The Year Ahead – Caught in currents
20th December 2024

Listen to our podcast episode about this forecast.
2024 has been a record year for elections as almost 80 countries with around four billion people conducted national elections from the presidency to national legislators or local leaders. In Africa, nearly 20 countries also conducted elections.
International and regional political and economic developments also marked the year. It has seen the continuation of major armed conflicts, including the Russian invasion of Ukraine, the Myanmar civil war, the Sudanese civil war, the Islamist insurgency in the Sahel, and the Israel–Hamas war. Additionally, Syria’s nascent government collapsed under the pressure of a lightning attack by Islamist rebels. Apart from the destruction of lives and properties, the conflicts continue to upend geopolitical coalitions, deplete natural resources, and jeopardise the health of our planet.
In November, Donald Trump beat Vice President Kamala Harris, becoming only the second US president to serve non-consecutive terms after Grover Cleveland was elected in 1884 and 1892. For Europeans, it could mean the end of American support for Ukraine in its war with Russia. In the Middle East, it could mark a change from the Biden administration’s seeming ambivalence to Israel’s wars with Hamas in Gaza, Hezbollah in Lebanon, and Iran to full-throated support.
Trump 2.0 is expected to usher in policies that put America first. He will likely focus on strengthening the US dollar, increasing crude oil production, traffic cuts in China, the European Union, Mexico, and Canada, lowering interest rates, and focusing less on renewable energies.
However, a stronger dollar stokes inflation in countries with weaker currencies, especially in Africa. Import costs will continue to rise, and debts denominated in dollars may become harder to repay. For West Africa, the impact will likely manifest in reduced engagement, altered trade dynamics, and potential funding cuts for climate and development initiatives.
Earlier in the year, three West African nations governed by military juntas – Niger, Mali, and Burkina Faso – abruptly announced their withdrawal from the Economic Community of West African States, a move that threatens regional stability, economic integration and fragmentation.
The World Bank projects the African economy will rebound to 3.4 percent in 2024, rising from a low of 2.6 percent in 2023. In the first half, inflation in some leading African economies, such as South Africa and Kenya, waned. However, Nigeria and Ghana’s inflation picked up for the second month in October, reaching 33.88 percent and 22.1 percent, respectively.
Nigeria’s economy slipped from first to fourth place in Africa. Persistent current depreciation and rising energy prices have fuelled its general price level, limiting its economic growth. Since the removal of the petrol subsidy in May last year, fuel prices have increased more than fourfold. Nigerians now pay almost ₦1,200 for a litre of petrol, while electricity tariffs for Band A customers spiked from ₦72.3/kWh in May to ₦209.5/kWh in July.
Two refineries started producing petrol in the last few months of the year. Dangote refinery, one of the continent’s most ambitious infrastructure projects, began in September to reduce the country’s reliance on imported petroleum products. However, Dangote is now facing the challenge of securing additional funds to cover crude procurement and the refinery’s operational costs, which could reach approximately $2 billion every 90 days for a minimum supply of 300,000 barrels per day.
In November, Port Harcourt Refinery came upstream after decades of unfulfilled promises and several missed deadlines since initial rehabilitation efforts commenced in 1999. NNPC claims the plant runs at 70% capacity and can produce 200 trucks worth of products daily. However, many controversies surround its operations and capacity to produce petrol on a large scale. 2024 witnessed more petrol scarcity compared to previous years.
Rising fuel prices and recurring floods affected harvest gains, and food inflation continued its upward trend in October. The World Bank revealed that at least 129 million people are poor. Despite cost-cutting and inflation management measures, Nigerian households spend 97% of everything they earn on food. Recent National Bureau of Statistics data revealed that almost two of three Nigerian households skip meals. The number of households not having enough food to eat doubled to 62.4% in 2023 from 37% in 2019.
The prices of protein sources have increased, causing households to reduce their healthy diet intake. The average healthy diet cost spiked by 113% to ₦1346 in September 2024 from ₦631 in the same month in 2023. Our third quarter Jollof Index showed that the cost of preparing a pot of jollof rice for a family of five rose by 420 percent to ₦21,300 within eight years. In recent years, persistent insecurity, supply chain disruptions, climate change, elevated energy prices, floods, weaker naira, and high farm input costs have reduced the agricultural sector’s capacity to grow above three percent.
A recent Farming Early Warning System Network report suggests an impending deterioration in food security from November 2024 through May 2025, driven primarily by suboptimal harvest yields. This deterioration indicates that food production may decline unless urgent steps are taken to boost production and provide Nigerians with respite, in addition to palliatives and import waivers.
