions
“I am incredibly bad at predicting the future. I am only smart enough to observe the present and listen to my intuition about tendencies.” — Rem Koolhaas.

Unlike Koolhaas, I do not solely rely on instinct. After attending a summer course on futurism in Boston in 1970 focused on macroeconomic forecasting, I developed my own forecasting model that has proven effective over time.

Each year’s forecast is built on a year-long collection of data and relevant information regarding economic trends. We have a dedicated team that reviews multiple publications and television programs, compiling data for thorough analysis and trend prediction.

No individual or organization can claim 100% accuracy in forecasting; thus, there’s no need to apologize for our predictions that may not have materialized as anticipated. Below is a summary of our 2024 forecasts made last December.

It is hoped that public and private sector leaders will begin to take our insights seriously as many food and beverage companies face closure.

Budget Overview for 2024
Here’s a comparison of the 2023 and 2024 budgets:

The 2023 budget was later amended to a total of N24.82 trillion. It is clear that, in more stable dollar terms, the 2024 budget reflects a 23% reduction from the previous year.

Crude Oil Estimates:
Production estimates have likely not been met, with exports averaging less than 1.6 mbpd.

Exchange Rate:
Expect further devaluation.

Inflation:
Inflation rates are expected to exceed 30%.

Future Scarcity:
Anticipate widespread scarcity, including shortages of dollars, fuel, power, food, jobs, and cash in banks.

Manufacturing Sector:
The exit of companies like GSK and P&G marks the beginning of a downturn in manufacturing.

Decline in Foreign Direct Investment:
Further declines in new investments are expected as the impact of devaluation takes hold.

Debt and Deficits:
The nation is on track to end the year with a larger deficit than anticipated, necessitating more loans and resulting in a heavier debt burden.

Power Supply:
There is no provision in the 2024 budget for any significant improvements to power supply.

Fuel Supply and Pricing:
Despite hopes that the Dangote and Port Harcourt refineries would stabilize prices to under N600/litre, we predicted that fuel costs would range between N700 and N1200. As we conclude the year, prices have indeed ranged between N1100 in Lagos and N1200 in the North East.

Renewed Hope? Forget It.

The Outcome

“Even God cannot change the past.” — Agathon (447-401 BC)

By the time you read this article, 2024 will largely be behind us. It is unlikely any major variables, except the volatile exchange rate, will shift the year’s outcomes.

Reports available to the public reveal that 2024 has concluded under the following circumstances:

• National Assembly under pressure as Nigeria’s debt hits N63 trillion
• Food transportation costs are expected to surge
• Cash shortages continue compounding hardships for Nigerians
• The manufacturing sector’s muted growth threatens the $1 trillion GDP target
• Oil production peaked at 1.7 mbpd in November, but averages for most of 2024 were below 1.4 mbpd
• The national grid experienced multiple collapses, resulting in widespread blackouts

These findings summarize the state of 2024. Reflect upon the accuracy of the predictions for yourself.

What to Expect in 2025

“A riddle wrapped in a mystery inside an enigma.” — Sir Winston Churchill

While Churchill was not referring specifically to Nigeria’s economy, this description aptly captures the situation we face in 2025. The budget submitted to the National Assembly exemplifies many flaws inherent in federal and state budgets, which often lead to their failure.

Each budget, since 1999, has commenced with unrealistic expectations regarding crude oil production and exports. Budget 2025 is no different, based on the same faulty assumptions as its predecessors. Engaging in the same actions repeatedly while expecting different outcomes is futile.

The 2025 budget presents several new challenges, resulting from aggregate revenue estimates that hinge on the swift passage of tax legislation, which is currently facing considerable opposition. As a result, the anticipated revenue stream is unlikely to materialize. Additionally, the government has once again assumed a crude production estimate of 2.06 mbpd at a price of $77 per barrel. Yet the available evidence suggests these projections are likely overly optimistic, leading to deeper deficits and increased borrowing than initially planned.

The budget anticipates an exchange rate of N1400/dollar and inflation at 21%. Only those entrenched in government can genuinely believe these figures.

Despite numerous uncertainties, one thing is certain—deepening poverty appears unavoidable.

The Poverty Crisis

“Whenever a man prays, he prays for a miracle; every prayer reduces itself to this: Great God, grant that twice two be not four.” — Ivan Turgenev (1818-1883)

Nigerians are among the most prayerful people globally, often engaging in three-day fasts and prayers for divine intervention in our circumstances. However, more prayers are needed now than ever as poverty continues to worsen. The interplay of the budget, exchange rate, and anticipated inflation reveals a distressing picture of the economy moving forward.

The tables below confirm that a picture can often be worth a thousand words.

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