How Nigeria can achieve economic stability

Nigeria, the largest economy in Africa, is at a crucial juncture in its economic trajectory. Amit Jain, the Director at the Nanyang Technological University SBF Centre for African Studies, emphasizes that the key focus for Nigeria over the next two years should be on achieving economic stabilization. In a recent interview with CNBC Africa, Jain outlined three critical pillars that Nigeria must address to catalyze economic growth and foster stability. The first imperative highlighted by Jain is the need to tame inflation. Managing fiscal and monetary policies effectively is paramount to curbing inflationary pressures. The recent bold steps taken by the Nigerian government, such as ending the fuel subsidy and unifying the exchange rate, demonstrate a commitment to addressing these economic challenges. While acknowledging that it is still early days in the reform process, Jain commends the government's proactive approach and anticipates a positive market response in the near future. Secondly, Jain stresses the importance of eliminating trade barriers to facilitate smoother economic operations. By streamlining trade processes and creating incentives for key sectors, Nigeria can unlock its full economic potential. Jain mentions the country's diverse economic landscape, with different regions specializing in agriculture, manufacturing, services, and oil. Diversification away from reliance on oil revenues towards a more robust and varied economy is essential for sustained growth. The third key point raised by Jain pertains to enhancing Nigeria's GDP growth rate. Currently hovering around 3%, which is significantly lower than the population growth rate, Nigeria must aim for a GDP growth rate of 7% to achieve a more balanced economic equilibrium. Jain underscores the need for targeted actionable plans spanning short-term (2-year), medium-term (5-year), and long-term (10-year) horizons to drive growth across vital sectors. Discussing the monetary policy environment, Jain lauds the Central Bank of Nigeria's (CBN) efforts to focus on orthodox measures aimed at stabilizing the economy. By emphasizing interest rate management and money supply control, the CBN is steering towards a more sustainable economic framework. Jain also emphasizes the importance of aligning fiscal discipline with effective public expenditure management to consolidate these stabilization efforts. Furthermore, Jain elaborates on the NAYAN governance provision framework, advocating for a structured approach to governance within government agencies. By emphasizing outcomes over expenditures and narrowing down objectives to a few critical areas, Nigeria can enhance efficiency and accountability in its governance framework. Looking ahead to 2024, Jain remains cautiously optimistic about Nigeria's economic prospects. While the World Bank forecasts a modest growth rate for the country, Jain believes that with continued reforms and dedication to the stabilization agenda, Nigeria can exceed growth expectations and signal a positive trajectory to the market. Acknowledging that the reform process may involve short-term pains, Jain urges patience and perseverance, emphasizing that Nigeria is on the right path towards sustainable economic growth and prosperity. In conclusion, Nigeria's journey towards economic stability is a gradual but necessary process that hinges on meticulous policy planning, proactive reforms, and steadfast commitment to long-term goals. By addressing inflation, eliminating trade barriers, and boosting GDP growth, Nigeria can lay a solid foundation for sustainable economic development and emerge as a key player in the African economic landscape.