As Nigeria grapples with spiraling inflation rates, renowned economic analyst Bismarck Rewane has cast serious doubts on President Bola Tinubu’s ambitious target of reducing the country’s inflation rate to 15% by 2025. Rewane, who is also the Managing Director of Financial Derivatives Company Limited, describes the target as little more than a hopeful “aspiration” rather than a feasible economic goal.
In a candid discussion on Channels Television’s Sunrise Daily, Rewane pointed out that the current economic realities make such an optimistic target unlikely. With Nigeria’s inflation rate currently hovering around 34.6%, the analyst predicts a more realistic target of 27% to 25% in the coming year.
A Sky-High Inflation: Tinubu’s Aspirations Versus Economic Realities
The call for a significant reduction in inflation stems from President Tinubu’s 2025 budget, which was presented to the National Assembly on December 18, 2024. In his budget speech, Tinubu projected that the inflation rate could drop from the current 34.6% to 15% in the next year—a figure that would represent a monumental improvement. However, Rewane is not convinced.
“The target of 15% inflation for 2025 is aspirational at best. If you look at the numbers, what we are realistically dealing with is an inflation rate that might reduce to somewhere between 27% and 25%,” Rewane explained.
The former Central Bank of Nigeria (CBN) consultant noted that while it is not wrong to have high aspirations for the economy, economic realities should drive policy expectations, and the current state of Nigeria’s inflationary pressures paints a different picture.
Rewane’s stance is based on a thorough examination of Nigeria’s recent economic trajectory, as well as global and domestic factors that influence inflation. These include fluctuations in global commodity prices, structural challenges within Nigeria’s domestic economy, and the effects of recent fiscal and monetary policies, particularly those under the Tinubu administration.
Inflationary Pressures Mount
When Tinubu assumed office in May 2023, Nigeria’s inflation rate was 22.41%. But since then, the situation has worsened significantly. By November 2024, the country’s inflation rate surged to a staggering 34.6%, sparking concern among analysts, economists, and Nigerians alike.
A major factor behind this surge has been the government’s decision to remove the petrol subsidy, which led to a dramatic increase in fuel prices. The unification of Nigeria’s foreign exchange (forex) rates—an effort to stabilize the currency—also contributed to inflationary pressure, as it resulted in an immediate depreciation of the naira.
“Both the removal of the petrol subsidy and the unification of forex rates have had significant inflationary consequences,” Rewane noted. “While these measures are necessary for long-term fiscal health, their immediate effect has been to push inflation even higher.”
Rewane added that the combination of these policy actions and global inflationary trends had placed extraordinary pressure on Nigeria’s economy. As the price of goods and services continues to rise, Nigerians are struggling with increased costs of living, which is having a knock-on effect on purchasing power and overall economic stability.
Inflation in Context: What Are the Drivers?
To better understand the root causes of Nigeria’s current inflation woes, it is important to contextualize the factors that are contributing to the ongoing crisis. Aside from domestic issues like forex challenges and the fuel subsidy removal, global pressures such as food and energy price hikes, as well as supply chain disruptions, have exacerbated inflation worldwide.
Locally, the scarcity of foreign exchange has led to a rise in the cost of imported goods, while the inflationary effects of higher fuel prices continue to ripple across sectors. In sectors such as transportation, agriculture, and manufacturing, the rise in costs has been steep, contributing to the broad-based inflation that the country is currently experiencing.
In 2024, the naira depreciated significantly against the dollar, with the parallel market exchange rate sometimes exceeding ₦1,000 to $1. This has compounded the cost of imported goods and services, making it harder for businesses to source raw materials at competitive prices.
According to Rewane, these ongoing challenges make it very difficult for the inflation rate to return to single digits in the near future, let alone a target as ambitious as 15%.
Government’s Economic Strategies and Their Impact
In response to Nigeria’s high inflation rates, President Tinubu’s administration has adopted a number of policy measures aimed at addressing both the structural and cyclical factors contributing to inflation. These include fiscal reforms, efforts to improve domestic production, and strategies to attract foreign direct investment (FDI).
However, the economic analyst points out that while these strategies may be effective in the long run, they are unlikely to yield quick results in terms of inflation reduction. “Policies like the unification of the forex rates and removal of the fuel subsidy are necessary reforms, but their immediate effects have been inflationary,” said Rewane.
In addition, efforts to boost domestic production and reduce the country’s reliance on imports face significant challenges, including infrastructural bottlenecks, security issues, and a lack of investor confidence in the Nigerian economy.
“It’s going to take time to see the fruits of these policies. Reducing inflation to 15% in such a short time frame is highly unlikely,” Rewane added.
What the Public Can Expect
Despite the challenging outlook, the Nigerian government continues to push for economic recovery through various reforms and the hope that inflation will moderate in the coming year. However, as Rewane points out, the reality may be less rosy.
“I would rather bet on a scenario where inflation hovers between 25% and 27% than on an unrealistic 15% target,” Rewane stated firmly.
For the average Nigerian citizen, this forecast signals a tough road ahead. With the cost of living continuing to rise, many will likely experience a prolonged period of economic hardship. Analysts are advising the government to focus on more practical, achievable targets and implement policies that address the structural issues underpinning inflation.
Conclusion: Can Nigeria Achieve 15% Inflation?
While it is important for any government to set ambitious targets, it is equally crucial that these targets are grounded in economic realities. For now, President Tinubu’s inflation target of 15% for 2025 remains a far-off aspiration in the face of current challenges. Economic analysts like Bismarck Rewane argue that a more realistic expectation would be an inflation rate of around 25% to 27%, at least in the short term.
In light of the current trends, Nigerians are bracing for another year of economic turbulence, with hopes for a gradual improvement rather than an immediate turnaround.
