Global investment bank, Morgan Stanley has said the economic reforms made by the current president of Nigeria, Bola Tinubu, may lead to a strong increase in annual income despite the challenge they pose for economic growth.
The bank’s analyst, Steven Quattry, noted that Tinubu’s reforms could lead to a new consumer class and attract investment opportunities.
This is according to a post titled ‘Market Outlook: Nigeria’s New Dawn’ published on the bank’s website.
“Prior to the May 2023 election of new president Bola Tinubu, two sets of policies had inhibited the country’s growth. The first was fuel subsidies, which cost a whopping $10 billion in 2022 and primarily benefited middle- and high-income members of the population: Only three per cent of all subsidized fuel was consumed by the poorest 40 per cent of Nigerians.
“The second was a complex currency regime, which led to an overvalued currency and curbed much-needed foreign investment, as foreign direct investment fell by 60 per cent under former president Buhari.
“In response to the economic challenges, Tinubu has acted quickly to revive growth. During his inaugural address, he declared an end to fuel subsidies. Days later, he put an end to the overvalued currency by unifying the exchange rates. The incoming administration intends to grow the economy primarily via private investment and is aiming for 6% real GDP growth per year.
“This could lead to a strong rise in incomes, which, combined with a young and fast-growing population, could usher in a new consumer class and a number of investment opportunities.”
The analyst added that the interventionist policies of former president of Nigeria Muhammadu Buhari triggered economic bottlenecks and hindered the private sector’s ability to grow.
He identified two major policies multiple foreign exchange rates and fuel subsidies.
The Morgan Stanley analyst noted that the average Nigerian has experienced an incredibly difficult time in the last eight years, with annual income shrinking by 32 per cent from $3,222 to $2,200 under Buhari’s administration.
