Tinubu’s 15% Inflation Target Ambitious, Unattainable – Rewane, Adedipe
Economic experts and analysts on Wednesday described President Bola Ahmed Tinubu’s promise to reduce inflation to 15 per cent in 2025 as an ambitious and aspirational goal but not a realistic one.
This was the view of the Chief Executive Officer, Financial Derivatives, Bismark Rewane and the founder and Chief Consultant, B. Adedipe Associates (BAA), Dr Biodun Adedipe.
They spoke at the FirstBank webinar on ‘Nigeria 2025: Pathway to Economic Rebound and Recovery’.
The experts, however, projected positive trends in terms of economic stability in the year 2025 but insisted that inflation would still remain above 20 per cent.
This is just as the Managing Director/Chief Executive Officer, of FirstBank, Mr Olusegun Adebiosu, said the complete removal of fuel subsidy in 2024 increased his optimism about the 2025 economic performance with increased revenue to government.
President Tinubu had in his New Year message, last week, spoken on his administration’s plan to reduce the country’s inflation rate from the current 34.6% to 15% this year.
Inflation rose to 34.6 per cent as of November 2024, a significant increase in the last one year as compared to the December 2023 figure when headline inflation rate was 28.92%.
The inflation rate has been driven largely by an increase in fuel price and the depreciation of the naira which adds to the cost of manufacturing.
Adedipe, who gave the keynote address, said inflation is not going in the direction of 15 per cent projected by the president, noting that “We project 33% by the end of 2024 and 27 per cent this year.”
He said food inflation has been the number one driver of headline inflation, adding that for Nigeria to achieve “inclusive, sustained and sustainable” economic growth, it must address the issue of food deficit, energy deficit and manufacturing deficit.
Looking at the 2024 economic growth, he projected that by the end of 2024, “we see an economy that may likely end at about 4.12 per cent growth rate for 2024.”
“Now if it grew at that rate, by any standard globally, that growth rate is significant. People often think 3% growth rate is small but by any standard globally, growing at 3.46, 3.47, 3.49, 4.12% is quite strong but the challenge for us is that growth has come mostly from services.
“For those who think the growth numbers are not that reliable, they are also reminded that it appears because that growth came mostly from services. That took us back to where I started from, which is deficit in food and manufacturing which of course are two major sectors that can drive inclusive and sustainable growth,” he added.
Adedipe further projected the moderation of exchange rate in 2025, stabilising at N1,575 to one dollar, saying, “For us in Nigeria, the major drivers of the FX rate are the structure of the economy where we consume what we don’t produce and we produce what we don’t consume.”
He hailed the expanded capacity for local refining of crude oil, stating that it would ease the pressure on the FX market.
He also stated that addressing the problem of inflation requires more than raising the interest rate, adding that there must be food availability and food affordability.
“For that to happen, Nigeria must address causes of food deficit, like security. 60% of farm output goes into post-harvest losses due to storage inadequacy and processing inadequacy,” he said.
“All well and good, 2025 is a year of recovery for Nigeria’s economy. 2024 has proven to be a year of resilience,” he added.
Rewane on his part said the year 2025 would not be as hard as 2024, adding that while inflation is expected to come down from the yet-to-be-released December figure, the 15% target in 2025 by the president is not realistic.
He stated that the food import waiver which would have reduced inflation has been “bureaucratically bungled.”
“We are projecting that the inflation coming out at the end of next week would be at 35.4%. The spike is not as high as it was and food inflation is actually flattening, that is December inflation. January traditionally will drop.
“We have to be careful of false expectations. The president’s goal of 15% is an aspiration and people are free to have aspirations, but we deal in the world of reality. We are going to be seeing more like 27 or 25% towards the end of the year with some luck.”
The MD/CEO of FirstBank stated that 2025 is “pregnant with potentials for discerning businesses and individuals” with improved government revenue made possible through complete fuel subsidy removal.
He stated that going by the ongoing reforms of the government and the monetary reforms, especially the stability in the foreign exchange market, the year 2025 would be a positive year for the country’s economy.
He stated that FirstBank is committed to working with its customers “through this difficult era.”
