• Friday, February 23, 2024
businessday logo


Insights from the economic mastermind, Chinwe Egwim

Chinwe Egwim launches book to promote economy

Chinwe Egwim is a seasoned Economist with experience in macro, financial, development, gender and behavioural economics. She is currently the Chief Economist and Head, Economic Research/Intelligence at Coronation Merchant Bank.

Chinwe currently has 700+ published economic notes under her belt. She was recently appointed as a member of the Presidential Fiscal Policy and Tax Reforms Committee. The committee was set up by President Bola Tinubu to review and redesign Nigeria’s fiscal system with respect to revenue mobilisation, quality of government spending and sustainable debt management.

Her efforts to simplify complex economic concepts through her book ‘Understanding Economic Jargon’ demonstrates her commitment to making economics accessible to a wider audience. The book has ranked as a bestseller under education leadership on Amazon. This commitment extends to her recent accomplishment in authoring a children’s book addressing the enigma of inflation, reflecting her ingenious approach to nurturing awareness through education.

Chinwe is frequently pulled in to give expert advice on economic trends across print and visual media. She is an advocate for women’s empowerment and has published a series of papers used for gender equality advocacy.

Share your formative years and influences, including how it has inspired you to be who you are today

My formative years were a mosaic of experiences that have significantly shaped who I am today. Growing up, I was exposed to the values of hard work, generosity, curiosity, integrity, empathy, persistence, accountability and the importance of education. My early experiences were also rooted in a close-knit community (SPDC community in Warri Nigeria; Assen, in the Netherlands and then; Shell Camp in Port Harcourt Nigeria) where everyone looked out for one another. This sense of community instilled in me a strong sense of responsibility and the belief that we all have a role to play in uplifting our society. It also fuelled my passion for giving back and contributing to the welfare of others.

Education was also a cornerstone of my upbringing. My parents fostered a love for learning that continues to drive me to this day. Education, they taught me, was not just about personal advancement but also a means to create positive change. My early professional experiences further honed my skills and insights into the world of finance and economics. These experiences reinforced my commitment to contributing to economic growth and development.

Read also: Women’s Hub Nov 10 2023

How would you describe the current state of the Nigerian economy?

The current state of the Nigerian economy can be described as complex and challenging. There is a mix of both positive and negative indicators. On the other hand, Nigeria is blessed with vast natural resources, a large and youthful population, and a growing technology sector, which all offer significant potential for economic growth. On the other hand, Nigeria faces challenges such as elevated inflation levels, high unemployment rates, security issues, and an overreliance on oil exports. However, businesses have shown resilience in the current hazy macroeconomic environment. The silver lining lies in diversification efforts, with potential in agriculture, technology, and manufacturing. To quickly turn things around, policies focused on improved infrastructure, and business-friendly reforms are essential for a brighter economic future.

What are the main challenges and opportunities faced by the Nigerian economy?

Well, a handful. There is an urgent need to combat high inflation, improve infrastructure, and enhance security. Given the high import dependency of the country as well as manufacturing and merchandise trade activity levels among others, the current exchange rate dynamics which point towards foreign exchange liquidity constraints also need to be addressed. However, there are opportunities in sectors like agriculture, renewable energy, technology, and manufacturing. Infrastructure development, energy, and technology are prime candidates for resource allocation, fostering an environment ripe for business expansion, increased productivity, and innovation. It’s imperative to champion SMEs, the lifeblood of the economy. Trade and export promotion are pivotal. It is crucial to deliberately create an ecosystem that empowers Nigerian products and services to thrive in global markets. Through strategic partnerships, trade agreements, and quality standards, Nigeria can broaden its export opportunities and, therefore, drive economic growth. The youth are an invaluable resource and should be equipped with the skills necessary to excel in the modern job market. Enhancing education and vocational training is key.

How do banks’ economic forecasting process work? How do they use it to inform decision-making?

Well, it typically involves a combination of quantitative analysis, modelling, and expert opinions. These forecasts help banks anticipate economic trends, which, in turn, inform decision-making. Economic forecasts are used to set interest rates, allocate resources, manage risks, and make investment decisions, both in lending and investment portfolios.