Inflation and the country’s benchmark interest rate (27.50%) continue to dampen business activities in the private sector, affecting job creation and retention. The Tinubu administration has its work cut out—arresting spiralling insecurity, tackling grinding poverty, enhancing economic opportunity, and forging a sense of national consciousness. Nigeria’s 2024 was one to reap the benefits of the Renewed Hope Initiative. However, the World Bank recently said it could take at least 10 or 15 years. All I can say is good luck to Nigeria.
Our expectations for 2025:
Economy
We forecast that 2025 crude prices will remain elevated but will not stray significantly from the current price. Thus, our projection is an oil price of $65 – $75 per barrel in 2025.
OPEC+ will not have a very coherent year. While Saudi Arabia will attempt to bring down prices by boosting supply, the Russians would want higher prices, leading to disagreements.
In recent years, Nigeria’s daily crude oil production dropped below one million barrels per day, the lowest in decades, as the sector suffered from corruption, oil bunkering, theft, militancy and production shut-ins due to infrastructure deficit. Many international oil companies (IOC) are re-strategising and selling off their onshore assets to focus on deep water production, where production is more expensive but has fewer non-technical challenges. The Tinubu administration has made production improvement a key priority and is embarking on various initiatives, including fast-tracking approval of asset sales to local companies, tackling insecurity and attracting investments. Despite OPEC’s quotas, the government’s target for oil production in 2025 is two million barrels daily. However, we envisage a shortfall, and forecast production will be around 1.8 million barrels per day.
Various factors, such as the global oil market, fiscal and monetary reforms, and the growth of the digital economy, will likely shape Nigeria’s economic performance in 2025. The Government also plans to rebase the economy in 2025, which should be a significant event. Nigeria’s GDP expanded by 3.19% y/y in Q2, 2024, compared to 2.98% in Q1, 2024. The growth was fueled mainly by a significant recovery in the oil sector, which experienced a growth of 10.15% y/y. However, regarding the three broad sectors of the economy, the services sector was again the main driver of growth, contributing 56.55% to the GDP. In contrast, the agriculture and industry sectors have continued to struggle. We maintain a cautious outlook in the remaining two quarters of 2024 on the non-oil sector and moderate growth in the oil sector to support overall growth. We forecast Nigeria’s economy to grow by about 3.5% in 2025, as the adverse impacts of prior supply constraints and fiscal/monetary reform shocks gradually ease.
We expect improved government earnings in the second half of 2025 largely due to a rise in oil sales and tax collections. This will be reflected in higher disbursement from the Federal Account Allocation Committee (FAAC).
We expect the Value Added Tax (VAT) reform bills to be passed. Due to the passage of the VAT and other tax reforms, we see further improvement in government earnings in 2025 as collections efficiency improves.
With the success of the local dollar-denominated Eurobond programme in 2024, the government will further explore Eurobond issuances in 2025 at lower yields than the 2024 issuances.
We expect an increased Chinese presence in visible areas of Nigeria’s economy – from Temu’s ramp-up of e-commerce investments to the Chinese purchase of the second major cement producer in the country, and their emerging dominance in retail financial services.
We expect the current wave of divestments by IOCs from onshore assets to continue. We expect even more divestments as the Western majors continue to sell their stakes, but the domestic players may have limited capacity to absorb such sales.
However, we expect domestic oil and gas sector players to take up more marginal fields and capped wells.
We expect a Western response to Chinese inroads in Nigeria, with the French charm offensive followed by a UK one early in 2025. Nigeria is, therefore, in a position where it can take advantage of these if it can clearly pursue its interests with the competing global powers.
We expect the CBN to increase regulatory oversight on fintechs, especially in the remittance space, to manage the exchange rate.
We forecast that inflation should remain elevated throughout 2025. However, it is expected to ease moderately to around 28% at the back of the high base effect, while similar challenges faced in 2024 persist.
Nigeria’s external reserve balance has sustained an upward trend in 2024, climbing above $40 billion. We expect the upward trend to continue through 2025 as the country’s import bill reduces due to local crude refining by Dangote Refinery and NNPC’s production in Port Harcourt and others.
However, on the back of a strengthening dollar due to Trump policies and potential interest rate hikes in the U.S. seeing a rise in global dollar demand, there is likely to be another round of currency devaluation in 2025, and this may cause a rise in inflation towards the last quarter of 2025. Despite a healthier foreign reserve and improved balance of trade, the Naira should depreciate to above $1/₦2000 in 2025.
Once inflation begins to trend downwards and sustains for two or three months, we expect the Monetary Policy Committee to begin cutting interest rates. Once the MPC begins to cut, we expect the cuts to be aggressive. We project a 300 basis points cut in at least four cycles throughout 2025.
