Notable global financial institutions and key domestic stakeholders have expressed concerns over the future of Nigeria’s economy. Recently, the World Bank Country Director, Shubham Chaudhuri, offered some tips on how to reposition the economy. He advised the nation’s policymakers to initiate swift and concrete regulatory reforms that will unlock about 6.7 per cent annual growth the economy needs for sustainable growth for the next two decades.

According to him, with a population of over 200 million, and an upward mobile entrepreneurial youths and a dynamic private sector population, Nigeria has the potential to grow beyond where it is currently if the necessary regulatory reforms are put in place. Nigeria recorded a nominal Gross Domestic Product (GDP) of $440 in 2021. It is a good starting point for economic recovery and growth. 

Beyond that, the World Bank representative says the federal government should prioritise reforms in both short and medium term on key macroeconomic, institutional structures and investment accelerators that will stimulate and sustain growth. This is in addition to having a single market reflective exchange rate. Currently, Nigeria has a multiple exchange rate regime. Experts say this is why, despite a surge in oil export revenue, foreign exchange reserve at the Central Bank of Nigeria continues to decline, opening a wide gap between the official rate and the parallel market rate that has adversely affected the value of the naira.  Chaudhuri also aligns with some of the presidential candidates’ position that  petroleum subsidy should be removed, arguing that it has enriched a few and has not benefited the vast majority of Nigerians, creating strong incentives for smuggling of the products across Nigeria’s neighbouring countries.

He, therefore, called for an increase in taxes on some non-oil exports. Government should see the World Bank Country Director’s timely advice as a fresh awakening to revamp the economy, using the regulatory reforms he recommended. His recommendations are, however, not new. The International Monetary Fund (IMF), the African Development Bank (AfDB), among others, had offered similar recipes for Nigeria’s economic recovery. Nonetheless, more than before, Nigeria currently faces serious financial and security crises that require urgent action. Most recently, two international rating agencies, S&P and Moody’s, downgraded Nigeria’s credit rating B3 to Caa1, citing bleak economy outlook, heavy debt burden and weak fiscal and monetary policy. 

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In all, the economy needs aggressive diversification with priority attention on production rather than consumption. Let the emphasis be on non-oil exports. With the recent IMF forecast of 2.9 per cent for Nigeria’s economy this year, the global financial institution has predicted a tougher 2023 with a looming global recession in the horizon. It advises countries to focus on products that it has comparative advantage. Nigeria has abundance of exports that can boost its revenue. Manufacturing companies and Small and Medium Enterprises engaged in exports should be given access to finance at low interest rate. 

Besides, efforts should be intensified to tame inflation, which has reached its highest level in nearly two decades. Other areas that need urgent regulatory reforms include reduction of poverty, unemployment, soaring food prices and insecurity. The latest poverty level from the National Bureau of Statistics (NBS) revealed that 133 million Nigerians are multi-dimensionally poor. World Bank data shows that Nigerian government’s investment in infrastructure and access to financial intermediation ranks among the lowest globally and needs strengthening. 

Government should boost power generation by investing sufficient funds in infrastructure.  The collapse of the national grid has had a heavy toll on the economy. Between 2017 and 2020, statistics by the Manufacturers Association of Nigeria (MAN) and the World Bank Enterprise survey, showed that about 320 companies shut down operations and some of them relocated to neighbouring West African countries because of rising cost of production and unstable power supply. 

There is need to revamp the economy and put it on the path of recovery and growth. Let the government reduce corruption, cost of governance and excessive borrowing. Currently, Nigeria’s terms of trade has declined by 2.7 per cent, according to data from the National Bureau of Statistics. Lack of synergy among Ministries Departments and Agencies (MDAs) remains a major factor delaying the delivery of set economic goals. The incoming administration must address the economic challenges by implementing sound policies.