What impact have recent policy changes and reforms had on the Nigerian economy?

Recent policy changes and reforms have had a mixed impact on the Nigerian economy. While some have shown promise in diversifying the economy and improving the ease of doing business, there is a need for sustained efforts to address structural issues. Reforms should be focused on enhancing transparency, reducing corruption, and promoting sustainable economic growth. To be more precise, in recent times, we have seen elevated inflation figures, higher borrowing costs, and steady depreciation of the NGN against the USD, among others.

What are the key sectors driving economic growth in Nigeria, and what potential do they hold for the future?

Over the past 12 quarters, key sectors driving economic growth in Nigeria include traditional sectors such as agriculture, manufacturing, telecommunications, and the digital economy. These sectors have the potential to drive economic diversification, job creation, and wealth generation, but it’s also crucial to consider emerging sectors like those within the “orange economy.” The orange economy encompasses creative and cultural industries, including entertainment, fashion, design, and the arts. These sectors hold great promise for Nigeria’s economic growth. The creative industry, in particular, has shown remarkable potential, contributing to job creation and export revenue. By nurturing and supporting these sectors, Nigeria can tap into new avenues for growth and innovation, adding to the diversity of its economic landscape. With the right policies and investments, these emerging industries can significantly contribute to Nigeria’s economic development, creating opportunities for entrepreneurs, artists, and professionals while adding vibrancy and uniqueness to our economic profile.

Read also: Women’s Hub Nov 03 2023

What is your outlook for inflation in Nigeria, and what measures are being taken to manage it?

Nigeria’s headline inflation has recorded consecutive upticks over the past several months. I expect to see subsequent upticks. At some point next year, we should see dips in the headline inflation partly due to base effects and hopefully, on the back of positive implications driven by the implementation of policies which we expect the current administration to drive over the medium-term. In my view, monetary policy alone is not sufficient. Inflationary pressure in Nigeria is due to a blend of cost-push or supply side and demand-pull inflation. A hand-in-glove approach between monetary and fiscal is likely to provide sustainable solutions. There are challenges that cannot be tackled using a lop-sided approach – factors such as, structural issues impacting the cost of doing business, logistical challenges associated with moving goods, global supply chain disruptions, and boosting production, among others.

What is the impact of global economic trends and events on the Nigerian economy?

The Nigerian economy is intricately interconnected with the global economic landscape. Nigeria, historically an oil-dependent economy, relies heavily on oil exports as a major revenue source. Consequently, shifts in global oil prices can have immediate and substantial repercussions on government revenue, foreign exchange earnings, and budgetary planning. Such fluctuations can lead to revenue shortfalls, fiscal deficits, and exchange rate volatility, thereby affecting the overall economic stability of the country. Another vital dimension of the global economy that significantly influences Nigeria is international trade. Nigeria is an active participant in the global trading system, and any disruptions in international trade can influence the cost and availability of imported goods. This directly impacts inflation rates, consumer prices, and overall economic stability. As a result, fluctuations in global trade, such as trade disputes, tariffs, or supply chain interruptions, are critical factors that need to be carefully monitored and assessed for their risk potential. The foreign exchange market is another critical area where global economic trends have a direct impact on Nigeria. Currency exchange rate fluctuations driven by global events can substantially affect the cost of imports, which, in turn, impacts inflation and the purchasing power of consumers. The value of the Nigerian Naira is intricately tied to global economic trends, and any sudden or substantial changes in exchange rates can have significant economic implications. The importance of assessing market risk in light of global economic trends is further underscored by the influence of investor sentiment. International investors closely monitor global economic conditions when making investment decisions.

Favourable global trends can attract foreign investment, while adverse trends can lead to capital flight. Therefore, understanding how global economic events affect investor sentiment is crucial for market risk assessments. Commodity prices also play a crucial role in the Nigerian economy, given the country’s dependence on commodities such as oil, agricultural products, and minerals. Global trends in commodity prices directly impact Nigeria’s export revenue and trade balance. Thus, fluctuations in the prices of these commodities have the potential to influence the country’s economic health.

