SBM Intelligence : Nigeria to grow by 2.5% in 2022

Nigeria is poised to experience a robust GDP growth of 2.5% in 2022, surpassing the World Bank's forecast of 1.8% for 2021, according to a report by SBM Intelligence. The Head of Research at SBM Intelligence, E. Kemese, shared insights during a CNBC Africa interview, highlighting several factors that will drive the country's economic expansion. 2021 saw gradual growth after the economic slowdown induced by the pandemic and subsequent lockdowns in 2020. As the borders reopened, key sectors like services and trade began to recover, setting the stage for even stronger growth in 2022. Despite optimistic projections, challenges such as inflation remain a concern. While inflation has decelerated, food prices remain high, with the Food Price Index still elevated. Efforts to curb inflation, including policies by the Monetary Policy Committee, may see some success, but reaching single-digit inflation could be a stretch. Moreover, the proximity of 2022 to the upcoming elections poses a risk of accelerated inflation due to political spending. The intricate balance between core inflation and food inflation is expected to persist, with food insecurity and seasonal agricultural factors contributing to the challenge. Government revenue projections for 2022 present a complex scenario, with the debt-to-service ratio remaining elevated. Efficient tax collection is crucial, particularly in the informal sector where tax compliance is low. Integrating more Nigerians into the formal tax system and boosting financial inclusion could enhance revenue generation. In terms of security, the persistent threat continues to be a major concern for foreign investment and overall stability. Recent data revealing the loss of over 600 security personnel underscores the gravity of the security situation. Addressing security challenges and improving the perception of safety are vital steps towards attracting foreign investment and fostering economic growth. Looking ahead to 2022, security issues are expected to persist, with the pre-election period likely to escalate tensions. Foreign direct investment could be impacted by ongoing security concerns, necessitating decisive action to address the root causes of insecurity. Despite the challenges on the horizon, Nigeria's economy shows resilience and potential for growth in 2022, driven by various factors at play. As the country navigates through uncertainties, strategic policies and targeted interventions will be crucial in sustaining economic momentum and steering towards a path of sustainable development.