Nigeria's finance minister expects single-digit inflation by 2023

Nigeria's finance minister, Zainab Ahmed, recently announced a bold target of achieving single-digit inflation by 2023. According to her, the gradual decline in inflationary pressures indicates that the worst may be over for the country's economy. The announcement has sparked a debate among economists and experts, with many expressing skepticism about the feasibility of the target. Oluseyi Akinbi, the Managing Director at Zedcap Partners, weighed in on this matter during a recent interview on CNBC Africa. Akinbi expressed reservations about the minister's projections, citing historical data that shows Nigeria has only experienced three years of single-digit inflation in the past decade. He suggested that inflation is likely to remain stubbornly high in the double-digit range for the next few years, contrary to the government's optimistic estimates. This divergence in views underscores the uncertainty surrounding Nigeria's economic trajectory and the challenges it faces in achieving sustained economic stability. In addition to the inflation target, Akinbi addressed concerns about the government's upcoming bond sale and the broader outlook for the economy. He highlighted key areas of focus, including exchange rate stability, interest rate trends, security challenges, and revenue generation. These factors are crucial in shaping the economic landscape and investor sentiment towards Nigeria. The discussion also touched upon the impact of the billions of dollars that Nigeria aims to raise through Eurobonds and SDR allocations. Akinbi emphasized the importance of effective currency management by the Central Bank of Nigeria (CBN) to mitigate foreign exchange risks and maintain stability in the forex market. He noted that while external inflows could provide temporary support to the currency, long-term sustainability requires structural reforms and prudent fiscal policies. One of the key concerns raised during the interview was the ability of the Nigerian government to meet its dollar payment obligations, particularly to foreign investors participating in the Eurobond issuance. Akinbi acknowledged that Nigeria's heavy reliance on oil revenues for foreign exchange earnings poses a risk, given the volatility of global oil markets. However, he expressed confidence in the country's foreign reserves and liquidity position to honor its debt obligations in the near term. Overall, the debate surrounding Nigeria's economic outlook reflects the complex challenges facing the country as it navigates a delicate recovery phase. While the government's ambitious targets signal optimism for the future, the reality of achieving sustained stability and growth remains contingent on addressing deep-rooted structural issues, fostering investor confidence, and implementing sound economic policies.