The early signs are that the Nigerian economy, plunged into doldrum by the twin policies of exchange rates and petrol price deregulations in 2023 by the Bola Ahmed Tinubu government, is beginning to pick up. They are just early signs, no significant changes for the effects to trickle down to majority of the people. But it is something that we need to recognize.
I will take the value of the Naira, our national currency, for starters. The exchange rate has not only stabilized thus helping businesses to plan, the Naira has actually been appreciating albeit slightly. Currently it hovers around N1,500 to the dollar with very marginal gap between the official and the parallel market rates. If the trend continues, the ripple effects will be noticeable especially in the prices of imported goods. Many factors are responsible for the northward trend we are witnessing: the price and increased volume of crude oil, remittances from diaspora Nigerians and the reduction in the volume of imported refined petroleum products (thanks to Dangote Refinery) into the country. These have helped build up the country’s foreign exchange reserves thus enabling the CBN to defend the Naira (the central bank does not like that phrase…defending the Naira). We have seen the reserves go up from $38 billion to $41 billion. Given our population and high octane appetite for anything foreign, this is not much; but nonetheless a win. We are still a very small economy. On Wednesday 10 September 2025 one man, LarryEllison, the Chief Technology Officer of Oracle, made $101 billion. In just One Day: it had never happened before in human history!
Inflation rate has been slowing down for five consecutive months now. Today, the National Bureau of Statistics released the August inflation index and it is cheery news as inflation came down to 20.12%, below predictions. This is still very high but given where we are coming from, it is a very positive sign for the economy. The rate was 21.88% in July and so much higher in the earlier months of the year.
This is good news for majority of Nigerians who have been financially squeezed by high cost of living. Manufacturers and other businesses will be happy to see their goods and services receive better patronage due to lowering prices.
Those who lean heavily on borrowed funds to finance their businesses will be particularly happy that with the concomitant reduction in inflation rates, interest rates will begin to head south. Earlier this year and following the skyrocketing inflation rates, the CBN did the unthinkable, raising monetary policy rate to 27.5%. The rate never went this high in the lifetime of the bank. At its 301st meeting in July, the bank voted to sustain the MPR rate even though inflation rate had started to ease. It needed to see more of such reductions.
With the current rate of inflation, the apex bank will almost certainly reduce its MPR when it meets later this month. It will also have a consequential effect on the rate banks lend to borrowers which currently hovers between 31 per cent and 36 per cent. Not many companies can survive let alone break even with such interest rates.
Which explains why many highly rated companies abandoned banks and headed to Commercial Papers to raise capital for their businesses. This year, that debt market has been particularly bullish. A week hardly passes without seeing one or two companies seeking to raise credit via Commercial Papers. Many of them do so at rates about 10% lower than the rates at which they would otherwise have borrowed from banks. This year alone, Skymark Partners, Valency Agro, Citi Bank, Coleman Technical, Neveah Limited, CIG Motors, to name just a few, have gone up to investing publics, rather than banks, to raise capital.
Earlier this month, Dangote Sugar sought to raise N50 billion in commercial papers. It gave a window of three days for would-be lenders to do so instead of the usual five to seven days. It was oversubscribed. The money was raised at between 23 per cent and 25 percent interest rates which is far better than the rate at which banks lend to customers. By end of July, the value of new listings of commercial papers had risen to N1.58 trillion, more than doubled compared to the same period last year.
Going into October, and with the expected decline in MPR, lending rates should reduce thus further reducing inflation rates and stimulating consumption and general economic recovery.
The capital market has also not been left out in this bullish trend. Year to date, the market has returned 37.63 per cent to investors. This is already 17 per cent well above inflation rate. And it is an average rate performance because many companies there are that have performed between 80 per cent and 300 per cent this year alone. Apart from the early months of the year and in August (where a near pullback was observed), the market has seen a lot of positives. July was the peak month for investors so far; and September is already onto a good start. At least 18 quoted companies have reached the $1 billion market capitalisation. This year, more quoted companies have joined the privileged few as companies with one trillion naira capitalisation. It is expected that the market capitalisation will hit the N100 trillion mark by year end.
That would be phenomenal and a major boost for the government that wants to see the size of the Nigerian economy grow to $1 trillion by 2030; a tall order for an economy that is just under half that capacity. But not impossible.
The recapitalisation program for banks (and lately insurance companies) in the country is a major boost. Given that many banks’ rates of return on investment have been very impressive over the years, investors have brought in more money than expected for the banks to shore up their capital base. Six months to the recapitalisation deadline, six of the 13 quoted banks have already surpassed the target; 14 out of 24 banks in the country have already braced the tape. The rest are racing to do so within the allowable time. Compared to what obtained during the last recapitalization exercise in 2004 under Professor Charles Soludo as the CBN governor, not many mergers are being experienced this time around.
Of the top ten African startups that have raised big capital this year, two are Nigerian: Koolboks ($11 million) and Chowdeck ($9 million). This may not be much given the size of our population but it is a good sign that foreign capital is still flowing into the economy despite the many challenges.
Another proof that the economy is heading north, if one was needed, is the impressive first half 2025 results from Nigeria corporates. Even some erstwhile loss making firms are negotiating positive bends.
There seems be some high level collaborations between monetary and fiscal policymakers as well as between private and public sector players. Big businesses are beginning to feel confident that the economy appears to be heading in the right direction. There is at least opportunity to plan under certain predictabilities.
Conversely, the same cannot be said of medium and small scale enterprises and workers. The macro indicators have yet to have positive effect on their businesses and disposable income which are areas the government needs to focus on if the small gains will be sustained and even improved upon.
For now, rather than go to town with a loud gong, vigilance should be the watchword.
Esiere is a former journalist!
