Nigerian economy to hit $400bn by 2026 – Rewane

The Managing Director and Chief Executive Officer of Financial Derivatives Company Limited, Bismarck Rewane, has projected that the Nigerian economy would grow by 3.5 per cent by 2026, pushing the country’s gross domestic product to approximately $400bn.

He disclosed this at the Access Bank Customer Forum held in Lagos on Thursday.

“The Nigerian economy will grow at 3.5 per cent (approximately $400bn). Nigeria is on track to becoming the second-largest economy in sub-Saharan Africa,” Rewane said.

He added that the country’s foreign exchange auction system would become more efficient, with unencumbered foreign reserves reaching $20bn.

“There will be an efficient forex auction system, and unencumbered foreign reserves will hit $20bn,” he noted.

On inflation, Rewane projected that the rate would decline to 22 per cent by 2026, expecting the monetary policy rate to be reduced to 20 per cent annually, leading to a decline in the level of bad loans across the banking sector.

“We will see inflation drop to 22 per cent, and the MPR is likely to come down to 20 per cent, which will reduce bad loans,” he explained.

Despite those positive trends, Rewane warned that the naira would likely trade at N1,550 to the dollar in the parallel market, citing intervention funds, diaspora remittances, and exchange rate policies as key factors in the exchange rate alignment.

Rewane credited those improvements to intervention funds, diaspora remittances, and policies focused on exchange rate adjustments.

“These gains are driven by intervention funds, remittances, and adjustments to exchange rate policies,” he noted.

He added that total factor productivity would increase to 2.6 per cent by 2026, up from 2.4 per cent in 2024, while the country’s trade balance was expected to rise to $9.3bn from $8.42bn.

“Total factor productivity will increase to 2.6 per cent, and our trade balance will grow to $9.3bn,” he stated.

Rewane predicted that the price of petrol would stabilise at N900 per litre, with a steady supply guaranteed by production from the Dangote refinery and modular refineries.

“We expect petrol to stabilise at N900 per litre due to increased production from Dangote refinery and modular refineries,” he said.

He also projected that the stock market capitalisation would rise to N58tn, with the listing of big-cap companies like Dangote Refinery and Nigerian National Petroleum Corporation.

In terms of commodity prices, Rewane predicted that a basket of tomatoes would cost N20,000, a bag of rice would sell for N75,000, and a bag of beans would reach N110,000 by 2026.

The FDC boss emphasised that inflation remained a major challenge for Nigerian companies, affecting their operating margins.

Also, the Minister of Finance and Coordinating Minister of the Economy, stated that Nigeria’s foreign reserves have seen a net inflow of about $2.35bn into the Central Bank’s coffers.

“There has been a net inflow in the first seven months of this year of about $2.35bn every month,” Edun stated, adding that the increase had played a key role in stabilising the naira in the forex market.

“We also have foreign exchange liquidity. The gross reserves are up,” the minister continued.

He attributed the growth to the government’s efforts, saying, “On the fiscal side as well, government revenues are growing.”

Edun highlighted that the country’s tax-to-GDP ratio stood at 10 per cent, with the revenue to GDP at 15 per cent, calling for more infrastructure and social safety net spending to address those low figures.

The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, expressed concerns over the current economic projections, contrasting them with those of Bismarck Rewane.

“Our projection is slow, and I do not pray that Bismarck’s projection comes to pass,” Oyedele said.

He highlighted the issues of divestment, poor education, and rising unemployment, noting that the Nigerian currency had lost 10 times more value than the Kenyan shilling.

He stressed the need for data-driven decision-making.

“We need to use data and evidence so that it can work for us,” he averred.

Oyedele stated that the Federal Government hoped to reduce company income tax in the coming years, adding that the government was looking to reduce the tax burden on businesses while prioritising collection efficiency to increase government revenues.