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Nigeria Economy – A New Quarter but Same Old Story

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By Lukman Otunuga, Senior Research Analyst at FXTM,

Africa’s largest economy entered the new quarter with a strong likelihood of following the same old story, namely COVID-19 headwinds, recessionary trends and widespread local and global market uncertainty.

What are the chances of a plot twist?

In a year full of twists and turns, the Central Bank of Nigeria (CBN) surprised investors with a 100 basis point interest rate cut from 12.5 percent to 11.5 percent. The monetary policy signal is a green light for more affordable lending which could stimulate economic growth and temper recessionary pressures. However, the same green light could speed up the inflationary pressures which weigh on the economy.

The currency markets may view the CBN’s rate cut as a sign that monetary policy no longer prioritises foreign investors seeking high returns on deposits.

Until now, the CBN’s hawkish monetary policy helped to maintain and grow the banking system’s foreign currency reserves, providing the Naira with a cushion against further weakness. The current weakening global and domestic economic outlook does not support a high-interest rate environment in the short term. Faced with a protracted recession or runaway inflation, the CBN appears to have chosen the lesser of two evils. The central bank’s latest statement indicates that high interest rates have not been successful in checking inflation, which the CBN blames on structural factors like rising fuel and electricity prices.

This raises the question of why an Oil-producing country faces inflation in fuel and electricity prices when fossil fuels are locally produced and ought to be more affordable. The answer is the strange economic distortion created by COVID-19. In this case, Nigeria applied to borrow $3.4 Billion from the IMF in order to bail out the economy because of the COVID-19 pandemic. The money will have to be repaid – cue a hike in electricity tariffs to increase government revenues from utilities and bolster its repayment capacity. This would be credit-positive as the last thing Nigeria needs in such extraordinary times are doubts over its creditworthiness.

Weaker global Oil prices make Nigeria’s creditworthiness even more of an important factor because the state is hard-pressed to cover its budgetary needs in the current climate of low demand for crude Oil.

Now that the CBN has put checking inflation lower down in its priorities, does this signal further rate cuts in the near future?

The case for further pandemic-driven rate cuts appears to be strong. The COVID-19 outbreak shows no signs of abating. On the contrary, at the time of writing, the number of new cases in Nigeria is on the rise after lockdowns eased. Further monetary stimulus to the economy appears unavoidable.

Of course, it all depends on what happens with inflation. If the inflation rate keeps rising in sectors like fuel, electricity and food it may drag on consumer spending, outstripping the economic benefits of lower interest rates. Medical costs have also risen because of COVID-19, according to the August inflation statistics.

The pandemic comes at a time when Nigeria is exposed to external and domestic risks. Locally, the drive to diversify the economy stayed stuck in first gear. Border clashes between herders and farmers led to border closures, further dampening economic activity. Externally, Oil prices remain in a slump, the US Dollar is appreciating and global sentiment struggles with the COVID-19 circumstances.

Further elevating fears over a technical recession in Nigeria, the World Bank forecasts an economic contraction of 3.2 percent for the full-year 2020, a five percent drop from its previous projection.

Summing up, Nigeria’s outlook remains influenced by the same old themes. If Oil prices stay depressed, foreign currency reserves and government revenues will likely decline. Low Oil prices also impact the CBN’s capacity to defend the Naira. A falling Naira could accelerate inflation and further weigh on economic growth. Will the final quarter of 2020 see a continuation of these themes, or will the economy offer a positive surprise?

The banking sector remains a bright spot in the cloudy outlook. Easier borrowing terms might boost the banking sector’s income while encouraging economic activity. Another bright spot is that growth in China has returned, promising to hike demand in the Oil markets and further supporting Oil prices.

After the year we’ve had so far, one thing’s sure: surprises are only to be expected.


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WHO Says Ebola Risk Now at Highest Level

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World Health Organisation (WHO), yesterday, said that Ebola outbreak is “very high” but added that the global risk remains “low”.

WHO Says Ebola Risk Now at Highest Level

So far, 82 cases and seven deaths have been confirmed in the Democratic Republic of Congo (DRC), but WHO, said, the real scale of the outbreak is likely far larger, with nearly 750 suspected cases and 177 suspected deaths reported

Tedros Adhanom Ghebreyesus, chief, WHO, said the situation was “deeply worrisome”.

He said there were now nearly 750 suspected cases in the DR Congo and 177 suspected deaths, as health workers scramble to track down contacts of everyone thought to be infected with the virus.

“The Ebola outbreak in the Democratic Republic of the Congo is spreading rapidly,” he told a press conference.

“So far, 82 cases have been confirmed in DRC, with seven confirmed deaths.

“But we know in people who travelled from DRC and one death.

Measures to address the epidemic in DRC are much larger.

There are now almost 750 suspected cases and 177 suspected deaths.”

He said the situation in Uganda was “stable”, with two cases confirmed in Uganda, including “intense contact tracing” and calling off the Martyrs’ Day commemorations, “appear to have been effective in preventing the further spread of the virus”, Tedros added.

While a US national who was working in the DRC has tested positive and been transferred to Germany for care, Tedros said another US national deemed to be a high-risk contact had been transferred to the Czech Republic.

Besides national staff already in the DRC, he said 22 international staff had been deployed to the field, “including some of our most experienced people”.

Tedros said that violence and insecurity were impeding the response to the outbreak in the DRC.

“We are now revising our risk assessment to very high at the national level, high at the regional level, and low at the global level.

“So far, 82 cases have been confirmed in DRC, with seven confirmed deaths.

