Nigeria's looming recession - what's the ideal policy response?

Africa's largest economy, Nigeria, is facing the looming threat of a recession as projected by the Budget Office and confirmed by recent statistics from the National Bureau of Statistics, indicating a 78.6% decline in total capital imported in the second quarter. The country's economic woes have been exacerbated by the double whammy of the COVID-19 pandemic and the plummeting global oil prices. To shed light on the ideal policy response for Nigeria's recovery, Tilewa Adebajo, the CEO of CFG Advisory, joined CNBC Africa's Christy Cole in a crucial conversation. Adebajo emphasized the importance of reopening the economy as a fundamental step towards economic revitalization. As Nigeria braces itself for the impending recession, Adebajo highlighted key strategies and challenges in steering the country towards a path of sustainable growth. The discussion delved into the impact of the recession on capital importation, the timeline for recovery, and the critical measures needed to reverse the negative growth trajectory. Emphasizing the significance of proper implementation of the Economic Sustainability Plan, Adebajo underscored the need for fiscal stimulus to complement monetary policy interventions. He stressed the urgency of aligning fiscal, monetary, trade, and investment policies to foster a conducive environment for economic recovery. Adebajo also addressed the challenges posed by the exchange rate regime, urging the adoption of a single window system to streamline foreign exchange transactions. Despite the Finance Minister's optimism about a short-lived recession, Adebajo offered a more cautious timeline, projecting a gradual recovery by the later half of the next year. The CEO highlighted the critical role of synchronized policies and structural reforms in navigating the economic challenges and restoring investor confidence. As Nigeria grapples with mounting pressures on the Naira and dwindling reserves, Adebajo warned of the escalating demand for foreign exchange and the need for proactive measures to address the currency fluctuations. In conclusion, Adebajo's insights shed light on the complex dynamics of Nigeria's economic landscape and underscored the imperative of decisive actions to propel the country towards sustainable growth and development.