Nigeria at 63: How to unlock Nigeria’s economic potential

Nigeria's President Bola Tinubu is optimistic about the country's economic future, citing ongoing reforms and policies that will help steer the economy towards recovery. However, analysts like Tilewa Adebajo, CEO of CFG Advisory, and Sodik Olofin, Economist at the Nigerian Economic Summit Group, offer a more cautious view, highlighting the structural challenges facing the Nigerian economy. In a recent interview with CNBC Africa, they discussed the current state of the economy, the need for policy alignment, transparency, and setting clear growth targets to unlock Nigeria's economic potential. The Nigerian economy is currently facing stagflation, characterized by stunted growth, high inflation, unemployment, and poverty. Adebajo pointed out that the country's inflationary pressures stem from various factors, including high food prices, removal of subsidies, and unsustainable debt levels. He emphasized the importance of taming inflation to preserve the value of the currency and stabilize the foreign exchange market. On the fiscal side, the government's heavy debt burden and reliance on deficit financing pose significant challenges to sustainable economic growth. Olofin echoed Adebajo's concerns, highlighting the government's dilemma in balancing inflation control with the need to stimulate economic growth. He noted that Nigeria's debt service-to-revenue ratio is alarmingly high, exceeding 100%, indicating a precarious fiscal position. The government's struggle to implement reforms and drive development amid these challenges underscores the complex policy environment that hampers economic progress. To navigate these challenges and set the economy on a more stable path, Adebajo emphasized the importance of prioritizing key economic areas. He called for a comprehensive review of trade policies to align them with monetary and fiscal policies. Addressing excessive borrowing, transparency in revenue management, and formulating a realistic budget based on accurate revenue projections were identified as crucial steps to improve fiscal stability. Additionally, tackling inflation through a revamped monetary policy framework and ensuring policy coherence between the central bank and government were highlighted as key priorities. Olofin stressed the need for clarity and transparency in policy frameworks, particularly in the financial market. He underscored the importance of creating a harmonized financial market framework to provide investors with clear guidelines on capital mobility, reporting standards, and sustainable financial practices. Establishing a conducive environment for investment by streamlining policies and enhancing transparency is essential to attracting capital and fostering sustainable economic growth. Looking ahead to the next decade, Adebajo believed that Nigeria's economic potential could reach a trillion Naira, provided sustainable policies are implemented to drive growth. He highlighted the need for consistent 8-10% annual GDP growth, citing past instances where the Nigerian economy demonstrated significant expansion. Emphasizing the importance of setting realistic growth targets and aligning fiscal and monetary policies with growth objectives, Adebajo urged the government to focus on achieving the country's economic potential and avoid 'chasing shadows' through misguided projections. As Nigeria commemorates its 63rd anniversary, the discussions with Adebajo and Olofin shed light on the critical challenges and opportunities facing the country's economy. The call for policy coherence, transparency, and sustainable growth strategies resonates as Nigeria seeks to unlock its economic potential and navigate the complexities of a challenging economic landscape.