After consolidating its exit from 2020’s pandemic-induced recession, Nigeria’s economy is projected to continue a mild recovery in 2022. However, the recovery will be fragile and subject to risks. Oil revenues remain critical to both exports and public finances, and an expected pickup in output remains subject to OPEC quotas and external demand.

Additionally, government demand is forecast to weaken through 2022, after a surge in 2020 increased the strain on public sector accounts. FX challenges will persist, but a series of modest reforms are expected to allow some naira weakening and a light moderation of FX scarcity. Companies should position themselves to compete for the modest gains of a tepid recovery by incentivizing local partners to identify key growth opportunities, particularly in the resilient private-sector industries of tech and agriculture, and the fast-rebounding trade and manufacturing sectors. Moreover, firms should ensure local partners can demonstrate the value of their offerings to customers.

Our analysts are constantly evaluating changing market trends to ensure you have the most updated and relevant information for your strategic decisions. Keep reading for our analysis of the key trends in Nigeria that you need to pay attention to.

Nigeria’s earlier-than-expected recovery will continue relatively mildly through 2022

The economy consolidated its recovery, expanding through the first half of 2021, after exiting the pandemic-led recession earlier than expected in 2020. Modest growth is forecast through 2022, when the economy is expected to reach pre-pandemic levels. Alongside high inflation, this will create a competitive environment where businesses must review their product offerings, clearly define their value to customers, and expand their client base.

FX scarcity will remain but ease slightly amid currency reforms and FX inflows

After devaluing the NAFEX in February, the CBN has maintained the exchange rate despite a widening black-market premium on dollars. Alongside a US$ 3.4 billion share of the IMF’s US$ 650 billion disbursement in August 2021, a US$ 4 billion eurobond issuance in late September 2021 has helped shore up FX reserves. Still, another devaluation remains likely in Q4. While FX scarcity will ease slightly, firms will still face challenges accessing dollars.

Vaccination rates will gather pace in Nigeria but remain low by global standards

The slow vaccine rollout means Nigeria will not vaccinate 80% of its population before 2023, which will sustain retightening risks over the coming year. However, authorities maintain a virus tolerance approach, which will keep restrictions from being commercially disruptive and widespread. Businesses should continue to monitor local COVID developments, and include sudden, subnational lockdowns in their scenario planning.

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