CFG Advisory: Move excess liquidity, profit into value retaining assets to hedge

Nigeria's economic landscape is poised for another year of challenges and reforms, according to CFG Advisory. The advisory firm highlights the importance of moving excess liquidity and profits into value-retaining assets as a hedge against the continued high-interest rate regime. With global central banks adopting a cautious stance on rate hikes, households, firms, and investors in Nigeria are urged to be proactive in their financial strategies. Tilewa Adebajo, CEO of CFG Advisory, shared insights on the economic forecast for the nation in a recent interview with CNBC Africa. Adebajo emphasized the need for sustainable growth and addressed key issues such as debt servicing costs, inflation, and monetary policy implications. As Nigeria grapples with economic uncertainties, stakeholders are urged to make strategic decisions to navigate the complex financial terrain. Adebajo underscored the critical role of government policies in shaping the country's economic trajectory this year. The 18-month economic reform program in Nigeria has yielded mixed results, with challenges such as escalating debt service costs and persistent inflation deviating from targets. Adebajo noted the absence of fuel subsidy allocations in the budget as a positive development but cautioned against the mounting debt burden. The budget's allocation to debt servicing has increased significantly, raising concerns about the sustainability of fiscal policies. With debt levels surpassing $100 billion, Nigeria faces pressing issues of insolvency and the need for balance sheet restructuring. Adebajo proposed asset divestments and investment in growth-stimulating projects to bolster the economy and offset debt pressures. Sustainable growth, he emphasized, hinges on closing the output gap and enhancing productivity to achieve GDP growth rates of 8% to 10%. In the context of global economic trends, Adebajo highlighted the need for Nigeria to align its monetary policy with inflation dynamics observed in key markets. While advanced economies have successfully managed inflation and implemented rate cuts, Nigeria remains in a stagflation mode with subdued growth prospects. The country's credit rating status poses challenges for attracting foreign investments, necessitating a reduction in debt exposure to improve investor confidence. Adebajo underscored the importance of addressing money supply dynamics and reducing government debt to create an investor-friendly environment. The Nigerian Stock Exchange's performance in 2025 reflected mixed outcomes, with local currency gains offset by negative returns in dollar terms, signaling the need for strategic reforms to attract investment. Looking ahead, Nigeria faces critical decisions in managing its economic reform agenda and fostering sustainable growth amid external uncertainties. As the monetary policy landscape evolves, stakeholders must adapt to shifting dynamics and position themselves for long-term resilience. Adebajo's insights shed light on the challenges and opportunities facing Nigeria's economy in 2026 and the imperative of prudent financial management to navigate an evolving economic landscape.