Global geopolitical events are another facet of the international landscape that affects Nigeria’s economy. These events can influence Nigeria’s international relations, trade agreements, and security concerns. For instance, political instability in neighbouring countries can impact regional trade and security, thereby introducing significant risk factors that must be considered in market risk assessments. Furthermore, financial market volatility in other countries can spill over into the Nigerian economy. Global financial market turbulence, such as stock market crashes or banking crises in other countries, can affect Nigeria’s financial markets, investor confidence, and capital flows. Therefore, understanding the interconnectedness of global financial markets is crucial.

How important is it for banks to play in promoting financial inclusivity and supporting small and medium-sized enterprises in Nigeria?

Financial inclusion and support for SMEs are pivotal elements in fostering economic growth and development in Nigeria. Banks play a central role in driving financial inclusivity and providing assistance to SMEs, making their participation in these initiatives of paramount importance. To begin, banks serve as the backbone of the financial system, possessing the infrastructure, resources, and expertise required to reach a broad spectrum of customers. Their ability to offer financial services, such as savings accounts, loans, and payment solutions, is instrumental in extending access to financial services to underserved and marginalised populations. Furthermore, banks play a pivotal role by providing SMEs with much-needed access to credit, financial advisory services, and payment solutions. This support enables SMEs to expand, innovate, and compete in the market, ultimately driving economic growth and reducing unemployment rates. However, banks encounter several challenges when it comes to promoting financial inclusion and supporting SMEs in Nigeria. First and foremost is the issue of financial literacy and awareness. Many individuals and SME owners lack a basic understanding of financial products and services, which can hinder their ability to utilise banking services effectively. Banks need to continuously invest in financial education and outreach programmes to bridge this knowledge gap. Additionally, risk assessment and credit scoring for SMEs can be challenging due to the lack of formal credit histories and collateral. Developing alternative credit scoring methods and encouraging the use of technology in assessing creditworthiness can help banks mitigate these risks and extend loans to SMEs more effectively.

In your view, in what ways can non-performing loans remain low in the Nigerian banking industry?

Effective risk assessment is paramount. Banks must employ robust mechanisms to evaluate the creditworthiness of borrowers. This entails conducting thorough due diligence, utilising credit scoring models, and incorporating advanced technology for predictive analytics. These measures enhance the quality of loans, reducing the likelihood of loans turning non-performing. Diversification of loan portfolios is another key strategy.

Concentrating too heavily on specific sectors or types of loans can expose banks to a higher degree of risk. By diversifying loan types and sectors, banks can spread risk, mitigating the impact of economic fluctuations in any one area. Active monitoring and the establishment of early warning systems are indispensable for averting NPLs. Banks should continuously track the performance of their loan portfolios, promptly identifying any signs of deteriorating loans. Timely intervention, such as restructuring or renegotiating terms, can prevent minor issues from escalating into non-performing loans. An effective legal and loan recovery framework is critical. Timely resolution of default cases and efficient collateral management can expedite loan recovery, reducing the burden of NPLs on bank balance sheets. Furthermore, promoting a responsible credit culture among borrowers and offering financial education can significantly improve loan repayment behaviour. Educated borrowers are more likely to honour their obligations, reducing the incidence of NPLs. Banks must also maintain prudent reserves to cover potential losses. Adequate loan loss provisions in accordance with accounting standards ensure that there are resources in place to absorb potential losses, preventing them from negatively impacting bank capital.

Encouraging economic diversification is a broader strategy that reduces the overreliance on specific sectors, making the economy and banks less susceptible to sector-specific shocks. This diversification can help prevent the concentrated buildup of NPLs in certain industries.

How important is it for the private sector to work with the government to shape economic policies and reforms?

