Nigeria govt crafts economic recovery plan

Nigeria is currently at a critical juncture as the government crafts an economic recovery plan in an effort to steer the country out of recession. With investors and analysts eagerly awaiting the release of Nigeria's third quarter GDP numbers, all eyes are on how this plan could potentially impact asset prices. Pabina Yinkere, Head of Research at Vativa Capital, joined CNBC Africa to shed light on the upcoming economic recovery plan and its potential implications on the market. Looking ahead to the third quarter GDP numbers, Yinkere expressed caution, predicting a negative growth of 1.9%. Key factors such as higher energy prices, currency fluctuations, liquidity, and inflation have contributed to the challenging economic environment in Nigeria. While there has been a slight recovery in oil prices, Yinkere noted that the oil sector's contraction in Q2 still weighs heavily on the economy, with limited prospects for a significant rebound in Q3. Discussing the much-anticipated economic recovery plan, Yinkere underscored the importance of a long-term vision for Nigeria's economy. He emphasized the need for a clear trajectory spanning the next three to five years, providing businesses with the necessary stability and foresight for strategic planning. While acknowledging the delayed release of the plan, Yinkere viewed it as a positive step towards outlining a roadmap for Nigeria's economic future. One of the crucial elements expected in the economic recovery plan is a strategy to enhance foreign exchange availability for the private sector. Yinkere highlighted the significance of increasing dollar revenue generation and diversifying forex earnings to stimulate economic growth. He emphasized that the plan's effectiveness in bolstering the economy and restoring market confidence hinges on its ability to address key issues such as foreign exchange liquidity. In terms of market performance, Yinkere noted a decline of almost 6% for the year and highlighted the importance of foreign investments in driving capital and portfolio inflows. While the equity market has experienced challenges, particularly in attracting foreign investors, Yinkere remained cautiously optimistic about potential improvements in dollar liquidity and foreign inflows positively impacting market activity. However, he stressed the need for significant economic growth to drive sustained market recovery. Addressing concerns around non-performing loans (NPLs) in the banking sector, Yinkere expressed caution regarding the potential for higher provisioning in the fourth quarter. With businesses still facing pressures from foreign exchange constraints and economic strains, NPLs remain a looming challenge for banks. Yinkere emphasized that until the broader economic landscape improves, the banking sector may continue to grapple with rising bad loans. As Nigeria navigates its way through economic challenges, the success of the government's economic recovery plan will be pivotal in shaping the country's financial stability and market outlook. Investors and stakeholders will closely monitor the plan's details and implementation to gauge its effectiveness in revitalizing Nigeria's economy and steering it towards a path of recovery and growth.