How to set Nigeria on the path to economic recovery

Nigeria, Africa's largest economy, finds itself grappling with a second recession in four years, prompting discussions on the path to recovery. In a recent CNBC Africa interview, Kyari Bukar, Former Chairman of the Nigerian Economic Summit Group, and Sam Chidoka, Managing Director & CEO of Kairos Capital, shed light on the challenges and strategies needed to set Nigeria back on the track to economic growth. One of the key points discussed was the need for a well-coordinated fiscal and monetary approach to navigate the current economic landscape. Prior to the pandemic, Nigeria was already facing economic challenges with anemic growth and high inflation rates. The pandemic further exacerbated these issues, leading to declining oil prices and disrupted supply chains. To overcome this quagmire, Bukar emphasized the necessity of a coordinated fiscal policy and an expansionary monetary stance. He highlighted the importance of investing in critical sectors of the economy and moving away from an allocation-based economic model. The need for a level playing field for all businesses was stressed to promote competitiveness and growth. Additionally, Bukar addressed the challenge of deficit-financed budgets and the implications of increased borrowing. While acknowledging that borrowing for investments in capital infrastructure can spur economic growth, he cautioned against unsustainable debt levels that could strain the country's finances. Foreign direct investment was presented as a crucial component to fill the funding gap and attract long-term capital inflows. Bukar emphasized the significance of creating a conducive environment for foreign investors and domestic entities to participate in Nigeria's economy. Chidoka echoed the sentiment, highlighting the importance of innovative funding models such as Public-Private Partnerships (PPP) and concessioning of infrastructure projects. He emphasized the need to move away from borrowing for consumption purposes and focus on investments that can drive economic productivity and sustainability. Chidoka proposed tolling roads and rails as potential revenue-generating mechanisms to fund infrastructure development. The discussion also touched upon the significance of policy reforms to stimulate growth and facilitate a V-shaped economic recovery. Despite the challenges ahead, both experts agreed on the need for a strategic and collaborative approach to steer Nigeria towards economic prosperity. The road to recovery may be fraught with obstacles, but with sound policies, prudent financial management, and a conducive investment climate, Nigeria can revitalize its economy and chart a path to sustainable growth.