Renowned economist, Bismarck Rewane, has warned that Nigeria must brace for challenging economic conditions ahead, despite earlier optimism about a capital market boom, as falling crude oil prices and global uncertainties threaten the country’s fiscal stability.
The Managing Director of Financial Derivatives Company said this during a television interview when he clarified that his November projection of a boom specifically referred to capital market growth, not broad economic expansion.
Rewane projected that Nigeria’s stock market capitalisation could surge from N93 trillion to N230 trillion by the end of 2026, driven by anticipated listings of the Dangote refinery and NNPC Limited, as well as strong corporate earnings.
However, he warned of a potential asset bubble and inevitable correction. The economist expressed particular concern about declining crude oil prices, which have fallen from $64 per barrel in November to around $60 currently. He said the prices could drop to as low as $55, with each dollar reduction increasing Nigeria’s fiscal deficit.
“Every dollar reduction in the price of crude increases our fiscal deficit. We’ll have less money to spend. We would have to borrow money, both domestically and internationally, and we would have to be much more efficient in the way we spend,” Rewane stated.
He emphasised that Nigeria’s OPEC quota limitations and ongoing vandalism in the Niger Delta further constrain the country’s ability to respond to price shocks.
On inflation, Rewane projected a temporary spike in the December 2025 figures, potentially reaching the 20s or 30s due to rebasing effects from the new consumer price index (CPI) methodology adopted in December 2024.
However, he assured that this would be a “one-month phenomenon” as headline inflation would moderate to around 13 per cent by mid-year.
“Nobody should be scared about that. It is a temporary phenomenon,” he said, noting that the running average would settle around 14 and 15 per cent.
He cited exchange rate stability, declining petrol prices and potential interest rate cuts as factors that could help moderate inflation. He also predicted petrol prices could fall to around N700 per litre, compared to current levels.
Rewane called for greater transparency and efficiency in government spending, particularly as reduced oil revenues squeeze the budget. He stressed that debt service obligations would consume funds needed for health, education and infrastructure.
He also suggested the Central Bank of Nigeria (CBN) should allow the naira to find its fair value at around N1,400-1,500 to eliminate arbitrage opportunities between official and parallel market rates.
On monetary policy, Rewane predicted the Monetary Policy Committee (MPC) would likely reduce interest rates by 25 or 50 basis points at its February meeting, depending on Federal Reserve actions.
However, he noted the need to maintain relatively high rates to prevent capital flight. Despite the challenges, Rewane highlighted some bright spots, including the optimal functioning of the Dangote Refinery and significantly lower petrol prices compared to neighbouring countries.
At current rates, Nigerians pay approximately 30 per cent of what South Africans pay for petrol, he noted. He also noted that companies previously reporting losses due to exchange rate volatility are now posting profits, though they must first recover eroded capital before paying substantial dividends.
Rewane said while Nigeria has built some buffers against external shocks, this year’s success would require harder work, more efficient resource deployment and institutional reforms.
