Accelerating Nigeria’s economic recovery

The Lagos Chamber of Commerce and Industry has welcomed the plan of the Central Bank of Nigeria to review the minimum capital base of banks, emphasizing the need for the apex bank to adopt the right policy mix to control high inflation effectively and stabilize the foreign exchange market. Chinyere Almona, Director General of the Chamber, joined CNBC Africa to discuss the measures needed to accelerate Nigeria's journey to economic recovery. The proposed 2024 budget of 27.5 trillion Naira is the largest in the country's history, marking a 21.4% increase compared to the previous year. The budget presentation by the President has highlighted key focus areas such as defense, internal security, and job creation, aiming to address critical factors like macroeconomic stability, investment environment optimization, human capital development, and poverty reduction. However, concerns arise regarding the daily oil production estimate of 1.78 million barrels per day, considering Nigeria's historical struggles to meet production quotas due to underinvestment, vandalism, oil theft, and rising production costs. The government needs a strategic approach to address these challenges to implement budget projects effectively. The Lagos Chamber of Commerce and Industry emphasized the importance of the Central Bank of Nigeria's plan to review the minimum capital base of banks. While acknowledging it as a positive step, the Chamber stressed the need for a balanced policy mix to tackle inflation and stabilize the foreign exchange market. Insufficient forex liquidity has been a persistent challenge for businesses, impacting the manufacturing and industrial sectors crucial for economic growth and job creation. Recapitalization of banks is deemed necessary to strengthen their capacity to fund economic activities and support the real sector's expansion, which could lead to reduced poverty and inflation rates. Dr. Almona highlighted the significance of increasing banks' capital base to ensure they can provide adequate funding to drive economic growth and employment opportunities. The comparison between the 2005 minimum capital requirement of $25 billion (equivalent to $190 million at the exchange rate of $132.15 Naira per dollar) and the current value underscores the need for banks to enhance their capitalization to meet the evolving economic demands. As discussions continue on the potential impacts of the 2024 budget on the Nigerian economy's growth prospects, the Lagos Chamber of Commerce and Industry remains focused on collaborating with policymakers to navigate the challenges and opportunities for accelerating the country's economic recovery. In conclusion, aligning fiscal and monetary policies, addressing structural constraints in the oil sector, and promoting a conducive business environment are essential steps to drive sustainable economic growth and development in Nigeria.