February 22, 2023/United Capital Research
The most daunting task for Nigeria’s next President will be to pull the world’s poverty capital from the brink. Nigerians today contend with multidimensional poverty, insecurity, crippling inflation, and power shortages, among other constraints. The next President must also fast-track industrialization and diversification, improve investment-to-GDP, grapple with underperforming sectors and deliver a more competitive currency, and actual reform implementation. These are the primary matters in the electorate’s consciousness ahead of Saturday’s election.
Due to fiscal deterioration, the government needs help accessing necessary borrowings at manageable costs. This potentially necessitates a debt restructuring to alleviate the debt service burden. According to the IMF, the FG is projected to spend 82.0% of its revenue on interest payments this year. The new government may take comfort in relatively high and stable oil prices while the oil production outlook has brightened in recent months. Also, the economy is expected to exceed its pre-pandemic size in 2030 at a 3.1% annual growth rate.
The election outcome is the most significant determinant of Nigeria’s direction over the short-to-medium term. On the economy, based on their manifestoes, the front-running candidates have market-friendly policies looking to shift emphasis from consumption to a production-centred economy, raise GDP per capita to $5,000 by 2023, and reduce youth unemployment. Similarly, on monetary and fiscal policy, candidates have promised to review the budgetary allocation formula, reduce the cost of governance by harmonizing public servants’ wages, and tackle exchange rate inefficiencies. However, policy implementation post-elections usually differ from the plan based on precedence. Undeniably, Nigeria needs a leader with a bold plan. However, he risks drawing the ire of a largely socialist and illiterate population if he executes the tough reforms required to set the country on a sustainable growth path.
