Zedcrest Capital CEO on COVID-19, debt sustainability & Nigeria's economic future

Nigeria’s National Assembly has recently given the nod to the $5.5 billion external loan request of the executive arm of the government, a move aimed at bridging the country's budget deficit. Amidst the approval, the oil price benchmark has been raised to $28 per barrel from the initial $25, signaling a potential positive shift in the nation's fiscal landscape. Dayo Amzat, the Managing Director and CEO of Zedcrest Capital, shared insights on the country's economic future and the necessary steps to ensure debt sustainability and robust revenue generation. Amid the global economic downturn triggered by the COVID-19 pandemic, Nigeria, like many other oil-dependent nations, faced a sharp decline in oil prices. However, with recent price recoveries to around $40 per barrel, there is a glimmer of hope for the Nigerian economy. Amzat pointed out that this increase in oil prices might cushion the impact of budget deficits, which are projected to reach as high as 5 trillion Naira in the country. The CEO acknowledged the dire need to address Nigeria's mounting debt burden, emphasizing the importance of strategic fiscal planning beyond the current year. While the government has initiated borrowing plans, securing funds from institutions like the IMF, World Bank, and the AFDB, Amzat highlighted the significance of reducing deficit levels in 2021. He cautioned against over-reliance on borrowing to fund future budgets, stressing the need for sustainable financial practices. Looking ahead, Amzat underscored the crucial role of structural reforms in reshaping Nigeria's economy for long-term growth. He identified key areas for diversification, citing the enhancement of energy efficiency and major investments in the country's energy infrastructure as fundamental to industrialization. He mentioned ongoing discussions on a government contract with Germany to revamp Nigeria's electrical system, a move that could significantly boost power supply for industrial activities. In addition to energy reform, Amzat addressed the urgent need for improved transportation infrastructure to facilitate the seamless movement of goods and services across the nation. He criticized existing bottlenecks that contribute to structural inflation and emphasized the necessity of allocating substantial funds towards enhancing rail networks and other critical transportation systems. Amzat stressed the importance of food sufficiency as another pillar of Nigeria's economic diversification efforts, emphasizing the need to bolster the agricultural sector for enhanced self-sufficiency and increased revenue generation. Proposing a multi-year approach to structural transformation, he urged policymakers to prioritize long-term planning and strategic investment in key sectors to drive sustainable economic growth. As Nigeria grapples with the dual challenges of mounting debt obligations and the imperative for structural reforms, Amzat's insights shed light on the path forward for the country's economic recovery and sustained development. The government's actions in navigating these complex issues will play a pivotal role in shaping Nigeria's financial stability and growth prospects in the post-pandemic era.