The private sector’s input in shaping economic policies and reforms is indispensable due to its granular understanding of market dynamics and consumer behaviour. The importance of private sector-government collaboration in shaping economic policies and reforms cannot be overstated. It is a symbiotic relationship where each party contributes its unique strengths. The private sector brings its practical market insights, innovation, and economic firepower, while the government provides the regulatory framework and resources to support and enable business growth. Private enterprises, ranging from small businesses to multinational corporations, possess a front-row perspective on the challenges they face, from regulatory burdens to infrastructure gaps. Consequently, their involvement in policy dialogue ensures that economic reforms are pragmatic, responsive, and oriented towards addressing real issues. Collaboration between the private sector and government is also essential for building a competitive and attractive business environment. Regulatory certainty, transparency, and a fair playing field are all conditions that stimulate private sector investments. The alignment of interests through collaboration leads to a more predictable and secure business environment, ultimately attracting domestic and foreign investments that spur economic growth. Challenges do exist in fostering effective private sector-government collaboration. These challenges often revolve around trust, transparency, and the alignment of interests. However, open and constructive dialogue, backed by a commitment to the common goal of national development, can overcome these challenges.

Read also: Funke Opeke, Rachel Adeshina, others urge more women in tech leadership

What practical measures can be taken to encourage foreign direct investment in Nigeria?

Foreign Direct Investment (FDI) is not just a financial injection into the economy, it represents a gateway to economic growth, job creation, and industrial development. For Nigeria, encouraging FDI is not just a desire but a strategic necessity to diversify the economy, boost infrastructure, and create a sustainable path for growth.

Improving Ease of Doing Business: Simplifying administrative procedures and reducing bureaucratic hurdles is paramount. Foreign investors seek a streamlined process when setting up and operating businesses.

Investment Promotion Agencies: Investment Promotion Agencies should proactively market the country’s investment potential. These agencies can engage in global outreach, offering information and support to potential investors interested in the Nigerian market.

Investor-Friendly Policies: Consistency in economic policies is essential. Frequent changes in policy create uncertainty and can deter potential investors. To attract FDI, we must maintain stability and predictability in our policy frameworks.

Infrastructure Development: Infrastructure, encompassing power, transportation, and telecommunications, is a critical factor for foreign investors. Investing in infrastructure not only improves the business environment but also reduces the cost of doing business in Nigeria.

Public-Private Partnerships: Collaborative efforts between the government and the private sector can be an FDI magnet. Joint ventures and Public-Private Partnerships (PPPs) can facilitate investments in sectors that require substantial capital, such as infrastructure development.

Investor Protection: A clear legal framework that protects investors’ rights and intellectual property is non-negotiable. Ensuring that foreign investors are confident their investments are secure is a fundamental aspect of attracting FDI.

Market Access: Trade agreements and partnerships that grant access to larger markets can be an incentive for foreign investors. Expanding our trade relationships regionally and globally opens up new avenues for investment.

Sector-Specific Incentives: Tailored incentives for specific sectors can be highly effective. For instance, tax incentives, grants, or sector-specific regulations can attract investments in priority areas like renewable energy or technology.

Stakeholder Engagement: Engaging with the international business community and addressing their concerns is vital. Open dialogues, round-table discussions, and forums provide a platform for mutual understanding, valuable insights, and building trust.

What are the major factors affecting exchange rate stability in Nigeria, and how can this be managed?

As for the exchange rate, liquidity constraints are expected to persist in the near term. There are a series of conversations around government efforts to boost FX liquidity but concerns around the pace at which this would be done exist. It is a weak supply vs high demand dynamic – speculative demand pressures partly triggered by the increased need for safe haven currency are not helping.

The exchange rate is influenced by several factors, a few include:

Oil Prices: Global oil price fluctuations impact the exchange rate due to Nigeria’s oil-dependent economy.

External Reserves: Sufficient foreign exchange reserves act as a buffer against external shocks.

Balance of Trade: An imbalance, like excessive imports, can weaken the local currency.

Inflation: High inflation erodes currency value, so managing it is crucial.

Investments: Foreign investments, both direct and portfolio, affect demand for the local currency.

Monetary Policy: Interest rates and central bank policies play a significant role.

To manage exchange rate stability:

Diversify the Economy: Reduce reliance on oil by developing non-oil sectors.

Effective Reserve Management: Maintain adequate foreign exchange reserves.

