The President's New Year speech outlined some key initiatives and reforms to drive economic growth and stability. One clear theme the speech demonstrates is the government’s desire for continuation of projects from the past administration. Sectors such as power and petroleum benefit from renewed focus but also continuation of past initiatives.
The president inferred that the Siemens energy project in Nigeria, officially known as the Presidential Power Initiative (PPI) which is a multi-phase ambitious undertaking aimed at revamping and expanding the country's power infrastructure will be accelerated. In terms of economic growth, without stable electricity, Nigeria wouldn’t be able to become a manufacturing country. The development of the country and it’s economic stability is inversely tied to manufacturing and the development of economic clusters that the ability to manufacture brings. The initial target was to boost output to 7,000 megawatts (MW) by 2021, eventually reaching 25,000 MW by 2025. The COVID-19 pandemic and global supply chain disruptions have caused delays in project completion. The initial 2025 target for Phase 1 is now pushed back to 2030. If the president indeed accelerates the project to seeing phase 1 completed in the next 2 years, the effects on employment and productivity is likely to be felt from this year. The president also alluded to Ongoing power installation projects to strengthen the grid which collapsed a few times last year. The presentation of the 2024 budget shows the Ministry of Power has a total budget of N344.10 billion of which 98% is capital expenditures. The phase one cost of the Siemens project was earmarked at $2.3 billion.Â
President Tinubu also promised the functionality of local refineries to kickstart at some point this year. Restarting local refining of petroleum products with facilities like the Port Harcourt Refinery and the Dangote Refinery holds significant economic benefits for Nigeria. By reducing the country's dependency on imported refined petroleum products, it positively impacts the trade balance and foreign exchange reserves. This move not only leads to cost savings in terms of transportation and handling of refined products but also contributes to lower fuel prices, enhancing economic competitiveness. Additionally, the revival of local refineries generates employment opportunities across various stages of the refining process, thus decreasing unemployment rates and fostering increased household incomes. The development of a reliable and efficient local refining sector stimulates industrial growth by providing a consistent and affordable source of energy for manufacturing and transportation industries. Furthermore, it contributes to revenue generation for the government through taxes, royalties, and dividends, which can be utilized for public infrastructure development, education, healthcare, and other social programs. The ministry of petroleum resources budgeted a total of N44.17 billion with 86% of it being recurrent expenditure.Â
President Tinubu also pointed to the agriculture sector to revive the Nigerian economy. He made the promise to cultivate 500,000 hectares of land and follow through with the 120,000 hectares of dry season farming in Jigawa launched in November 2023. Cultivating 500,000 hectares of farmland for staple crops like maize, rice, wheat, and continuing dry season farming under the National Wheat Development Programme in Nigeria can yield several economic benefits. Firstly, it contributes to enhanced food security by increasing the domestic production of essential crops, reducing dependency on imports, and stabilising prices in the local market. This increased production not only meets the growing demand for staple foods but also creates a buffer against external market fluctuations.
Moreover, the cultivation of a significant land area generates employment opportunities, especially in rural areas, where agriculture is a primary source of livelihood. This, in turn, boosts rural incomes, reduces unemployment rates, and contributes to poverty alleviation. Additionally, sustained agricultural activities stimulate economic growth by creating a multiplier effect, as increased incomes lead to higher spending on goods and services, fostering economic development at both local and national levels.
This contributes to overall economic stability by mitigating the impact of seasonal variations and promoting a consistent supply of crops throughout the year. Ultimately, these efforts in agriculture support the government's broader economic agenda by fostering self-sufficiency, reducing import bills, and promoting sustainable economic development. The renamed Ministry of Agriculture and Food security budgeted N363 billion of which N252.69 billion is capital spending. The ministry has 385 new capital projects and plans to create a N100 billion agriculture development fund.Â
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The 2024 "Renewed Hope" budget marks a sizable increase in Naira terms: N27 trillion compared to N24.82 trillion in 2023. However, despite this apparent growth, adjusting for the projected weaker Naira reveals a 36% decrease in dollar value. The government expects Naira revenue to climb, but this won't offset the anticipated slide in dollar revenue due to exchange rate fluctuations.
President Tinubu pointed out eight priority areas in the 2024 budget including job creation and investment attraction.However, juxtaposing the reality of GSK, Jumia and other MNC exiting Nigeria, it’ll be a welcome development for the President's emphasis on creating an attractive investment climate signals a commitment to attracting domestic and foreign investments. Policies aimed at reducing bureaucratic hurdles, ensuring policy consistency, and promoting ease of doing business are expected to enhance Nigeria's competitiveness on the global stage.Â
Significant investments in infrastructure projects are anticipated, with a focus on sectors critical to economic development, such as transportation, energy, and technology. The improvement in infrastructure is likely to boost overall productivity, reduce costs for businesses, and enhance the quality of life for citizens. The current reality of the average Nigerian citizen is that of economic hardship and turmoil, and the removal of fuel subsidies and foreign exchange chokehold to address fiscal mismanagement hasn’t been well received by the citizens. It is left to see what the new fiscal and tax regimes proposed in 2024 would mean to the average citizens and if the new national living wage would cushion the effect of the initial hardship these policies bring.Â
Although Nigeria's economic future seems promising, with projected GDP growth and refinery-driven trade surpluses, external uncertainties like global volatility, fluctuating commodity prices, and geopolitical tensions could still threaten progress. The government's ability to navigate these external shocks and maintain a robust economic framework will be the key to securing sustained growth. The anticipated launch of the Dangote refinery in 2024 is expected to significantly reduce imports and boost the trade surplus, acting as a catalyst for economic expansion. This could push Nigeria's real GDP growth modestly above the 2.4% projected for 2023, though external factors could influence the final outcome. Soaring prices, limited access to credit, and government budget restrictions are likely to continue pinching wallets and deter businesses from significant investments in 2024.