Boosting Nigeria’s Economy through Reform Initiatives

The Nigerian government has recently emphasised its commitment to revitalising the country’s economy through the implementation of extensive reforms. While these reforms have led to increased living costs for many Nigerians, they have also resulted in elevated revenue, which could help reduce the staggering poverty rate of 104 million.

According to analysts at Afrinvest Limited, a key focus for the government should be on ongoing economic reforms such as efficient taxation, plugging financial leakages, streamlining the public sector, and reforming the judicial sector. Moreover, they stressed the importance of paying attention to the mining sector road map (2015-2025) in order to fully utilise the potential of over 45 solid mineral assets across the country.

Ayo Teriba, CEO of Economic Associates, expressed concerns about the volatility of the foreign exchange market and emphasised the need for increased foreign direct investment to stabilise the exchange rate, decrease inflation, and stimulate economic growth.

On a positive note, Abubakar Bagudu, the Minister of Budget and Economic Planning, highlighted that the federal government exceeded its revenue target by achieving N8.65 trillion in revenue in the first nine months of last year. Out of this total, N1.42 trillion came from oil revenues, while non-oil revenues amounted to N2.50 trillion. The disbursement to the three tiers of government also increased significantly by 37.9 percent, demonstrating the potential impact of these reforms.

Olaolu Boboye, an economist and fixed income strategist at CardinalStone, emphasised the importance of the government upholding its commitment to ensure that the reforms yield positive results and improve transparency. He also recommended clear communication from the government to convey the benefits of these reforms to the citizens.

Despite the positive intentions behind the reforms, there have been unintended consequences. President Bola Tinubu’s measures, including the removal of the petrol subsidy and foreign exchange reforms, have contributed to a spike in inflation, which has reached its highest level in 18 years. This inflation surge has led to reduced purchasing power for consumers and increased operational costs for businesses.

To address these challenges, Israel Odubola, a research economist based in Lagos, highlighted the importance of aligning fiscal and monetary policies to tackle the drivers of inflation, such as currency devaluation and higher energy costs. He also proposed innovative strategies for raising foreign capital, including privatizing inefficient public assets and releasing government equity ownership in assets such as the Nigerian National Petroleum Company Limited.

Moreover, analysts at Vetiva have stressed the need for Nigeria to prioritize fiscal discipline, diversify its economy beyond hydrocarbons, and implement measures to mitigate the potential negative effects of subsidy removal while fostering sustainable growth.

The World Bank raised concerns about the impact of rising inflation on poverty levels, reporting that an additional 14 million Nigerians fell below the poverty line in 2023, bringing the total number of poor people to 104 million.

Adeola Adenikinju, a professor of economics and president of the Nigerian Economic Society, suggested an increase in the minimum wage and the expansion of palliatives and social intervention programmes to support vulnerable Nigerians. Additionally, he called for a focus on energy issues, proposing a shift to compressed natural gas in the transportation sector and the expansion of the rail system.

In conclusion, the Nigerian government’s reform initiatives have shown promise in terms of generating revenue and boosting the economy. However, it is essential to address the unintended consequences of these reforms, particularly the impact on inflation and poverty levels. Moving forward, a coordinated effort is needed to ensure that the reforms yield tangible benefits for all Nigerians and drive sustainable economic growth.