COVID-19: Cowry Assets CEO on how Nigeria’s economy can recover from the pandemic shock

Nigeria's economy is facing challenging times as it is expected to contract further in the coming quarters. Despite this concerning outlook, the Central Bank of Nigeria remains cautiously optimistic about the country's economic prospects. Johnson Chukwu, CEO of Cowry Assets Management, joined CNBC Africa's Christy Cole to provide insights on the Nigerian economy and strategies for recovery. Chukwu highlighted the impact of the COVID-19 pandemic on the economy and the government's response to the crisis. Chukwu acknowledged the Central Bank's stance on cautious optimism, noting that there has been some improvement in economic activities compared to the second quarter of the year. He pointed out that the economy had contracted by about 1% in the second quarter due to COVID-19 lockdown measures but has shown signs of recovery since then. However, he also raised concerns about Nigeria's increasing debt profile, which has reached approximately 31 trillion naira and $85 billion in total, limiting the government's ability to borrow further. In discussions with investors, Chukwu emphasized the limited options available, particularly for local investors who are constrained by currency restrictions. He mentioned that local investors are focusing on short to medium-term opportunities within the local market, including investments in equity stocks with strong dividend yields. Meanwhile, foreign investors are closely monitoring liquidity in the foreign exchange market and awaiting government initiatives to stabilize the economy. Chukwu highlighted the importance of policy reforms and government interventions to attract foreign investment. Recent actions such as adjustments in exchange rates, petroleum product prices, and electricity tariffs have garnered interest from foreign investors. These reforms, coupled with ongoing fiscal improvements, are expected to create a more favorable investment environment in Nigeria. Foreign investors are cautiously optimistic about the country's economic recovery and are closely observing developments in the market. As Nigeria navigates through these economic challenges, stakeholders are monitoring key indicators such as inflation numbers and government policies to gauge the country's recovery trajectory. The road to economic recovery may be challenging, but with strategic interventions and investor confidence, Nigeria aims to overcome the current obstacles and emerge stronger in the post-pandemic era.