News Highlights:
- Edun emphasized that the economic reforms of the Tinubu administration are yielding results.
- Central Bank witnessed a net inflow of about $2.35 billion every month for the first seven months of the year.
- The government is targeting a daily crude oil production of 2 million barrels by the end of 2024.
Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, has said that Nigeria’s foreign reserves have seen a net inflow of about $2.35bn every month for the first seven months, into the Central Bank’s coffers even as he disclosed that the economic reforms embarked upon by the Tinubu administration are yielding positive results.
Edun, who emphasised the need for government revenue to compete with the private sector and fund social and infrastructure spending, stated that “Seventeen months or so, we rethink the reforms from the evidence, from the data, from the details that we have in our hands, the reforms are yielding fruits.
“The economy is beginning to turn a corner and I think we all are witnesses to the improved macroeconomic stability, stable exchange rates, increasing government revenue, positive and increasing trade balances, current account balances and the total reconfiguration and the revamping of government revenues as well as the greater emphasis on expenditure.
“We have relative currency stability, and of course, the all-important margin of the rates. We’ve seen a gradual elimination of multiple exchange rates,” he said.
The Minister who was speaking at the 2024 edition of the Access Bank Annual Corporate Forum themed: “Nigeria’s Economic Rebirth: Hopes and Implications”, in Lagos, stated that the increase in foreign reserves inflow has played a key role in stabilizing the naira in the foreign exchange market.
While attributing this growth to the government’s efforts, the minister stated, “We also have foreign exchange liquidity. The gross reserves are up. There has been a net inflow in the first seven months of this year of about $2.35 billion every month.
“On the fiscal side as well, government revenues are growing. And the key to government revenue is not so much that the government has revenue to compete with the private sector. It is the fundamentals, the social and the key infrastructure spending, the social safety net spending.
“And, historically, our figures are low. Our tax to GDP ratio is as low as 10 per cent. Our revenue to GDP is also around 15 per cent. We have relative currency stability. And of course, the all-important margin of the rates. We’ve seen a gradual elimination of multiple exchange rates.”
Edun who highlighted various steps being taken by the Federal Government to rebirth the country’s economy, announced efforts being made by the government to ramp up crude oil production as a buffer for the fiscal revenues and added that the country is on track to produce the targeted 2 million crude oil barrels per day (bpd) before the end of 2024.
Part of the plans to rebirth the economy according to the minister, is to ramp up oil production and diversify exports, particularly in knowledge services, citing countries like the Philippines as potential partners for subcontracting online services.
He stated that the stabilisation plan includes intervention in agriculture and the corporate sector, with a focus on small, medium, and large-scale industries.
He said that the Federal Government plans to fund about 360,000 farmers to farm 3000 hectares of farmland aimed at turning out 1.4 million metric tons of food by next year, as part of efforts to curtail the ravaging food inflation while giving the economy a rebirth.
“Only yesterday, the First Lady launched a Farmers Club to encourage food production and exports. The government aims to provide relief for manufacturers, encourage employment, and incentivize export production,” he said.
On the application of technology to improve fiscal management and increase domestic revenue, the minister disclosed that the economic management team is being reconvened to prepare a plan for the next six months, adding that “the focus is on pushing for economic growth, with a need to attract both domestic and foreign investors.”
Managing Director of Financial Derivatives Company (FDC) Limited, Mr. Bismarck Rewane, discussed Nigeria’s economic projections for 2026, and highlighted the country’s potential to become the second largest economy in Africa.
Rewane who predicted a stable petrol price and a GDP of $400 billion by 2026, listed the key economic drivers to include funds, direct foreign remittances, and exchange rate adjustments, and projected total factor productivity to increase from 2.4% to 2.6%, with a trade balance going from $8 billion to $9 billion.
He proposed power sector reforms, cost-effective tariffs, and debt write-offs as solutions to the country’s current economic challenges, and emphasised the need to optimise the use of capital stock to increase growth.
Rewane said inflation would continue to decline to around 22 per cent while there would be a reduction in interest rate with the Monetary Policy Rate at around 20 per cent.
According to him, “In 2026, we would have a proper forex system that is functioning, due to intervention funds, diaspora remittances, and exchange rate adjustment policies. There will be an efficient forex option system by 2026 and air-combact reserves will be at $20 billion.
“Inflation will continue to decline to anywhere between 19 percent and 22 percent and MPR, I think, will decline to 20 percent rather. I’m talking about June 2026. The Naira will appreciate from its current levels to anywhere between $1,450 and $1,500 at that time.”
Uche Uwaleke, a Professor of Finance and Capital Market at Nasarawa State University, said during one of the panel sessions that deepening the capital requires raising the right mix of instruments and posited that the federal government has not been deploying the right instrument in its borrowings from the domestic capital market, saying more infrastructure bonds should be issued.
“If you look at the borrowings that have been done overtime, in my view, the right instruments have not been used in borrowing in the domestic market. When we borrow from the market, it is important that we use more of infrastructure bonds instruments because that is when we can be sure that the proceeds are tied to projects.
He called for crypto assets adoption, arguing that youths who comprise over 70 percent of the population would find crypto assets more attractive and acceptable and hence would propel their participation in the capital market.
Director General of Manufacturers Association of Nigeria (MAN), Mr. Segun Ajayi-Kadir, stated that successive governments in the country had declared their intention to grow domestic production, but failed to show adequate interest in the growth of the manufacturing sector.
“There is always intention to grow the sector, but at the end of the day, it is either lack of total commitment to put policy into action or that the sector is crowded out in terms of priorities. So, the manufacturing sector in Nigeria has continued to perform at less than 50% of its installed capacity.
“There is still the issue of the unsettled $2.4 billion FX Forwards contract that the CBN, for inexplicable reasons, is still holding. Most of our big industries are declaring losses and some of these losses are traceable to this issue of not honouring FX Forwards contracts.”
Director General of Lagos Chamber of Commerce and Industry (LCCI), Dr. Chinyere Almona, in her contribution, said the plight of the SMEs should keep the finance minister awake at night because some of the policies of the government were stifling businesses, noting that “Sometimes the policies are great, but their implementations are zero.”
President of Dangote Group, Alhaji Aliko Dangote, in his contribution, emphasised the need for the government to raise its support for domestic investors and entrepreneurs, noting that the confidence in local investors typically attracts foreign investors while adequate support for local industries can help the country create a circular economy where all stakeholders benefit along the entire value chain.
“What attracts foreign investment is domestic investment. No domestic investments, no foreign investments! So, we have to make sure that we support our domestic investors. I went to two places on Wednesday and I was a bit angry. I wanted to eat snacks and all the biscuits that I was given in these two different places were made in China, which is wrong.
“If we are consuming made in China biscuits, it means that we are actually creating jobs in China and creating poverty here. So we need to have proper support for domestic industries. We must give the SMEs all the support to survive against all these dumpings,” Dangote said.
Managing Director of Access Bank Plc, Mr. Roosevelt Ogbonna, had earlier in his welcome address, said the bank was committed to working with the government and all stakeholders to champion the growth of the economy.
“This is the kind of forum that we have been having since this current administration came into service in May 2023. I think in many respects it signifies the challenges that we are having as a nation and the need for us to combat the rising economic headwinds that we are facing.
At least, Nigeria is not isolated in this term. Many emerging markets and local markets are facing significant challenges.
“This year, the focus on building a collective pathway towards the journey of Nigeria’s economic rebirth and revitalisation reflects our commitment to not only adapting to change but also leading it.”