Nigeria Economic Outlook
The economy bounced back to pre-Covid-19 pandemic levels in the fourth quarter of 2021, but believed to have lost some steam towards the tail-end of the first quarter of 2022 against the backdrop of substantial headwinds; in particular, the crisis in the oil industry’s downstream. Positively, business conditions improved at a stronger clip in January–February, with the purchasing manager index (PMI) hitting an over two-year high in February.
Following its emergence out of recession in 2020, drastic efforts continue to reduce inflation, protect the poor and vulnerable and support economic recovery. Also in focus is a big push in exchange-rate management, monetary policy, trade policy, fiscal policy, and social protection. The government is believed to be tweaking with specific measures such as:
Increasing the transparency and predictability of exchange rate management policies to reduce distortions in allocations in the private and public sector; and to ensure that agents can access foreign exchange in a timely and orderly manner, at an agreed rate.
Clearly defined monetary-policy priorities and objectives, with price stability as the primary goal. The resumption of naira-denominated open-market operations (OMOs) based on a transparent issuance schedule, and signal to markets that OMOs will use short-maturity securities to achieve price stability.
Full and effective reopening of land borders for trade and strengthening regional cooperation to combat smuggling.
Facilitation of imports for staple foods and medicines by removing them from the list of foreign exchange (FX) restrictions and replacing import bans and with tariffs that aligns with the ECOWAS Common External Tariff.
Full elimination of the petrol subsidy; and design of sequenced reforms to mobilize domestic non-oil revenue in a way that does not affect the economic recovery, including increasing excise taxes on harmful consumption goods, rationalizing tax expenditures, removing loopholes in tax laws, and improving tax compliance by strengthening revenue administration.
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