Intervention: Central bank intervention can influence exchange rates.

Inflation Control: Targeting inflation through monetary policies stabilizes the exchange rate.

Trade Policies: Encourage exports and reduce imports to improve the trade balance.

Attract Investments: Create an investment-friendly environment to increase demand for the local currency.

Transparency and Predictability: Ensure exchange rate policies are transparent and predictable.

Economic Reforms: Implement structural reforms for a favourable business environment.

Tell us about your book and your reason for writing it, including what you hope it achieves

Sure, this is my second book, and I had fun writing it. The inspiration to write ‘Super E: The Inflation Smackdown’ came from a deep-seated desire to impart financial literacy to the younger generation. I firmly believe that economic education should start early, empowering children with the knowledge and skills they need to make informed financial decisions. The book was also motivated by a series of faith-driven nudges, prompting me to contribute to a more financially knowledgeable future generation. I wanted to provide children with a resource that not only educates but does so in an engaging and entertaining manner.

What do you hope readers will learn from the book?

I want children to understand how to make wise financial decisions and grasp the concept of inflation, not as a complex economic term, but as a tangible force that affects their lives. My hope is that children will learn these crucial lessons while enjoying an exciting and interactive story that brings economics to life.

Why should parents purchase it for their children?

Parents play a pivotal role in shaping their children’s financial future. By purchasing ‘Super E: The Inflation Smackdown’ they equip their youngsters with essential financial skills that can have a lasting impact. This book transforms children into savvy money managers, helping them make informed choices and develop a healthy relationship with money from an early age.

How to get the book?

You can conveniently purchase the book on Amazon and through Roving Heights. Additionally, it is available for direct purchase from our website at www.chinweegwim.com/super-e, making it easy for families to embark on this educational journey and foster financial literacy in their children.

Read also: Women encouraged to leverage strengths, talents to break barriers

Tell us about your contributions to grassroots programmes especially on economically empowering widows and why?

My contributions to grassroots programmes, particularly in economically empowering widows, stem from a sense of social responsibility. I believe that empowering marginalised communities, such as widows, is not only a moral imperative but also an essential step towards building a more inclusive and equitable society. Since the peak of the pandemic in 2020, things have been incredibly tough from a purchasing power point of view.

Every income class has had to make adjustments to economic realities. In 2018, I got acquainted with an NGO that was focused on empowering widows. The Executive Director had identified and created a community of widows that required economic empowerment but was seeking ways to create a sustainable impact. I got involved. In recent times, I’ve had to set aside funds on a monthly basis to supply food items for households run by these widows. The economic hardship is truly disturbing, and I think we all need to actively engage in grassroots community engagements to soften the economic pain.

Share with us about being a National Consultant by the United Nations Economic Commission for Africa to lead the services trade project partly driven by UNCTAD

On the back of my role as a National Consultant for the United Nations Economic Commission for Africa, I delivered an extensive policy document around trade with financial services, as well as global and regional value chains in focus, which were relevant to the implementation of the African Continental Free Trade Area agreement. My output contributed to a developing road map for necessary policy frameworks that would enable the maximisation of benefits that can be derived from financial services, in terms of, mobilising savings, facilitating transactions and supporting employment while fostering financial inclusion.

On a much granular level, I did assess the degree to which financial services may improve tradability of goods and services as well as improve a country’s penetration into regional value chains. I enjoyed leading this project, it required a lot of cross-country collaboration – counterparts in Togo, Ethiopia, Kenya and Ghana were a delight to work with. Despite some unavoidable constraints, we were still able to deliver high-quality output, useful to the Bank of Industry, government agencies and stakeholders.

Concluding words

In recent times, Nigeria, like many other countries, has faced its share of economic challenges. However, understanding economic cycles teaches us that even in the face of adversity, there is always room for optimism and hope. Economic cycles remind us that downturns are typically followed by upturns. It is during the recovery phase that we often witness significant advancements and positive changes. One of the developments that excite me for the future of Nigeria is the ongoing commitment to diversify the economy. If the policy implementation willpower is there, I believe that the country can attain a healthy macroeconomic environment status.