The Financial Reporting Council of Nigeria (FRC) has declared that the country does not qualify as a hyperinflationary economy under the criteria outlined by IAS 29: Financial Reporting in Hyperinflationary Economies.
According to a statement by Dr Rabiu Olowo, the FRC’s Executive Secretary/CEO, while IAS 29 provides guidance for financial reporting in hyperinflationary conditions, it does not explicitly define when hyperinflation occurs but lists indicators such as a preference for non-monetary assets, pricing in foreign currencies, and a cumulative three-year inflation rate nearing or exceeding 100%.
The Council noted that Nigeria does not exhibit these conditions. “There is no indication that the general population prefers to keep its wealth in non-monetary assets or any other relatively stable foreign currency,” the statement read.
It further emphasised that Nigerians continue to transact in local currency and invest in Naira-denominated assets, showing confidence in the local economy.
FRC cited data from the Central Bank of Nigeria (CBN) and financial institutions, showing a rise in investments in monetary assets such as treasury bills, mutual funds, and fixed deposits over the last three years.
Pension fund assets have also grown significantly, increasing from ₦18.35 trillion in December 2023 to ₦22.25 trillion in November 2024, according to the National Pension Commission.
The Council also dismissed claims that inflation is factored into credit transaction pricing.
“There is no evidence that the price of credit transactions is adjusted for inflation as sales and purchases on credit do not take place at prices that compensate for the expected loss of purchasing power during the credit period.” the FRC explained, adding that credit terms are determined by contract conditions, business risk appetite, and customer profiles.
While acknowledging that Nigeria’s three-year cumulative inflation rate reached 110.9% by December 31, 2024—exceeding the IAS 29 threshold—the FRC highlighted a marginal decline in the month-on-month inflation rate as of July 2024.
Furthermore, the International Monetary Fund (IMF) projects that Nigeria’s inflation rate will stabilise at 21% by the end of 2025.
The FRC, a government agency established under the Financial Reporting Council of Nigeria Act 2011, is tasked with issuing and enforcing standards for financial reporting and corporate governance in both the public and private sectors.
