In a recent report released by Renaissance Capital Africa, Nigeria is forecasted to experience a favorable economic landscape in 2024, buoyed by several key factors including a strengthening currency and an upsurge in oil prices. The report sheds light on the promising prospects for the Nigerian economy amidst a backdrop of evolving market dynamics.
One of the pivotal aspects highlighted in the report is the notable strengthening of the Nigerian currency, the naira. At a level of N1,303/$ as of March 28, the naira remains significantly undervalued compared to its long-term average by approximately 30 percent. Renaissance Capital Africa suggests that this undervaluation presents an opportunity for the Nigerian economy to leverage its currency dynamics for future growth.
Furthermore, the report underscores the positive trajectory of Nigeria’s capital market, with gains of 20 percent observed since February. The strengthening of the naira, which appreciated from 1,600/$ to around 1,300/$, attributes to the surge in the equity market. Analysts at Renaissance Capital Africa anticipate further gains in the equity market, emphasizing that Nigerian equities are currently among the cheapest in two decades when measured in US dollar terms.
Moreover, the report highlights the sensible monetary policy adopted by Nigerian authorities, which has instilled confidence among portfolio investors. Analysts expect this confidence to boost investment activities, projecting a decline in inflation rates in the near future.
Despite the positive outlook, the report also identifies potential risks to Nigeria’s economic trajectory. According to the report, challenges like a deteriorating current account, unexpected inflation, and security issues could hinder the nation’s progress. Despite challenges, Renaissance Capital Africa is optimistic about Nigeria’s resilience, especially with its stronger currency and rising oil prices.
Renaissance Capital Africa forecasts a promising 2024 for Nigeria, emphasizing economic growth amidst favorable currency dynamics and rising oil prices. With ongoing implementation of prudent economic policies and risk management, investors and stakeholders remain optimistic about Nigeria’s future prospects.
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