Share
Has Nigeria’s economy turned a corner?
Nigeria saw its first positive quarterly growth in the last three quarters after its economy grew by 0.11 per cent in the fourth quarter of the year. This means that Nigeria has technical exited its second recession since 2016. The National Bureau of Statistics says though the growth is weak, it reflects the gradual return of economic activities. Tilewa Adebajo, CEO of CFG Advisory and Lizzie Kings-Wali, CEO of Blackstone Asset Management join CNBC Africa for more.
Fri, 19 Feb 2021 11:53:07 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- The recent positive quarterly growth of 0.11 percent signals Nigeria's technical exit from its second recession since 2016, reflecting a gradual return of economic activities.
- Experts highlight the need for structural reforms to elevate Nigeria’s growth rate to combat poverty effectively and drive sustainable development.
- Limited impact of monetary policy measures on inflation calls for significant reductions in government expenditure and administrative measures to maintain a low-interest rate environment for sustained growth in the real sector.
Nigeria recently celebrated its first positive quarterly growth in the last three quarters, with the economy expanding by 0.11 percent in the fourth quarter of the year. This development signifies the country's technical exit from its second recession since 2016. The National Bureau of Statistics acknowledged that while the growth is modest, it reflects a gradual return of economic activities. CNBC Africa's interview with experts Tilewa Adebajo, CEO of CFG Advisory, and Lizzie Kings-Wali, CEO of Blackstone Asset Management, shed light on the significance of this growth and the challenges lying ahead. Tilewa emphasized the need for structural reforms to elevate Nigeria’s growth rate to levels that can effectively combat poverty and drive sustainable development. He highlighted the population growth outpacing economic growth in recent years, leading to Nigeria being dubbed the 'poverty capital of the world.' Tilewa stressed that the economy must aim for a growth rate of at least 6% to make a substantial impact. Despite the recent positive numbers, he cautioned that the current growth rate of 0.11 percent falls short of what is required to uplift Nigeria's vast population. Lizzie echoed this sentiment, acknowledging the fragility of the recovery and emphasizing the importance of maintaining a low-interest rate environment to stimulate growth in the real sector. She noted that while the agriculture sector saw a 3.4 percent growth in Q4, challenges such as logistics costs and supply chain inefficiencies continue to hinder translating this growth into lower inflation rates. Both experts agreed that monetary policy measures have limited impact on the current inflationary pressures facing Nigeria. Tilewa emphasized that structural fiscal reforms are imperative, calling for significant reductions in government expenditure to pave the way for sustained economic growth. Lizzie supported this stance, suggesting that maintaining administrative measures to keep interest rates stable and affordable could aid physical sustainability and lower business capital costs. The conversation also delved into the government's GDP growth forecast of 3% for the year, a target that surpasses the IMF's projections. Tilewa pointed out that the discrepancy between these forecasts and the challenges Nigeria faces, such as inflation and exchange rate fluctuations, underscores the need for strategic reforms and a clear pathway to achieve sustainable growth. Lizzie expressed optimism about the resilience shown by key sectors such as agriculture and telecommunications, anticipating continued growth driven by digital adoption and government interventions. Despite the positive outlook in certain sectors, both experts raised concerns about the dependence on oil revenue and the risks associated with fluctuations in global oil prices. They advocated for a diversified economy with a focus on non-oil sectors, emphasizing the potential of the digital economy in sustaining growth. As Nigeria navigates economic recovery amidst daunting challenges, the consensus remains that bold structural reforms and prudent fiscal policies are crucial to unlock the country's growth potential and uplift its citizens.
SIGN UP FOR OUR NEWSLETTER
DAILY UPDATE
Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.