• Wednesday, April 24, 2024
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Rockefeller chair lists Nigeria among top global reformers

Rockefeller chair lists Nigeria among top global reformers

Ruchir Sharma, chair of American firm Rockefeller International, listed Nigeria among five of the world’s most troubled economies that are reforming their way towards recovery.

In a Financial Times article titled “The weakest links in the global economy are on the mend” Sharma, said Nigeria, Argentina, Turkey, Kenya and Egypt have carried out certain macroeconomic reforms which are expected to see their economies make a rebound.

“Many of the emerging world’s most troubled economies are reforming their way towards recovery, and markets are starting to reward them for it,” Sharma said.

“They include most prominently Turkey, Argentina, Egypt, Nigeria and Kenya, and they carry some weight. All five of these reforming countries are in the 40 largest emerging economies,” he added.

Nigeria’s President Bola Tinubu carried out some reforms immediately after he was sworn in last May. Tinubu did away with a costly fuel subsidy and liberalised the exchange rate, allowing the naira to float against other foreign currencies.

The market policies have met disparaging views. While some analysts see it as the next step to save the over 200 million populated country from running aground, others view it as hastily taken moves.

The reforms have put the already frailing economy into further distress, pushing the country’s headline inflation to a 27-year high at 31.7 percent and the local currency hitting a N1,600 to a dollar record in February before descending to N1,450 on Tuesday.

Meanwhile, analysts at Goldman Sachs Group Inc, Citigroup Inc. and Standard Chartered Plc see the naira advancing by as much as 25 percent, hitting a low of N1,200 against the greenback this year, as jumbo interest-rate increases and other steps to attract foreign capital yield results.

The economic policies, though painful, have begun to bear fruit as the country’s foreign reserves have increased by 3.18 percent to $34.26 billion as of March 25, 2024 from $33.17 billion recorded at the beginning of February 2024, data from the Central Bank of Nigeria shows.

The Abuja-based apex bank last Thursday projected the reserves to hit $35.01 billion by the end of March, boosting the confidence of investors in the central bank.

Beyond swelling external reserves, Africa’s largest economy has equally seen over $2 billion worth of foreign portfolio investment in 2024 alone, all thanks to the CBN’s monetary policies.

In North Africa, Egypt, under Abdel Fattah al-Sisi, has taken decisive steps to lower its deficit by cutting spending on new mega projects, stabilising the Egyptian pound through raising interest rates to beat inflation and allowing its value to float freely, leaving black marketeers no reason for being.

For Argentina, an aggressive reform was needed to stabilise the economy and tame its ballooning inflation, with consumer prices reaching over 200 percent.

Javier Milei, Argentina’s president, has devalued the peso by more than half, cut government departments in half to nine, downsized the public payroll and moved to eliminate private jets and other official perks while selling hundreds of state companies, making the country’s budget turned surplus after witnessing many deficits.

“In January, the budget turned to surplus in a country that has run deficits for all but 10 of the years since 1900,” Sharma noted.

While market reforms are needed to move countries out of economic crises as posited by Sharma, fiscal management is equally a complimentary measure for quickest recovery.

“Budget discipline and heeding market forces are the only policy choices that work when a nation runs out of money,” Sharma said.

The 47-year-old has previously worked at Morgan Stanley Investment Management where he managed nearly $20 billion in assets and helped launch several new products including an Emerging Leaders fund, a Frontier Markets strategy and a Special Situations fund.

Sharma is a prominent writer and author on the global economy and markets, with frequent appearances on major news channels. He was a regular contributor with The New York Times and The Wall Street Journal for many years.

He is currently a contributing editor at The Financial Times, where he writes a bi-weekly column.