Will Nigeria surpass economic growth forecasts near-term?

The International Monetary Fund's recent downgrade of Nigeria's economic growth forecast for 2025 to 3 per cent and 2.7 per cent for 2026 has raised questions about the country's ability to surpass these projections. Tilewa Adebajo, CEO of The CFG Advisory, shared his insights on the matter during an interview with CNBC Africa. Adebajo highlighted the impact of global inflationary pressures post-COVID and the consequences of trade disruptions caused by policies such as tariffs imposed by the Trump administration. While the IMF cited declining oil prices as a reason for Nigeria's growth forecast downgrade, Adebajo highlighted the resilience of the country's oil and gas sector, which contributed only about 10% to the GDP and showed signs of recovery. Despite the revised growth numbers, which fall below the ideal rate needed for significant development in Nigeria, Adebajo emphasized the importance of sustainable growth ranging between 8 to 10 per cent annually to address the nation's population growth and combat stagflation. He urged fiscal and monetary authorities to focus on implementing policies that stimulate economic growth, improve stability, and attract investments that drive entrepreneurship and job creation. Regarding the policy environment for local entrepreneurs, Adebajo acknowledged challenges such as rising interest rates due to inflationary pressures. He stressed the importance of government interventions to reduce inflation to around 11% to facilitate growth rates of 8 to 10 per cent. Additionally, he discussed Nigeria's debt levels, noting that while currently manageable, they are not sustainable, calling for the optimization of equity within the capital structure to address the debt burden. In terms of economic diversification, Adebajo highlighted Nigeria's diversified economy, with the non-oil sector playing a significant role in GDP composition. However, he pointed out the disproportionate reliance on the oil and gas sector for foreign exchange earnings, posing a challenge in terms of export revenue. Adebajo emphasized the need for asset optimization, including the sale of joint venture assets, to reduce debt levels and attract global infrastructure investments into Nigeria. While discussing ongoing investment projects such as the agro airport development in Ogun State and major infrastructure projects led by companies like Arise Group and Dangote, Adebajo expressed optimism about the potential economic growth drivers. He underscored the importance of government policies that support trade, domestic investments, and industrial development to foster a conducive environment for business growth and economic expansion. As Nigeria navigates the uncertainties surrounding its economic growth forecast and strives for diversification and sustainable growth, stakeholders are closely monitoring policy decisions and investment initiatives to gauge the country's economic trajectory in the near term.