The International Monetary Fund (IMF) recently concluded its Article 4 consultation with Nigeria and issued glowing accolades for the economic reforms of the President Bola Ahmed Tinubu administration.
The report by the IMF team praised Nigeria’s monetary and fiscal authorities for implementing significant reforms which has restored the confidence of foreign direct and portfolio investors to the economy.
The IMF upgraded Nigeria’s projected economic growth for 2025 from three per cent to 3.4 per cent. The optimistic view of the economic growth is predicated on the gains of the economic reforms embarked upon by the Tinubu administration.
The IMF team expressed appreciation for steps taken by the federal government to build up the country’s foreign reserves. There has been significant improvement in Nigeria’s foreign reserves in recent months.
The reserves leisurely crossed the $40 billion mark in November 2024 following improvements in crude oil production which had tumbled to a record low of 1.4 million barrels per day. Last month the Nigerian National Petroleum Company Limited (NNPCL) announced a significant improvement in crude oil production as it rose to 1.7 million barrels per day.
Nigeria’s foreign reserves had for decades dawdled around $33 billion.
However, the commencement of crude oil refining and consequent export of refined petroleum products by the Dangote Refinery, in addition to the increase in daily crude oil production boosted the foreign reserves to a record $40 billion for the first time in decades.
The IMF report commended the move and expressed hope that with the spiraling capacity utilisation of the Dangote Refinery, Nigeria’s foreign reserves will climb higher.
The IMF team also commended the federal government for discontinuing the process of funding budget deficits through ways and means. The previous administration had developed the culture of pressuring the Central Bank of Nigeria (CBN) to print money for funding budget deficit.
Between 2015 and 2023 the federal government gulped down something close to N30 trillion in what is derisively tagged ways and means funding of budget deficits.
That practice of printing money that is not backed by productivity is partially responsible for the spiraling inflation in the country today as it gets too much cash chasing very few goods. The Tinubu administration has discontinued that inflationary funding of budget deficits in a determined bid to curtail inflation.
The report of the IMF team commended the on-going efforts to strengthen the CBN governance to set the institutional foundation for inflation targeting.
While the CBN on the urgings of managing directors of banks is inclined to clamp down on the activities of fintechs like Opay, MoniePoint and others, the IMF report encouraged the CBN to develop the framework for risk monitoring of the activities of the fintechs.
The fintechs have been a thorn on the flesh of banks since the failed attempt by the CBN to re-design the naira in December 2022. The CBN planned to phase out the old N200, N500 and N1,000 notes and the consequent replacement with new notes.
During the abortive exercise, the apex bank withdrew N3.2 trillion in old notes from banks only to replace them with a scant N600 billion. The exercise created a cash squeeze that took Nigeria perilously close to trade by barter. In the absence of cash, transactions were consummated through electronic transfers. The massive switch to electronic cash transfers congested the networks of banks.
In some critical instances it took a whole week to consummate transactions in a bank’s electronic network. The fintech emerged right on time to protect banks’ depositors from the calamitous failure of the banks’ electronic networks. They opened their networks for depositors’ use.
Their networks consummated transactions within minutes and millions of depositors flocked to them. The banks were worried by the development. They pressured the CBN to stop the fintechs from taking deposits.
The IMF report has allayed the fears of the banks and the regulator on the operations of the fintechs as it recommends the development of the framework for risk monitoring of the fintechs rather than killing them.
Blueprint commends the federal government for the high marks the IMF scored its reforms programme. However, we join the Babel of voices including the IMF, calling on government to give its reform programme the semblance of human face by reducing the poverty in the land.
This newspaper believes that the federal government can make Nigeria a $1 trillion economy by 2030. However, like the experts have argued, Nigeria will need something close to double digit economic growth to attain the target.
The double digit economic growth can be attained by taking appropriate steps to create jobs and reduce poverty. Nigeria is derisively tagged the world’s poverty headquarters because it enigmatically musters the highest number of poor people in the world.
Government must empower the private sector to create jobs to stem the tidal wave of poverty.