Why Nigeria’s economic development will drop in 2023 – KPMG

Bisola David
Bisola David
Nigeria needs to balance foreign investment with local growth - KPMG

From the KPMG Nigeria 2023 Annual CFO Outlook Survey, 41% of CFOs think there won’t be any discernible growth at all.

The delayed withdrawal of fuel subsidies, an unstable foreign currency environment, a high rate of inflation, insecurity, and the tax and regulatory environment are some of the reasons the CFOs provided for the lackluster growth estimate.

CFO of Citibank Nigeria, Sharafadeen Muhammed, was quoted as saying in the survey report;

“Fiscal policy has recently come under pressure, and eliminating the oil subsidy would greatly assist in giving the government’s coffers additional headroom to enable the provision of development benefits to citizens.”

52% of the CFOs poll expressed poor confidence in the potential for growth in their respective industries, citing the high rate of inflation, the slowdown in the global economy, and overall economic uncertainty as the causes of the bleak outlook.

Nigeria’s headline annual inflation rate continued to rise until 2022, hitting its highest level in nearly two decades.

This, according to KPMG, was caused by ongoing structural problems, rising food and energy prices internationally, as well as other policy-related roadblocks that affect the cost of doing business.

In order to enhance economic growth and boost investor and public trust, CFOs encouraged the incoming administration to address the high inflation rate, security issues, and unpredictability of the foreign exchange environment.

Insightful data on how CFOs and organizations assess the current business environment, their expectations of the government and policymakers, and their solutions to their business difficulties were provided by KPMG’s Annual CFO Outlook poll.

The country’s finance minister claimed that the decision was made because the government needs to start laying the foundation for the future withdrawal of fuel subsidies.

“Because fuel subsidies are unsustainable, they should be eliminated sooner rather than later. We can no longer afford it. However, we must do it in a way that minimizes the impact of the subsidy on the lives of common Nigerians.

“As a result, it will be necessary to consider alternatives to the fuel subsidy that must be anticipated and then implemented. What must be done, however, in order to assist those who will be most impacted by the removal?

“We have a plan that we will start working on, putting the building blocks towards the eventual removal of the first subsidy.”

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