“But we know the epidemic in DRC is much larger. There are now almost 750 suspected cases and 177 suspected deaths.

“The situation in Uganda is stable, with two cases confirmed in people who travelled from DRC, with one death.”

Tedros said that violence and insecurity were impeding the response to the outbreak.

 

 


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Army Acquires New Drones to Boost Surveillance, Precision Strikes — COAS

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Nigerian Army has acquired additional drones and other advanced force multipliers to strengthen surveillance operations, improve target acquisition, and enhance precision strike and casualty evacuation capabilities.

Army Acquires New Drones to Boost Surveillance, Precision Strikes — COAS

Lt.-Gen. Waidi Shaibu, chief of Army Staff (COAS), said that the new drones will boost surveillance, precision strikes.

Shaibu, who disclosed this in a statement shared via the Nigerian Army’s official X handle, noted that the conference provided a platform for critical assessment of ongoing operations and the development of forward-looking strategies to address Nigeria’s evolving security challenges.

He said deliberations at the Nigerian Army Conference Centre, Asokoro, focused on sharpening operational responses, strengthening training frameworks and adapting to the demands of modern security warfare.

According to him, the resolutions reached are aimed at building a more agile, combat-ready, technologically driven and mission-oriented force capable of responding effectively to emerging threats.

A key highlight of the reforms is the Army’s increasing investment in modern warfare technology, including the acquisition of additional tactical drones and the reconfiguration of Army aviation assets for combat roles.

Shaibu explained that these developments have significantly enhanced intelligence gathering, precision targeting, operational mobility and casualty evacuation across various theatres of operation.

He also highlighted ongoing improvements in recruitment, advanced training, professional military education and leadership development, stressing that discipline, competence and meritocracy remain central to building a stronger institution.

Reaffirming his “soldier-first” philosophy, the COAS said troop welfare remains a top priority, stressing that “troop welfare remains non-negotiable; well-motivated soldiers operating in conducive environments are critical to mission success.”

He urged senior officers to ensure that resolutions from the conference are fully implemented in field operations, stressing that the true value of the gathering lies in measurable impact on the battlefield.

Describing the ongoing reforms, Shaibu said: “We are not just reforming the Army; we are building a lethal, technology-driven fighting force where only discipline, merit, and mission success matter.”

The Army Chief expressed appreciation to President Bola Ahmed Tinubu for his support, as well as the Minister of Defence, Minister of State for Defence, Chief of Defence Staff, service chiefs and intelligence agencies for their continued collaboration.

The conference ended with the presentation of commendation plaques to senior officers recognized for outstanding contributions to operational effectiveness.

 


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UK Special Envoy for Freedom of Religion or Belief Concludes Visit to Nigeria

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The UK Special Envoy for Freedom of Religion or Belief (FoRB), David Smith MP, concluded a three-day visit to Abuja this week, marking Nigeria as the first focus country he has visited under the UK’s FoRB strategy.

During the visit, David Smith MP held a wide range of meetings with senior Nigerian government officials, religious leaders, civil society organisations, and local communities – reflecting the UK’s commitment to sustained, practical engagement and partnership on freedom of religion or belief in Nigeria.

Meetings included discussions with the National Security Adviser, Mallam Nuhu Ribadu, the Honourable Minister of Information and National Orientation, Mohammed Idris, and the Governor of Plateau State, Caleb Mutfwang.

The Special Envoy also met with the co-chairs of the Nigeria Inter-Religious Council, Archbishop Daniel Okoh, President of the Christian Association of Nigeria, and HRH the Sultan of Sokoto, Muhammadu Sa’ad Abubakar III, President-General of the National Supreme Council for Islamic Affairs.

At the end of the visit, the UK Special Envoy for Freedom of Religion or Belief, David Smith MP, said: “Over the past few days, I have been honoured to meet a wide range of people — from senior government figures and civil society to faith leaders and local communities. I came to listen, learn, and see both how freedom of religion or belief is experienced in everyday life, and how it connects to – and is a core part of addressing – Nigeria’s wider challenges around security and cohesion.

“Some of the most powerful moments of this visit were at community level. Visiting Father Emmanuel Unamba’s parish and meeting Christian and Muslim neighbours living side by side was a real reminder that peaceful coexistence is something people build every day through leadership, dialogue, and shared responsibility.

“What I take away from this visit is the importance of further progress being Nigerian led, rooted in strong institutions and inclusive dialogue, with FoRB at its heart. The UK will continue to support practical efforts in ensuring greater peace, security and prosperity for all.”

The visit also included a roundtable with partners of the UK’s Strengthening Peace and Resilience in Nigeria (SPRiNG) programme, a £38 million UK government-funded conflict and resilience programme operating primarily in Kaduna, Katsina, Benue and Plateau states.

During the visit, Special Envoy David Smith MP held meetings with the Institute for Peace and Conflict Resolution, the Nigerian National Human Rights Commission, and civil society organisations working at the intersection of insecurity and religious freedom. He also visited the National Mosque and the National Ecumenical Centre in Abuja.

Speaking to the various stakeholders, Mr Smith called for greater tolerance across religion or belief in Nigeria and hoped that the cohesion he saw on a community level in the capital, could be achieved nation-wide with the same resolve. He hoped to continue these dialogues with interlocutors in the UK.

The visit builds on the momentum of President Tinubu’s State Visit to the United Kingdom in March 2026, which reinforced the UK-Nigeria Strategic Partnership and included interfaith events attended by President Tinubu and His Majesty The King, underlining both countries’ shared commitment to fostering constructive interfaith dialogue.


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