The Federal Government will face significant fiscal and economic challenges in implementing recent increase in the national minimum wage to N70,000.

In addition, the current pressure on naira will persist for the remainder part of the second half of the year 2024 owing largely, to limited supplies amid dependence on costly inorganic sources for reserve build-up.

A report by Afrinvest titled “Walking a Tight Rope… A Quest for Economic Redemption,” obtained on Wednesday by New Telegraph, also forecast that Nigerian Autonomous Foreign ExchangeMarket (NAFEM) rate will hover within N1,450.00/$ to N1,630.00/$ throughout H2.

After protracted negotiation between members of the organised labour and the Federal Government, the parties settled for minimum wage of N70,000. Afrinvest in the report said, domestically, Nigeria’s economy demonstrated resilience despite numerous challenges.

The oil sector, it said, grew for the second consecutive quarter in Q1’24 by 5.7 per cent y/y, consolidating its exit from a 14-quarter-long recession that begun in Q2’20, and increasing its share in the overall GDP to 6.4 per cent.

The non-oil sector grew modestly by 2.8 per cent, with a slowdown in trade and ICT sectors’ growth. Inflation reached a three-decade high of 34.2 per cent y/y in June 2024, driven by food shortages, depreciating naira, rising energy costs, and imported inflation.

It recalled the naira depreciated significantly from N907.11/USD to N1,505.30 in six months, despite CBN’s stabilisation efforts. “As part of its stability efforts, the CBN raised the MRP to 26.25 per cent, leading to higher interbank lending rates and liquidity challenges,” it said.