Towards Building Healthy Economy

Arize Nwobu

The objectives of the economic reforms by the federal government and the Central Bank of Nigeria (CBN) are primarily to correct the anomalies, and towards building a healthy and sustainable economy going forward, though the policy implementations may be disruptive and distressful for a period in the timeline, but as it is said, “no pain, no gain”.

Economy is the focal point and lifeblood of the people and which is why responsible governments and all relevant institutions would do all necessary things to ensure a healthy and sustainable economy. Because of the inevitable disruptive effects of the economic reforms, President Tinubu has thus far introduced some social safety nets to help cushion the impact of the reforms towards building a healthy economy in the long run.

Basically, a healthy economy features a robust financial system, low inflation, stable prices, low unemployment/ high employment (so that those who want jobs can easily find one), and wages that match or beat inflation. Other features are moderate interest rate to channel capital to productive sectors, stable exchange rate to enable businesses plan with certainty, high consumer confidence, balanced imports and exports and growth in GDP.

CBN has thus far implemented some notable policies that have positively impacted some of the above-listed economic variables as part of the reforms towards building a healthy economy. The apex bank keyed into the envisioned US$1trillion economy envisioned by President Tinubu and has implemented a proactive and seamless banks recapitalisation policy to ensure a robust financial system.

It is expected that the recapitalised banks will channel credits into productive sectors especially agriculture, manufacturing, infrastructure, technology and small and medium enterprises to justify the essence of their recapitalisation.

After the recapitalisation, CBN Governor, Olayemi Cardoso noted that the apex bank had shifted focus to ensuring that stronger capital translated into support for productive activities. CBN has also stabilized the exchange rate and fought inflation aggressively and reduced it from it previous high levels to 15.39% and is still targeting to moderate it further.

With the reforms, Nigeria’s economy presently can be likened to a sick patient that was taken to the intensive care unit of a hospital and underwent two major life-saving surgeries for stabilization and subsequent healing and expected restoration of good health.

In the context, the economy has been stabilized after two major ‘surgeries’, namely the removal of the corrupt, costly and wasteful fuel subsidy regime by the Federal Government and the unification of the exchange rate by CBN which removed unnecessary distortions, exploitations, arbitrage and volatility in the previous multiple exchange rate regime.

The unified exchange rate has its pros and cons but CBN’s target goals for adopting the new regime are to remove the ambiguities of the previous exchange rate regime and ensure transparency, true price discovery through “willing buyer, willing seller” mechanism, curb rent-seeking and to attract foreign direct investments (FDIs). The unified exchange rate has contributed in stabilizing the economy.

The fuel subsidy removal was an inevitable, bold and courageous policy action because fuel subsidy constituted a huge financial burden and drained government resources which often led to large deficits. It also led to fuel smuggling and scarcity and corruption. The removal of fuel subsidy was a financial lifeline for the economy. It generated about ~~N~~15.8 trillion to the economy between June 2023 and December 2025.

Prior to the removal, the economy was reportedly broke and at the brink of collapse due to the drain on the resources and the alleged fiscal misadventure of the previous administration which printed money and allegedly abused the Ways and Means facility of CBN and left a colossal debt of ~~N~~30 trillion which was not repaid but securitized and which increased the debt servicing burden, triggered high inflationary pressure and aggravated poverty.

World bank noted that between 2020 and 2021, inflation left about eight million more Nigerians below the poverty line and increased the number of poor people to about 90 million.

To minimize poverty and actualize the objective and drive of the present economic reform towards building a healthy economy, the present macroeconomic stability should be maintained and inflation should be further moderated through a combination of the monetarist policy by CBN and the boosting of the supply side of the economy.

Holistically, the economy needs to be more competitive in the manufacturing sector and with policies that would catalyze industrialization and with a diversified base for greater stability and prosperity.

Nwobu, a Chartered Stockbroker and Business Journalist wrote via [email protected]. Tel: 08033021230