Financial Derivatives CEO: Here’s how Nigeria can avert a looming recession

Nigeria is at a critical juncture in its economic trajectory, with the looming threat of a recession hanging in the balance. The Minister of State for Budget and National Planning, Clement Agba, has raised concerns about the possibility of a second recession in four years if the country does not post a strong third-quarter economic performance. To delve deeper into this issue, Bismarck Rewane, CEO of Financial Derivatives, sat down with CNBC Africa to discuss potential strategies to avert this impending crisis. Rewane began by highlighting the stark differences between the 2016 recession and the current economic challenges facing Nigeria. He emphasized that unlike in 2016 when policymakers were in denial, the authorities are now proactive and taking decisive steps to address the underlying issues. Measures such as unifying the currency, cost-effective electricity tariffs, and subsidy removal are all aimed at bolstering the economy. Rewane also pointed to upcoming projects like the Dangote refinery and investments in electricity as positive signs for Nigeria's economic recovery. In the face of mounting challenges such as COVID-19, rising debt obligations, and declining GDP, Rewane underscored the importance of diversification as a key strategy for Nigeria. He highlighted the country's economic sustainability plan as a roadmap for recovery, focusing on structural reforms and operational improvements. By leveraging the opportunity presented by the current crisis, Nigeria aims to revitalize its economy and attract much-needed investments. One critical metric that will shape Nigeria's economic outlook is inflation. With the July inflation figures on the horizon, Rewane projected a range between 12.8 and 13 percent. He attributed this potential uptick to supply chain disruptions, subdued harvests, and foreign exchange rationing. To mitigate the impact of inflation, Rewane suggested a closer alignment between interest rates and inflation, to foster capital formation and stabilize the currency. As Nigeria navigates these turbulent waters, it is evident that bold and strategic actions are needed to steer the economy away from the brink of recession. With a proactive stance from policymakers, a focus on diversification, and a keen eye on inflation dynamics, Nigeria can chart a path towards economic resilience and sustainability. The road ahead may be challenging, but with the right measures in place, Nigeria can overcome this crisis and emerge stronger than before.