CPPE: Q2’23 economic slowdown due to shocks from reforms

The Center for the Promotion of Private Enterprise recently highlighted the year-on-year slowdown in the second quarter GDP performance that reflects the adverse impact of reforms in Nigeria's economy. Muda Yusuf, Director at the Centre for the Promotion of Private Enterprise, joined CNBC Africa to discuss the implications of the reforms and the outlook for the economy. Yusuf emphasized that while the reforms are necessary for the long-term health of the economy and investment climate, they have come with significant challenges, particularly for the general populace. He stressed the importance of addressing the social consequences of the reforms, such as rising costs of food, energy, and transportation. Despite the short-term pain, Yusuf expressed optimism about the long-term benefits of the reforms. He called for swift and targeted fiscal policy interventions to mitigate the social impact of the reforms and ensure a balanced approach to economic growth. The conversation also delved into the performance of the manufacturing sector, which saw a marginal improvement in the second quarter, driven by sectors with strong backward integration like food and beverage and cement. However, challenges such as high energy costs and forex dependence continue to weigh on the sector's competitiveness. Yusuf underscored the need for policy-driven incentives to support vulnerable segments of the economy and foster growth. The discussion further explored the imbalance between Nigeria's exports and imports, with a heavy reliance on oil earnings and a lack of diversification in export sectors. Yusuf highlighted the importance of enhancing productivity and competitiveness in non-oil sectors to boost export earnings and reduce import dependence. He called for a focus on improving the regulatory environment, enhancing quality standards, and promoting technology adoption to drive export growth. Reflecting on the role of the Export Promotion Council, Yusuf emphasized the need for advocacy to address production bottlenecks, reduce export bureaucracy, and support exporters in navigating the complexities of international trade. Overall, while Nigeria's economy faces challenges from ongoing reforms, there is optimism for a rebound in the medium to long term as corrective measures are implemented and the economy adjusts to the new normal.