Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms Taiwo Oyedele, has expressed confidence that Nigeria could significantly reduce its inflation rate in 2025, aiming for a target of 15% down from the high average of 34.80% in 2024.
Oyedele made the optimistic forecast during the PwC & BusinessDay Executive Roundtable on Nigeria’s 2025 Budget and Economic Outlook in Lagos on Thursday. The event, themed ‘Insights and Strategies for Navigating Nigeria’s Economic, Fiscal and Policy Landscape in 2025,’ brought together key stakeholders to discuss strategies for tackling Nigeria’s economic challenges.
Despite concerns about inflation, Oyedele disagreed with naysayers who believe such a reduction is unattainable. “If 2025 is as challenging as 2024, inflation will nominally drop to 25% due to the base effect. However, I believe the ongoing reforms will limit key inflationary factors, leading to even lower rates,” he stated.
He attributed Nigeria’s 2024 inflation surge to three major factors: exchange rate volatility, the removal of fuel subsidies, and high interest rates. “Foreign exchange fluctuations were the biggest driver, with rates jumping from N900 to around N1,600, even peaking at N1,900. The fuel subsidy removal and high non-performing loans also played significant roles,” Oyedele explained.
However, he remained optimistic about 2025, noting that these inflationary drivers would have a reduced impact going forward. “These three factors will have a limited effect in 2025, if any,” he said. He added that the government’s commitment to fiscal discipline and avoiding money printing would help ease inflationary pressures.
Turning to Nigeria’s oil sector, Oyedele acknowledged gradual improvements in oil production levels, now at 1.8 million barrels per day—close to the 2 million barrels target. He emphasized that while oil production levels were important, the bigger concern remained oil prices. He expressed hope that ongoing investments in the sector would help stabilize revenue generation.
Addressing the widespread hardship Nigerians have endured due to economic reforms, Oyedele empathized with citizens. “It is honestly very painful what Nigerians are going through. The removal of subsidies and foreign exchange reforms have been difficult, but they were necessary,” he said. He emphasized that for the first time, market forces are determining prices, which has resulted in increased transparency.
In his final comments, Oyedele pointed to positive developments in Nigeria’s foreign exchange market, revealing that the government is saving about $20 million daily by alleviating pressure on the FX market. With tax reforms set to bring an additional $4 billion annually into the market, he expressed hope that the Naira would see a recovery. “I don’t believe N1,500 is the fair value of the Naira. It is undervalued, and as liquidity improves, we should see a recovery,” he stated.
