CPPE: Complementary fiscal policies needed to sustain naira gains

Nigeria's economic landscape has been experiencing some positive movement in recent months, particularly in terms of naira appreciation. Muda Yusuf, Director at the Center for the Promotion of Private Enterprises, emphasized the importance of adopting complementary fiscal policies to support the reform efforts of the Central Bank of Nigeria. In a recent interview with CNBC Africa, Yusuf highlighted the need for a strategic approach to ensure the sustainability of the current economic gains. Yusuf acknowledged the efforts of the Central Bank in stabilizing the foreign exchange market, which has seen increased inflows and a boost in confidence. However, he cautioned that while progress has been made on the monetary front, there is still a need for robust fiscal measures to address potential risks to macroeconomic stability. He pointed out concerns such as growing deficits, increased money supply, and rising debt levels that could impact inflation and exchange rate stability. One of the key areas of focus for Yusuf is the need to manage Naira liquidity in the system and reduce the overall cost of production and living. He stressed the importance of coordinated efforts between monetary and fiscal authorities to sustain the positive momentum and enhance investor confidence. In discussing the timeframe for addressing these challenges, Yusuf pointed to the short to medium term, highlighting the need for swift action to support businesses and citizens still reeling from the effects of recent reforms. He emphasized the critical role of fiscal policies in driving stability and competitiveness in the economy. On the proposed revenue reform bill for 2024, Yusuf expressed optimism about its potential to alleviate the tax burden on Nigerian workers and streamline tax administration. While acknowledging the positive impacts of the bill, he also called for a review of certain contentious provisions to ensure overall economic benefits. Reflecting on the broader reforms affecting the economy, including the removal of fuel subsidies and importation of petrol, Yusuf acknowledged the progress made but noted that more needs to be done to address the associated challenges. He highlighted the importance of mitigating the pains of the reforms and supporting businesses through innovative strategies like backward integration. Looking ahead to 2025, Yusuf remained cautiously optimistic about the direction of the economy, citing potential gains from initiatives like import substitution and the development of key infrastructure projects. Despite the current obstacles, he emphasized the resilience and adaptability of Nigerian businesses in navigating the changing economic landscape. In conclusion, Yusuf emphasized the need for a balanced approach that combines monetary and fiscal interventions to sustain the recent positive trends in the Nigerian economy. As businesses and citizens continue to adjust to the evolving economic environment, proactive measures and strategic planning will be essential to ensure long-term stability and growth.