Market News

By Sylvester Enoghase

…Says Nigeria On Track To Meet 2mbpd Before End Of 2024

…Explains Why Banks Can’t Lend At Single Digit Interest Rate

WASHINGTON, D.C. – The Minister of Finance and Coordinat­ing Minister of the Economy, Wale Edun, has stated that Nigeria must increase its oil production to ease forex inflow to stabilise the naira and boost economic growth.

He also stated that it is difficult for Nigerian deposit money banks to lend to borrowers at single digit interest rate because of challenging economic uncer­tainties in the country.

Recall that Nigeria’s foreign reserves have seen a consistent rise, recording an average net inflow of $2.35 billion per month over the past seven months of 2024.

 Edun, who made the declara­tions while speaking during the intergovernmental Group-24 on Tuesday at the ongoing IMF/ World Bank meetings in Wash­ington D.C., USA, noted that the recent significant increase in forex inflow has been a key fac­tor in stabilising the naira in the foreign exchange market.

Edun, who reiterated the gov­ernment’s focus on increasing crude oil production as a key rev­enue source, said: “Nigeria is on track to meet its target of produc­ing two million barrels of crude oil per day (bpd) before the end of 2024, providing a significant boost to fiscal revenues”.

Edun, who emphasised the positive impact of forex inflows into the country’s foreign re­serves, noting that the broader economy has improved, and the nation’s gross reserves have increased, highlighted that the growing government revenues are currently being driven by fundamental economic reforms.

He noted that while Nigeria’s tax-to-GDP ratio remains low at around 10%, efforts are being made by the Federal Government to increase revenue through im­proved infrastructure spending and social safety net programmes.

“We are seeing relative curren­cy stability, alongside the gradual elimination of multiple exchange rates. Foreign exchange liquidity has improved, and our gross re­serves have increased.

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“The net inflow into the central bank’s foreign reserves stands at about $2.35 billion each month for the first seven months of 2024.”

On fiscal growth and econom­ic reforms, he said: “Government revenue is not just about compet­ing with the private sector; it’s about ensuring that essential infrastructure and social pro­grammes are adequately fund­ed”.

He insisted that Nigeria’s revenue-to-GDP ratio currently stands at approximately 15%, but ongoing reforms aim to improve these figures.

On why Nigerian banks can’t lend at single digit, he noted that deposit money banks cannot lend at single digit interest rate due to the attractiveness of treasury bills.

He noted that banks have some challenges at lending at a single digit interest rate “not because they don’t want to do so, but because there are compelling needs to meet up with the recapi­talisation challenges”.

On export diversification, the Finance Minister said the Feder­al Government is committed to diversifying the country’s export base, particularly by expanding the service sector.

“We have a young, skilled pop­ulation, and we need to capitalise on this by exporting services,” he said.

On outlook for Nigeria’s eco­nomic future, Edun emphasised that Nigeria, no doubt appears to be on a path toward sustained economic stability.

“The rise in foreign reserves, coupled with reforms in the oil sector and efforts to diversify ex­ports, suggests that the country is positioning itself for long-term growth”.

According to the Finance Minister, the continued Nigeria’s economic reforms, increased oil production, and diversification of exports will support the country’s fiscal and economic resilience.

“As Nigeria moves forward, the combination of fiscal pru­dence, revenue growth, and for­eign reserve management will play a crucial role in bolstering the economy and stabilising the naira, ensuring a more robust and competitive market”, he averred.