American multinational investment bank and financial services company, Morgan Stanley, has lauded Nigeria’s president, Bola Tinubu’s reforms to reposition Nigeria’s economy, urging for more sound policies.
In the company’s recent advisory report titled “Tales from the Emerging World Nigeria’s New Dawn?”, it hailed the Tinubu-led administration, for several strategic reforms implemented, to recover the dwindling Nigeria economy.
The report began by stating how the previous administration of President Muhammadu Buhari led Nigeria to suffer eight years of stagnation, despite his claims to tackle corruption.
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Under the Buhari-led administration, the economy veered off the rails during his two terms, starting in 2015, with Nigeria’s annual real GDP growth, averaging a paltry 1.4% during his tenure.
Buhari’s failure to remove fuel subsidies and the implementation of foreign currency control hobbled the private sector, while a lack of economic growth exacerbated the level of extreme poverty.
Today in Nigeria, some 71 million people live below $1.90 a day, a significant jump from 61 million in 2016. During Buhari’s tenure, the average Nigerian saw their annual income shrink by nearly one-third from $3,222 to $2,200, one of the steepest declines recorded by any country over that period.
The unprecedented hardship during his tenure saw the rise of migration among Nigerians referred to as “Japa”. According to UN data, Nigeria witnessed its biggest-ever net migration of people over eight years.
After Buhari’s tenure ended, then came the tenure of President Bola Tinubu. From the start, President Tinubu did not hesitate to tackle some challenges that hindered Nigeria’s growth.
During his inaugural speech in May 2023, Tinubu declared the removal of subsidies, which cost the country a whopping $10 billion in 2022.
Morgan Stanley in the report, stated that the removal of subsidies is likely to prove painful in the near term, especially as it will likely erode consumer confidence, send inflation higher, and hurt consumption.
The investment company however believes that Tinubu’s actions could potentially mark a turning point and deliver medium-term growth, which will spur the emergence of a mass consumer market in one of the faster populations in the world.
Part of the statement reads,
“The removal of subsidies is likely to prove painful in the near term, especially as it will likely erode consumer confidence, send inflation higher and hurt consumption. We believe Tinubu’s actions could potentially mark a turning point and deliver medium-term growth which will spur the emergence of a mass consumer market in one of the largest growing populations in the world.
“As incomes rise, the demand for many consumer products typically rises even higher, as goods become affordable, exhibiting an “s-curve” of consumption. Delivering economic development will be key. High investment and rapid industrialization, often viewed as pathways to economic prosperity or emerging economies, have proven difficult for all but a handful of developing countries. Nigeria is probably not going to replicate East Asia’s manufacturing success anytime soon, but perhaps it could do more to boost services exports”.
While there was a mass exodus of Nigerians in the Buhari-led administration, Morgan Stanley is placing a bet on Nigeria’s human capital potential, the country’s greatest asset, taking into consideration its huge population. It has tasked the Tinubu-led administration to devise sound policies to unleash the potential of Nigeria’s human capital.
The investment bank suggests that President Bola Tinubu’s administration focuses on investments in educational outcomes and skill development, everything from improving too-low literacy rates to prioritizing STEM fields. The investment bank believes that bridging the gap in outcomes between the North and South of the country will be key.
Morgan Stanley concluded that Nigeria’s current administration reforms are a positive step but more needs to be done to ensure momentum is not lost. It therefore, noted that Tinubu and his team of technocrats have a unique opportunity to free up the economy and attract foreign investors looking for sustained growth.