REVIEW: Key events that shaped Nigeria’s economy in 2023

Ripples Nigeria in this round up examines some of the critical events that took place in the Nigerian economy and business eco-system in the year 2023.

Cash Scarcity

A spill-over from 2022, Nigerians will not in a hurry forget the harrowing experience of the cash scarcity brought about by the naira redesign policy of the then Godwin Emefiele-led Central Bank of Nigeria (CBN).

Irrespective of whatever the initial scheme intended to achieve, the cash crunch that arose from it led to one of the toughest periods for Nigerians seeking to do business. POS merchants—who would usually provide cash for a small fee—marked up their prices, with some collecting as much as 10 – 15 percent of withdrawn funds as a fee. ATM queues and crowds at Deposit Money Banks (DMBs) also abounded.

The cash crunch affected commerce on every level. Nigerian traders would, over subsequent weeks, report losses due to failed transfers and inability to purchase wares due to cash scarcity. This continued until sometime in March 2023, after the Supreme Court had earlier that month ruled that old banknotes remain legal tender until the end of the year. On November 29, the Court ordered that the old N200, N500, N1000 notes should continue to co-exist with the new notes till further notice.

Naira Float

The harmonization of the Foreign Exchange window will also go down in history as one of the water-shed moments in the Nigerian economy in 2023.

On June 14, 2023, a few weeks after President Bola Ahmed Tinubu assumed office, Nigeria’s apex bank began making a series of decisions to tighten the grip on the country’s forex. The first of these decisions was to stop defending the Naira at the foreign exchange market, meaning that the currency’s value would no longer be fixed but would instead “float” and be determined according to market forces.

The Central Bank of Nigeria (CBN), the country’s apex bank, then directed Deposit Money Banks to sell forex freely at market-determined rates. The I&E foreign exchange (FX) window became the country’s official exchange rate window.

The silent promise of the Naira float was, amongst other things, a more realistic currency value for the Naira, and a unified rate across markets. Notably, a wide disparity between official rates and black-market prices was seen as a result of the fixed CBN rate, and experts predicted that the disparity would shrink to reasonable levels with lessened pressure on the country’s forex and improved availability from the official market.

Months later, this remains unachieved. The price of foreign exchange on the official market still varies—at times greatly—from that of parallel markets.

This decision also exacerbated the already skyrocketing inflation rate.

Subsidy Removal

Fuel subsidy removal will go down as one of the biggest issues in the Nigerian economy in 2023. On the podium while making his inaugural speech as President of Nigeria, President Bola Ahmed Tinubu had thundered “Fuel Subsidy is gone”.

This announcement triggered a nearly 200 per cent surge in the price of fuel across the country. The price change led to a revision of the pricing structure across goods and services, with transportation costs rising as much as 200 – 300 per cent higher.

To soften the blow on everyday Nigerians, some state governments announced a reduction in physical work days, restructured wage payments, and even provided free transportation for some time.

Dangote Refinery Commissioning

A few days to the end of then President Muhammadu Buhari’s tenure, the $20bn Dangote Refinery and Petrochemical Plant was commissioned amidst huge fanfare in Lagos.

Owned by Africa’s richest man, Aliko Dangote, the new refinery is seen as the answer to persistent fuel shortages in Africa’s biggest oil producer.

READ ALSO:Seven key political events that shaped Nigeria in 2023 into the future

Record Inflation

The Consumer Price Index (CPI), which measures the rate of change in prices of goods and services, rose to 27.33 per cent in October 2023 — up from 26.72 per cent in the previous month. To date, that represents the worst year-on-year increase. This was disclosed by the National Bureau of Statistics (NBS) in its CPI report for September, released on November 15. The data revealed that there was an increase in headline inflation from January to October and an increase in the Month-on-Month percentage points from February to August before a drop from August to October.

This translated into very real terms for Nigerians. The NBS CPI report further reveals that the food inflation rate is at 31.52 per cent caused by the increase in some food items such as bread, yam, potatoes etc. “In October 2023, Food inflation on a Year-on-Year basis was highest in Kogi (41.74%), Kwara (38.48%) and Lagos (37.37%),” the report pointed out.

Exit Of Several Multinationals Due To Harsh Economic Conditions

In 2023 alone, no fewer than seven indigenous and multinationals packed up in Nigeria over unfavourable economic situation throwing thousands into the unemployment market. Coys like P&G, GSK, Sanofi-Aventis Nigeria Ltd, Equinor, Jumia Foods, Bolt Food, NABISCO Biscuit amongst others exited the country.

The exit of pharmaceutical companies like Glaxo SmithKline also led to a further skyrocketing of the cost of essential medicines used by everyday Nigerians. In some cases, prices rose by as much as 700 per cent, currently, Nigeria is rated by the World Health Organisation, WHO, as one of the eight countries in the world with exceptionally exorbitant drug prices.

Organised Labour Strike

Organized labour comprising the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) embarked on strikes to press home their demands grounding economic activities in the country.

Nigeria’s two biggest workers’ unions staged a protest in October against a cost of living crisis after the FG scrapped petrol subsidy.

And in November, economic activities were shut down after Labour went on a strike to protest the attack on NLC President Joe Ajaero in Imo State.

Emefielegate And The Jim Obazee Expose

Former CBN Governor Godwin Emefiele was ousted from the bank through a suspension. President Bola Ahmed Tinubu then ordered an investigation into the office of the former Governor and his reforms in the financial sector of the economy.

The report by Jim Obaze, a Special Investigator appointed by President Bola Tinubu to scrutinise the activities of Emefiele, has continued to send shock waves through the country.

Oil Theft

The issue of illegal crude oil refinery and oil theft was a recurring issue in the economic space in the country in 2023. As of October 2023, the Nigerian Senate revealed that the country has lost N2.3 trillion to the menace of crude oil theft.

Delisting Of Union Bank From NGX And N132bn Loss

After 52 years on the Stock Exchange, Union Bank of Nigeria, one of Nigeria’s oldest banks, announced it was exiting the Nigerian Xchange (NGX). The delisting of the shares of Union Bank of Nigeria from the Official Daily List of the Nigerian Exchange Limited chalked off a whopping N132bn from the market capitalisation.

PH Refinery Comes To Life

After $1.5 billion cost and three years of repairs, the 210,000 barrels per day (bpd) Port Harcourt Refinery has been reported to be operational and will boost the county’s local refining capacity to dissuade importation and conserve FOREX deployed to importation of refined crude.

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