Nigeria’s push for economic resurgence

Welcome to today’s edition of 234Digest, where we navigate the evolving economic landscape of Nigeria. We’re here to dissect, with clarity and insights, the significant developments that are shaping our nation’s future. Join me as we explore the latest economic trends and business news that matter. Let’s begin.

Nigeria’s new tariff plan to cut subsidies and boost efficiency

The Nigerian Electricity Regulatory Commission (NERC) has revamped consumer electricity rates, impacting primarily the top-tier service category. This initiative is part of the federal government’s broader plan to create a more efficient and financially viable power market.

Under the revised tariff structure, only Band A customers — those receiving a minimum of 20 hours of electricity daily — will face rate hikes, with prices jumping from 66 naira to 225 naira ($0.17) per kilowatt-hour. This segment, constituting about 15% of the customer base, accounts for 40% of the power consumption in Nigeria, Africa’s largest economy. The tariff reform is expected to cut subsidies significantly, potentially saving 1.14 trillion naira in the 2024 fiscal year.

The adjustments are in line with the Electricity Act 2023, which permits power companies to set rates that cover the full cost of efficient operations and ensure reasonable returns on investments. The policy is designed to spur investments in the Nigerian Electricity Supply Industry (NESI), promising better service delivery and a more reliable electricity supply across the nation.

NERC’s statement on Wednesday highlighted mandatory investment targets for Distribution Companies (DisCos) and goals to shift more customers to the Band A service level.

Nigeria’s power generation capacity stands at over 12,000 megawatts (MW), yet less than 5,000 MW reach the grid daily, partly due to ageing transmission infrastructure. Non-market reflective tariffs have also been a barrier to investment.

This tariff adjustment is a strategic component of Nigeria’s ongoing efforts to surmount its power sector challenges, emphasizing the need for increased investment and the adoption of sustainable energy solutions.

Long stories short

Dangote refinery launches: Africa’s largest refinery, owned by Aliko Dangote, has started operations in Lagos, supplying petroleum products. The refinery is set to begin domestic gasoline deliveries in May, which could end Nigeria’s reliance on imported petroleum.

Nigeria’s forex market hits record high: Nigeria’s foreign exchange market has seen its highest turnover since 2017, with $1.085 billion traded in a single day. This surge is a positive indicator of the easing dollar shortage that has long constrained Nigeria’s economic growth.

Nigeria’s wealthiest entrepreneurs: Despite economic challenges, Forbes has highlighted the success of Nigerian businessmen Aliko Dangote, Mike Adenuga, Abdulsamad Rabiu, and Femi Otedola, with fortunes of $13.4 billion, $6.7 billion, $5.2 billion, and $1.4 billion respectively.

Binance faces regulatory heat in Nigeria: Binance, the cryptocurrency exchange behemoth, continues to face scrutiny from Nigerian authorities. The detention of Tigran Gambaryan, a U.S. executive serving as a law enforcement officer for Binance, has led to calls for his release. The Nigerian government has accused Binance of illegal operations and currency manipulation, prompting the company to halt its naira services.

Nigeria’s debt strategy: The Debt Management Office plans to raise 1.35 trillion naira from the bond market in the second quarter through newly issued bonds, as it pushes to manage the nation’s debt profile and ensure fiscal stability.

Quote of the Day: “Fairy tales are more than true: not because they tell us that dragons exist, but because they tell us that dragons can be beaten.” —Neil Gaiman

That’s it for today with 234Digest. Anticipate our weekend edition for more pivotal updates shaping Nigeria’s economic and business landscape. Subscribe to 234Digest for direct delivery of these essential briefings to your inbox. And share with your network and be part of the community seeking clarity in complex times.