Nigeria’s current account balance has reported a surplus of $1.432 billion in 2024, according to the International Monetary Fund (IMF) in its ‘World Economic Outlook Database.’
This figure marks an improvement from the $1.21 billion surplus recorded in 2023. The IMF attributes this positive shift to the country’s increasing gross national savings and investment.
In 2024, Nigeria’s gross national savings rose to 26.32% of Gross Domestic Product (GDP), up from 24.61% in 2023. Total investment also saw an increase, reaching 25.75% of GDP in 2024, compared to 24.28% in the previous year. These improvements highlight Nigeria’s growing economic activities and potential for sustained growth.
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A country’s current account balance encompasses the total of its trade balance, net income, direct transfers, and asset income. It provides a holistic view of its international economic transactions, indicating the balance between exports and imports, income earned and paid, and asset changes. A positive balance signifies a net lending position, while a negative balance indicates net borrowing.
Nigeria’s Economic Outlook
The IMF’s data paints a positive picture of Nigeria’s economic growth and stability, with increasing investment and savings driving the economy forward. This trend is anticipated to continue, fostering further economic development in the region.
However, Nigeria faces significant challenges following the removal of subsidies by President Bola Tinubu in May 2023. This policy change has led to a sharp rise in electricity tariffs, food prices, transportation costs, house rents, and overall inflation, which currently stands at 33.69%, according to the National Bureau of Statistics (NBS).
Labor Unrest and Wage Demands
The economic hardship has sparked unrest, with the Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC) declaring a nationwide strike on Monday. The unions demand a living wage of N494,000 per month, a substantial increase from the current N30,000 paid by the Federal Government.
Although the government has shown a willingness to negotiate, offering a wage higher than the initially proposed N60,000, tensions remain high. The labor unions said they’re only relaxing the strike for seven days, opening a window for the government to come up with a living wage plan.
“The current economic situation has made it impossible for Nigerian workers to survive on the current minimum wage. We demand a living wage that reflects the cost of living in Nigeria today,” the unions said in a statement.
Threatened by Oil Production and Revenue Shortfalls
However, the momentum of Nigeria’s economic gains is threatened by low oil output, which is likely to curtail the current account surplus. The federal government’s target revenue for 2024 is projected to decline by N3.89 trillion due to crude oil production not meeting the 2024 budget targets.
The draft Accelerated Stabilization and Advancement Plan (ASAP) reveals that failing to meet the target crude oil production of 1.78 million barrels per day (bpd) could result in significant revenue shortfalls. The government aims to generate N19.68 trillion in revenue from various sources in 2024, but sub-optimal crude oil production could reduce this figure to around N15.78 trillion, creating a substantial gap.
The document highlights an average 27% shortfall in crude oil production from the budgeted target, posing a significant risk to the estimated revenue for the year. It further notes that revenue for January and February 2024 was approximately 60% of the budget, driven largely by lower crude oil production volumes, which ran at 74.5% of the budget projection. If these trends persist, the annual revenue is unlikely to exceed N15.8 trillion.
The ASAP document states, “Our ability to achieve the 2024 Budgeted revenue step-up of 77.4% from 2023 actual is at risk should oil production remain at 27.0% below budget. 50% of the annualized YTD variance suggests a lower-than-budgeted revenue of ~N15.7 trillion at the current run rate.”