CFG Advisory: Nigeria's economic stability & growth recovery a marathon - not a sprint

CFG Advisory, in its macroeconomic outlook for this year, has highlighted the need to revive the Nigerian economy from stagflation through a mix of short and long-term strategies. The advisory firm advises that businesses and investors should brace themselves for a high interest rate regime, scarce foreign exchange, and an 18-month period of economic recovery. Tilewa Adebajo, CEO of CFG Advisory, emphasized that with the right policies and sustained commitment, Nigeria can navigate its way towards economic stability and growth, although he cautioned that the journey would be a marathon, not a sprint. Adebajo's insights provide a comprehensive overview of the challenges and opportunities facing Nigeria's economy in the coming months. The key theme of 'the path from stagflation to growth' underpins the recommendations made by CFG Advisory, urging stakeholders to prepare for a prolonged period of recovery. The firm predicts high interest rates to curb inflation and preserve value, while also acknowledging the persistent scarcity of foreign exchange. Adebajo suggests that businesses and individuals can find support from parallel markets and advises investors to shift their excess liquidity into assets that will hedge against inflation. The forecast for the parallel market exchange rate ranges between 1,500 to 1,800, with a midpoint projection of around 1,640 by the end of the year. One of the primary concerns highlighted by CFG Advisory is the mounting debt burden, which currently stands at $130 billion and is projected to reach 11 trillion naira by the next year. Adebajo warns that ineffective management of this debt could jeopardize Nigeria's economic recovery and potentially lead to default, drawing parallels with the experiences of other African nations like Ghana, Zambia, and Ethiopia. Despite these challenges, Adebajo remains optimistic about Nigeria's economic fundamentals and emphasizes the importance of sound economic leadership and policy reform to drive the country's resurgence. The transcript of Adebajo's interview with CNBC Africa delves into various aspects of Nigeria's economic landscape, ranging from investment climate, sectoral performances, to budget allocations and risks in the upcoming year. The discussion on increasing dollar earnings and attracting foreign direct investment (FDI) sheds light on the critical role of private sector participation in driving economic growth. Adebajo underscores the need for a conducive business environment and regulatory clarity to boost investor confidence and stimulate economic activities. Furthermore, he advocates for further liberalization of key sectors to attract private investment and foster competition, emphasizing the importance of restructuring the economy to enhance productivity across all sectors. The conversation also touches upon the significance of revenue generation drive, trade facilitation, and the need to diversify Nigeria's income sources away from oil dependence. Adebajo's remarks on monetary policy underscore the importance of targeting inflation as a key challenge facing the Nigerian economy. By maintaining inflation within a specific range and ensuring positive real yields, Adebajo believes that Nigeria can stimulate productivity, reduce dollarization, and attract more investments. As the Monetary Policy Committee prepares for its first meeting of the year, Adebajo's message resonates with a call for a strategic focus on inflation management and value creation to pave the way for sustainable economic growth. In conclusion, while Nigeria's path to economic recovery may be characterized as a marathon, the insights provided by CFG Advisory and Tilewa Adebajo offer a roadmap for navigating the challenges and seizing opportunities to steer the country towards stability and growth.