by Niyi Jacobs
The Financial Reporting Council of Nigeria (FRC) has released its assessment of Nigeria’s economic status in relation to IAS 29, the international standard for financial reporting in hyperinflationary economies. After extensive consultations with stakeholders, the FRC concluded that Nigeria does not meet the full criteria for hyperinflation despite inflationary pressures.
The Council noted that Nigerians continue to transact in and invest with the Naira, indicating confidence in the local currency. Data shows that pension assets, predominantly held in Naira-denominated instruments, increased to ₦22.25 trillion as of November 2024, up from ₦18.35 trillion in December 2023. Goods, services, and wages are consistently priced and paid in Naira, with no significant shift towards pricing in foreign currencies. This is evident in transactions across major platforms such as Jumia, Konga, and Slot.
The FRC further explained that there is no evidence of inflation-adjusted pricing in credit transactions. Businesses continue to determine prices based on contract terms, customer risk profiles, and market conditions rather than anticipated inflationary losses.
While the three-year cumulative inflation rate in Nigeria has exceeded the 100% threshold stipulated by IAS 29, the Council clarified that other indicators, such as inflation-linked wages or widespread currency rejection, are absent. The recent inflation spikes are largely attributed to short-term shocks from government reforms, such as the removal of fuel subsidies and the floating of the Naira.
The FRC highlighted government measures aimed at stabilizing the economy. The operationalization of the Dangote Refinery and other local refineries is expected to reduce fuel import costs, ease forex pressures, and stabilize prices. Additionally, crude oil production has risen to 1.8 million barrels per day, improving foreign exchange availability. Agricultural initiatives and adjustments to food import policies are also helping to mitigate food inflation, which significantly impacts the overall inflation rate.
Looking ahead, the International Monetary Fund (IMF) projects that Nigeria’s inflation rate will stabilize at 21% by the end of 2025. This forecast reflects the effectiveness of government reforms, monetary tightening by the Central Bank of Nigeria, and the broader disinflationary trend.
The FRC stated that while challenges remain, the Nigerian economy does not exhibit the conditions necessary to classify it as hyperinflationary. The Council remains committed to ensuring transparency and adherence to international financial reporting standards in Nigeria.