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Agusto & Co projects 2.6 to 3 percent GDP growth in 2024



Augusto & Co projects 2.6 to 3 percent GDP growth in 2024

Agusto & Co , Pan-African Credit Rating Agency has projected Nigeria’s economy to grow by 2.6 percent, worst case scenario, or 3 percent, best case scenario, in 2024.

This is as it identified three major economic variables that are likely to have telling impact on the economy in 2024 to include interest rate, inflation rate and the rate of foreign exchange.

Mr. Ayokunle Olubunmi, the Head, Financial Institutions Ratings at Agency Agusto & Co stated this at the bi-monthly forum of the Finance Correspondents Association of Nigeria (FICAN) heald in Lagos on Thursday,

He noted that the level of interest rate, inflation rate and the rate of foreign exchange will drive Nigeria’s GDP growth to 2.6 percent in worst case scenario, and 3 percent in best case scenario, but will not exceed 5 percent.

Olubunmi said that interest rate is a very good tool that the the monetary policy authorities use to monitor and fight inflation and even exchange rates, noting that everything in Nigeria today is pointing towards higher interest rates because one of the reasons why there is a lot of pressure on the naira is that there is a low interest rate environment.

He stressed that high rates moderate economic activities, which, according to him, is why there are high expectations that the Monetary Policy Committee of the Central Bank of Nigeria (CBN) will increase interest rate by about 500 basis point at the forthcoming MPC meeting this month.

He, however, remarked that the apex bank will be cautious about raising interest rates because the Nigerian government is borrowing massively and if interest rate is high, the cost of servicing the debts will also be high.

This, according to him, might discourage the MPC from raising the rates too high, adding that the average interest rate for the year might hover around 18 percent (best case scenario) or 16 percent,  while it is expected that interest rate will not decrease below 15 percent.

It should be noted that the 364-day treasury bills stop rates increased to 19 percent per annum on Wednesday, February 7, 2024.

The 182-day and 91-day bills also rose to 18 percent and 12.2 percent and some analysts say the rates will likely continue to rise in the coming weeks as the CBN intensifies efforts to combat exchange rate depreciation.

On inflation, he Olubunmi said, “Insecurity is one of the major drivers for inflation. Unfortunately, insurgency, kidnapping and general insecurity are rife in the middle belt where they produce a lot of things that we consume. “

Nigeria’s inflation has been on the rise for 11 consecutive months, reaching a new high in December 2023, according to the National Bureau of Statistics (NBS).

The annual inflation rate rose to 28.92 per cent in December from 28.20 per cent in November.

According to him, aside from insecurity, the increase in exchange rate is also going to affect inflation. And because Nigeria is an import dependent country, rising cost of importation will have effect on the inflationary situation which will invariably affect growth.

Olubunmi further noted that a lot of factors affect inflation and the projection of the CBN governor Olayemi Cardoso can only be realized if all the countervailing variables have been addressed.

To this effect, he stated that the best case scenario for inflation targeting is 21 percent, best case or average inflation rate for 2024 he said would be 26.1 percent while the worst case scenario would be 28.2 percent.


He said Nigeria’s foreign exchange earnings this year will depend majorly on oil revenue and that the price of crude oil which averaged $80pbl in 2023 will likely settle around $70 to $75pbl in 2024 due to slow down of China’s economy and United States election.

He noted that Nigeria’s crude oil production can not exceed 1.5 barrels per day in 2024 because increasing production takes time to accomplish.

Agusto & Co is a leading provider of industry research and knowledge in Nigeria & Sub-Saharan Africa.

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