Welcome to this week’s 234Digest: Wednesday Edition—a round up of essential updates on Nigeria’s economy, policy shifts, and cultural highlights. Published twice weekly on Wednesdays and Sundays, my aim is to deliver concise insights to help you stay informed and make sense of the changes shaping Nigeria—without the information overload.

In today’s edition, we explore Nigeria’s plans to tax cryptocurrency transactions, the revision of inflation metrics that has reflected in sharp drop in consumer prices, and renewed investor confidence in Nigeria’s markets. We also highlight a $40.5 million investment in cocoa processing that promises to boost Nigeria’s agricultural exports and the Central Bank of Nigeria’s crackdown on insider loans. In our Catch Up segment, we take a closer look at the USAID aid freeze and its implications for Nigeria’s health sector. Finally, our Photo of the Day takes us back to 2021 with a striking image of Lagos’ informal economy in action.

It’s just past 11 pm as I hit send on this newsletter. Let’s dive in.

—Samuel Okocha, Editor & Curator, 234Digest

Word for word

Today’s briefs

Nigeria to tax cryptocurrency transactions

Nigeria is introducing taxes on cryptocurrency transactions as part of efforts to boost revenue and regulate its rapidly growing digital asset market. The Securities and Exchange Commission (SEC) is drafting new rules to ensure transactions conducted on regulated exchanges are taxed. A bill outlining the framework is currently before lawmakers and is expected to pass this quarter.

The SEC acknowledged the “substantial” tax revenue potential of crypto trading but did not specify expected figures. Cryptocurrencies have gained popularity among Nigeria’s youthful population as a hedge against inflation and currency depreciation.

This move marks a significant shift in policy from the Central Bank of Nigeria’s 2021 ban on crypto transactions to a more structured regulatory framework introduced after the ban was lifted in 2023.

Inflation falls as metrics are revised

Nigeria’s annual inflation rate took a surprising turn, dropping to 24.5% in January from 34.8% in December. This sharp decline follows the National Bureau of Statistics (NBS) revision of its methodology for calculating household expenditure, the first overhaul in 16 years.

The revised consumer price index now uses 2024 as its reference year, reweights categories, and expands the inflation basket from 740 to 934 items. As a result food inflation has slowed to 26.1%, while core inflation stands at 22.6%. Officials say these changes provide a more accurate reflection of Nigeria’s economic realities.

Investor confidence boosts Nigerian markets

Nigeria's economic reforms are paying off, boosting investor confidence and driving growth in the country's markets. A key indicator of this trend is the decline in Nigeria's sovereign risk spread, which has fallen to its lowest level since January 2020. This spread reflects the difference between the interest rates on Nigerian government bonds and those on comparable US bonds, essentially measuring the risk premium investors demand to invest in Nigeria.

The NGX All Share Index, a benchmark for the Nigerian stock market, has risen by 11% since December 2, outperforming the MSCI emerging markets index. Additionally, bond yields have dropped, indicating lower borrowing costs for the government. These developments suggest that investors are becoming more optimistic about Nigeria's economic prospects.

Several key reforms have contributed to this improved investor sentiment. These include:

• Improved currency liquidity: Making it easier for investors to access foreign exchange.

• Stable naira performance: Reducing the risk of currency fluctuations.

• Simplified profit repatriation: Allowing investors to more easily withdraw their profits from the country.

Analysts expect the Central Bank of Nigeria (CBN) to maintain its current interest rate of 27.5% at its upcoming monetary policy meeting. This decision would reflect the bank's efforts to balance inflation control with economic growth

$40.5 million cocoa investment boosts exports

Johnvents Group, an indigenous agribusiness and manufacturing group, has secured $40.5 million from British International Investment (BII) to expand its cocoa processing capacity from 13,000 metric tonnes annually to 30,000 metric tonnes at its facility in Ondo State. The funding will enable Johnvents to acquire new machinery, refurbish its plant, and strengthen sustainability practices.

Cocoa remains one of Nigeria's largest non-oil exports, primarily grown by smallholder farmers in southern states. The investment will also support Johnvents’ goal of achieving Rainforest Alliance certification for 90% of its cocoa by 2027.

Benson Adenuga, BII's Head of Office in Nigeria, noted that this partnership will boost Nigeria's global competitiveness in cocoa exports while empowering thousands of farmers across the supply chain.

CBN cracks down on insider loans

The Central Bank of Nigeria (CBN) has ordered bank directors with non-performing insider-related loans to step down immediately as part of efforts to strengthen corporate governance in the banking sector. Insider loans—granted by banks to their own executives or major shareholders—have been a longstanding governance concern.

The directive requires banks to recover collateral tied to these loans within six months or face regulatory penalties under provisions outlined in the Banking and Other Financial Institutions Act (BOFIA), 2020.

This move aims to address systemic risks while ensuring accountability within financial institutions.

Catch Up: USAID aid freeze and Nigeria

The USAID funding freeze has sent shockwaves through Nigeria’s health sector. With over $600 million in annual U.S. health assistance now suspended, critical programmes targeting malaria prevention, HIV treatment, and maternal health are at risk..

What’s at stake?

• HIV treatment: Nigeria has one of Africa's largest populations on antiretroviral therapy under PEPFAR (US President's Emergency Plan for AIDS Relief). A disruption in drug supply could lead to a surge in HIV-related deaths and new infections.

• Maternal health: Family planning programmes face uncertainty, potentially increasing unintended pregnancies and maternal mortality.

• Food security: USAID-supported agricultural programmes that provide training and resources to smallholder farmers are also under threat.

Government response

To offset the shortfall, Nigerian lawmakers have allocated $200 million to the health sector as part of the country’s $36.6 billion federal budget for 2025. These funds will be used to procure vaccines, sustain public health initiatives, and address gaps left by donor funding cuts.

President Bola Tinubu has emphasized self-reliance in healthcare financing but acknowledged that meeting global benchmarks like the Abuja Declaration—which recommends allocating 15% of national budgets to health—remains a challenge. The current allocation stands at just 5.18%.

Opportunities amid challenges

While the aid freeze poses immediate risks, it also presents an opportunity for Nigeria to reduce dependency on foreign assistance:

• Domestic resource mobilization: Experts urge increased tax revenue collection and public-private partnerships to fund healthcare sustainably.

• Local capacity building: Strengthening Nigerian institutions could ensure continuity of essential services even without external support.

• Diversified funding sources: Exploring partnerships with other bilateral and multilateral donors could help bridge funding gaps.

As Vincent Nwanma, a seasoned business and economics journalist with over 30 years of experience reporting across Nigeria and Africa, aptly noted in a recent opinion piece:

“For a long time, public sector financing in our region became virtually dependent on foreign aid...Now...the management of local resources will receive greater attention.”

Photo of the day

And that’s a wrap. Until Sunday when the next dispatch arrives, enjoy the rest of the week as we keep tabs on Nigeria’s evolving story.