A report by the African Export-Import Bank (Afreximbank) has expressed concern over the recent suspension of activities of the United States Agency for International Development (USAID), stating that it was adding pressure to Nigeria’s already strained public finances.
The report, however, revealed that Nigeria’s foreign trade remains strong at $110.5 billion, even as the country faces mounting macroeconomic risks driven by inflation, fiscal strain, and global uncertainties.
The Monthly African Macroeconomic Environment update for April 2025 highlighted that despite the resilience in trade, Nigeria’s economy was grappling with a challenging outlook marked by currency volatility, debt concerns, and slowing global demand.
It stated: “The economy is experiencing moderate growth at 3.19 per cent, but it is facing high inflation of 23.1 per cent. The policy rate stands at 27.5 per cent. Foreign trade remains strong at $110.5 billion, although a risk index of 60.93 indicates moderate economic risks”
On the suspension of aid to Nigeria and others, it noted that the development underscores the urgency of pursuing new funding strategies to keep critical government functions on track.
It states: “Many African nations face mounting fiscal pressures, with Nigeria’s 2025 budget featuring a fiscal deficit of 3.89 per cent of GDP. While this expansionary approach aims to stimulate economic activity through increased public spending, concerns over debt sustainability persist.
“The recent suspension of USAID assistance further compounds Nigeria’s fiscal challenges, necessitating alternative funding mechanisms such as domestic borrowing, multilateral support, and enhanced revenue mobilisation through taxation and economic diversification initiatives.”
The report also predicted that Nigeria, through its recent fiscal and monetary reforms, was expected to see a reduction in its inflation numbers.
“Key economies such as Ghana, Nigeria, and Sierra Leone are forecasted to substantially reduce inflation rates by 14.6, 16.7, and 27.8 percentage points, respectively,” it added.
It also noted that despite easing inflation, growth remains uneven across the continent. Structural challenges ranging from infrastructure gaps and energy shortages to debt burdens and governance issues continue to constrain economic expansion, particularly in South Africa, Nigeria, and Ethiopia
In addition to fiscal strain, the report pointed to Nigeria’s currency management strategy, which has seen some success due to targeted interventions by the Central Bank of Nigeria (CBN). The naira recently benefited from such efforts following tariff-related shocks to global markets.
Amid fluctuating investor sentiment and capital flows, Afreximbank noted the varied performance of African currencies, with Nigeria among the few that managed to gain ground.
“African currencies have experienced mixed performance. While Nigeria, Egypt, Morocco, and Angola have seen their currencies appreciate due to strategic policy interventions, broader depreciation trends persist across the continent.
“These fluctuations are largely influenced by the strength of the U.S. dollar, global trade dynamics, and shifts in foreign investment patterns. Addressing currency volatility remains a priority for policymakers to ensure macroeconomic stability,” it added.
Nume Ekeghe
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