Dear Subscriber,
The sprint is over, the marathon begins
Nigeria began its reform journey like a man on fire. In 2023, with public finances in tatters and exchange rate misalignment widening like a fault line, bold reforms were not optional—they were the only way! Petrol subsidies were scrapped, FX rates were unified, and the CBN rediscovered its monetary compass. The results were swift and encouraging as FX liquidity improved, investment inflows trickled back, and growth began to stir from its long slumber.
Although inflation eased slightly to 23.71% in April, it remains uncomfortably high. Reflecting this concern, the MPC held the policy rate steady at 24.75% in May, signalling that the fight against inflation is far from over.
Now here’s the kicker—early wins don’t guarantee a happy ending. Reform is not a sprint. It’s a grueling marathon. Now is the time to deepen the reforms, or else, reform fatigue will set in.
The warning signs are blinking
History teaches us that reform fatigue has been the undoing of many well-intentioned recoveries—from Argentina’s neoliberal overhaul in the ’90s to Greece’s post-2008 austerity spiral. Nigeria is no exception. We’ve seen this movie before: the SAPs of the ‘80s, the U-turns of the post-2015 FX liberalization, and the policy rollbacks that followed every bout of public discontent. Today, Inflation remains above 24%, and cost-of-living protests are brewing. Investors are asking: Will Nigeria hold the line and stay the course?
No pain, no gain: the case for second-tier reforms
If first-tier reforms were about survival, second-tier reforms must focus on institutions. Institutional reforms are essential because without them, chronic capitalization will persist, leading to exploitation and bribery. The next core reform agenda must prioritize building institutional credibility, fiscal transparency, and targeted social protection. This is how countries like Chile and Estonia avoided reform fatigue—and how Nigeria can do the same. Only when institutions are reformed can we ensure sustainability.
The oil price crash only sharpens the urgency. With projections threatening to remain below $70pb, fiscal space is narrowing fast. The economy can’t afford a policy wobble.
As always, we’re tracking these developments with a keen eye on the macro risks and policy inflection points. In this latest edition of Prism, the FDC Think Tank takes a deep dive into recent economic developments and their impact on your business and corporate strategy.
Enjoy your read!