We are cautiously positive despite high fixed-income yields; investors will see value in the stock market and take position ahead of the Q1 2025 earning season. We maintain a bullish outlook on the All Share Index for Q1 2025 and a cautiously optimistic outlook for the rest of the year.
The biggest fiscal reform that is likely to commence implementation in 2025 is the tax reform. While the political opposition to the new tax laws from the North is fierce, we don’t see a scenario where President Tinubu does not ensure the laws are passed.
Politics
A new political group will emerge as the main opposition to the Tinubu Administration. It will be clustered around the northern elements that are out of favour in the APC.
The Federal Capital Territory Minister, Nyesom Wike, will be removed in a cabinet reshuffle, precipitating his expulsion from the PDP and his loss of influence. This will enable the Rivers State governor, Sim Fubara, to consolidate his hold on the state.
Following Wike’s departure from the PDP, the 2023 flagbearer of the party, former Vice President Atiku Abubakar, will grow closer to Peter Obi. We don’t expect a formal alliance to be made between the two in 2025.
As a result of disorganised opposition and support from the federal government, we expect the former CBN governor, Chukwuma Soludo, to get a second term as Anambra State governor.
Nuhu Ribadu, the National Security Adviser, will become more prominent in 2025 and will begin to eclipse VP Kassim Shettima as the de facto second-in-command in the government.
There will be a reckoning within the APC in Lagos as more people stake out their interest in succeeding Babajide Sanwoolu as governor.
Security
Al Qaeda-backed groups will play a more significant role in the security landscape in North West and Central Nigeria. In 2025, Ansaru will likely be morphed into the larger JNIM network in North West Nigeria.
Despite Simon Ekpa’s arrest, IPOB-related violence in the South East will not cease, although its frequency will reduce compared with 2024.
NSA Ribadu’s handling of security will attract more scrutiny in 2025, and the criticism levelled at the Buhari administration in its dying days will resurface from the North.
The youth gang crisis will see a year-on-year rise, but one place where it is set to see a fall is in Edo, where pressure on the gangs will force a freeze.
Rest of Africa
Despite a comfortable parliamentary majority, the John Mahama government will not deliver on its promises to cut unpopular taxes, such as the electronic transaction levy and the Covid-19 levy, under the political pressure of major political, union and multilateral stakeholders. It will struggle to pass a full-year budget for this reason.
Ghanaian annual inflation will end 2025 at around 18%, lower than its current rate in the low-20s.
Ghana’s energy sector will deal with a major production and distribution crisis due to ballooning legacy debt that is disincentivising energy producers and suppliers.
Cocoa production in West Africa will remain weak in 2025 due to continued supply chain constraints and uncertain weather constraints across the region. As a result, cocoa forward contracts will set new records throughout 2025.
John Mahama’s government in Ghana will launch a prosecution spree of officials in the outgoing Nana Akufo-Addo administration. Chief targets will include cabinet members, Ghana’s Chief Justice, and the Electoral Commission Chair.
The ongoing crisis within the Economic Freedom Fighters party in South Africa will deepen in 2025, undermining Julius Malema’s hold on the party and presenting an opportunity for Jacob Zuma’s MK party to grow its parliamentary caucus.
The Jama’at Nusrat al-Islam wal-Muslimin (JNIM) menace in Mali and Burkina Faso will see greater Algerian involvement in 2025.
Islamic State affiliates in West and Central Africa will deepen their activities by acquiring new sub-affiliates and taking advantage of active and frozen conflicts in the Sahel and the eastern Congo basin.
Burkina Faso’s leader, Captain Ibrahim Traore will face another coup attempt.
Kenya’s economy will witness improvement over its 2024 performance on the back of interest rates and FDI, but the tense political situation will persist. Ruto’s popularity will continue to wane.
A rematch between Laurent Gbagbo and Alassane Ouattara for the Ivorian presidency will result in another term for Ouattara.
Benin will see a rise in Islamist attacks in its north and central regions compared to 2024.
Gabon’s November 2024 referendum will eventually pave the way for Brice Oligui Nguema to transition from military leader to elected president.
Togo’s first indirect presidential elections since the controversial 2024 constitutional reform will assure Faure Gnassingbé another term in office.
A failure of the civil war in Sudan to achieve a permanent ceasefire will see Chad enter the fray in armed action against the Rapid Support Forces, but fighting will be limited to Chad’s eastern border.
The renewed direct talks between Ethiopia and Somalia over Somaliland will stall. Anchored on a belief that the Trump administration will recognise Somaliland, Ethiopia will not fully pull out of the port deal.
FRELIMO and its flagbearer, Daniel Chapo, are unlikely to survive the political standoff in Mozambique. However, the unrest will fizzle out by mid-2025.
Download complete report (80 pages)