Nigeria Can Seize the Opportunity to Realize Its Growth Potential, The new administration has initiated critical reforms to address macroeconomic imbalances.
This window of opportunity could have a transformative impact on the lives of millions of Nigerians and establish a solid foundation for sustainable and inclusive growth.
The removal of the petrol subsidy and foreign exchange (FX) management reforms are crucial measures to begin to rebuild fiscal space and restore macroeconomic stability, and the opportunity should be seized to take further, necessary policy reform steps, says the latest Nigeria Development Update (NDU).
The June 2023 edition of the NDU, titled
“Seizing the Opportunity”, adds that it is critical to implement a comprehensive reform package that encompasses a range of complementary measures, including a new social compact to protect the poor and most vulnerable, to maximize the collective impact on growth, job creation, and poverty reduction.
In the first part of 2023, Nigeria’s economic growth weakened, and real gross domestic product (GDP) growth fell from 3.3% in 2022 to 2.4% year-on-year (y-o-y) in Q1 2023. The challenging global economic context has put pressure on Nigeria’s economy.
However, domestic policies play the major role in determining Nigeria’s economic performance and resilience to further external shocks.
The previous mix of fiscal, monetary, and exchange rate policies, including the naira redesign program, did not deliver the desired improvements in growth, inflation, and economic resilience.
The new government has recognized the need to chart a new course and has already made a start on critical reforms, such as the elimination of the petrol subsidy and reforms in the FX market.
With the petrol subsidy removal, the government is projected to achieve fiscal savings of approximately 2 trillion naira in 2023, equivalent to 0.9% of GDP.
These savings are expected to reach over 11 trillion naira by the end of 2025.