The Financial Reporting Council of Nigeria (FRC) has stated that Nigeria does not currently meet the criteria of a hyperinflationary economy, maintaining confidence in the country’s local currency, the Naira.
This declaration was made on Wednesday in a statement signed by the FRC’s Executive Secretary and Chief Executive Officer, Dr. Rabiu Olowo. According to the council, the International Accounting Standard (IAS) 29, which governs financial reporting in hyperinflationary economies, will not be applicable to the preparation of financial statements for the 2024 financial year.
Hyperinflation is characterised by rapid and extreme inflation that severely erodes the value of a nation’s currency. IAS 29 sets out financial reporting guidelines for economies experiencing such conditions. However, the FRC explained that determining hyperinflation requires careful analysis of relevant economic indicators and substantial judgment.
Following a comprehensive evaluation of Nigeria’s economic data, the FRC concluded that the nation has not met the threshold for hyperinflation.
“After analysing key indicators, the FRC has determined that Nigeria is not a hyperinflationary economy. Consequently, IAS 29 will not be applied in the preparation of financial statements for the 2024 financial year,” the statement read.
The council highlighted that Nigerians continue to demonstrate confidence in the local currency, as evidenced by increasing investments in Naira-denominated assets and monetary instruments. Data from the Central Bank of Nigeria (CBN) and financial institutions show a consistent rise in investments in monetary assets such as treasury bills, mutual funds, and fixed deposits over the past three years.
Additionally, pension assets, predominantly held in Naira, have surged, growing from ₦18.35 trillion in December 2023 to ₦22.25 trillion as of November 2024. The council noted that Nigerians prefer to transact in local currency, citing e-commerce platforms and major shopping malls like Jumia, Slot, Konga, and Jiji as examples of businesses that primarily operate in Naira.
The FRC pointed out that hyperinflationary indicators such as rapid devaluation of wages and widespread investment in non-monetary assets are not present in Nigeria. For example, the country’s minimum wage has historically been revised over extended periods, demonstrating stability. The minimum wage rose from ₦18,000 to ₦30,000 in 2019 after eight years and remained unchanged until July 2024, when it was increased to ₦70,000.
The council also cited ongoing fiscal and monetary reforms by the CBN to manage inflationary pressures, including adjustments to the monetary policy rate to regulate money supply.
The FRC assured stakeholders that it would continue to monitor Nigeria’s economic conditions and provide updates if necessary.
“As a regulatory body, we remain committed to engaging relevant stakeholders and assessing economic indicators to ensure transparency and accurate financial reporting,” the council stated.
 has stated that Nigeria does not currently meet the criteria of a hyperinflationary ...){kind=link}