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2025 economic policy – Eating your cake and having some left
“Policymakers face a difficult balancing act in striving for macroeconomic stability while also working to address development needs and ensure reforms are socially and politically acceptable.” – IMF 2024
2025 started with a frenzy of policy initiatives, but without an approved budget by the NASS. These policy moves could be game-changers for consumers and businesses alike—though not without their headwinds. Among these are the long-overdue rebasing of the GDP and CPI, aiming to provide a more accurate reflection of the Nigerian economy.
Rebasing of GDP is not plastic surgery
The GDP rebasing, last carried out in 2014, will change the base year from 2010 to 2019 and incorporate more activities such as the digital economy, modular refineries, fringe activities, and social programs like the National Health Insurance Scheme. The cosmetic effect of rebasing is a magnified GDP, more likely to be above $500 billion.
For the reconstitution of the CPI basket, the NBS is proposing to adopt 2024 as the base year and expand the items in the basket from 740 items to 960 items. New subindexes, such as service, energy, and goods indexes, will be introduced, and the 2022/2023 Nigeria Living Standards Survey (NLSS) will be adopted to determine the weights of items in the CPI basket.
Diaspora options increase by two
The CBN also launched two new accounts for Non-Resident Nigerians (NRNs): the Non-Resident Nigerian Ordinary Account (NRNOA) and the Non-Resident Nigerian Investment Account (NRNIA), effective from January 1, 2025. The NRNOA allows NRNs to remit foreign earnings and manage funds in multiple currencies while the NRNIA enables investments in Nigerian assets, including the Diaspora Bond. These initiatives aim to boost remittances and economic participation.
Tariff increases could be a spoiler
However, these positive initiatives could be undermined by hikes in telecom tariffs, VAT increases, and toll fees, which could erode household budgets and reduce disposable income. While the overall negative impact is expected to be minimal compared to the financial crunch of 2023 and 2024, the balancing act between stimulating growth and protecting consumer wallets will be a major policy challenge this year.
Textile revival – The next frontier
The Nigerian textile industry, which was once a powerhouse, has been in the doldrums since the early 1990s. As of 2023, its contribution to GDP was a meagre 3% and it accounted for only 0.05% of exports, with only 20 textile mills surviving, down from 175 in the mid-1980s.
Meanwhile, Bangladesh and Vietnam have turned their textile sectors into global success stories with export-oriented policies and competitive pricing.
In this latest edition of Whispers, the FDC Think Tank takes a deep dive into recent economic developments and their impact on your business and corporate strategy.
Enjoy your read!
