Can Nigeria sustain reform momentum in 2024?

Nigeria has been on a path of reforms aimed at repositioning the country to achieve a one trillion-dollar economy by 2026. The World Bank has highlighted the importance of sustaining and fully implementing these reforms to reap their benefits. The question on everyone's mind is whether Nigeria can maintain this momentum in 2024. Matthias Chika Mordi, an Adjunct Professor at the Johns Hopkins University School of Advanced International Studies, provided valuable insights into the current situation and the road ahead. Reflecting on the reforms implemented in 2023, Mordi acknowledged the progress made by the government in removing fuel subsidies and attempting to harmonize the foreign exchange market. While these steps have eased fiscal constraints, challenges like the gap between exchange rate windows still exist. The government's target of achieving a trillion-dollar economy by 2026 raises questions about whether focusing on growth targets is more important than addressing underlying structural issues. Mordi emphasized the importance of setting ambitious goals while also considering the practicality and focusing on fundamental issues like income per capita. With Nigeria's population projected to keep growing, sustaining economic growth above the population growth rate is crucial for improving citizens' welfare and reducing poverty. One key concern raised was the need to fortify Nigeria's economy against external shocks, given recent global events like hostilities in Ukraine and China's slower growth. Nigeria's reliance on the oil and gas sector adds to its vulnerabilities, necessitating a diversified approach to enhance resilience. The discussion shifted towards the banking sector's role in supporting a trillion-dollar economy and plans for recapitalization. Mordi cautioned against forcing recapitalization, citing the banks' rational behavior in seeking additional capital when necessary. While acknowledging the importance of a robust banking system, he highlighted the broader investment and industrialization challenges that need to be addressed for sustainable growth. Looking ahead, Mordi emphasized the opportunities within the African continental market and the need for Nigeria to enhance competitiveness and tap into regional trade advantages. Addressing issues like business friction, human capital development, and financial productivity will be critical for Nigeria's long-term growth and prosperity. In conclusion, Mordi expressed cautious optimism for Nigeria in 2024, noting that the country's fundamentals still make it an attractive prospect. Despite the challenges ahead, the ongoing reforms and strategic focus on key areas could position Nigeria for sustainable growth and economic advancement in the coming year.