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The CFG Advisory advised that the Central Bank of Nigeria (CBN) targets a reduction in the interest rate and commences its inflation targeting program immediately to fuel growth.
Nigeria’s benchmark interest rate of 27.25 per cent remains one of the highest among its African peers. While most of its Sub-Saharan peers are lowering their rates, the CBN has held rates at all its meetings this year.
This is because inflation remains stubbornly high at 22.2 per cent in June, despite being on a downtrend since March.
“The Central Bank should aim to reduce interest rates by the end of Q3 2025. This would help boost economic growth and combat inflationary pressures. By targeting an inflation rate of 12-14 percent, historical data suggests that Nigeria can achieve an economic growth rate of 8-10 percent,” the firm said.
It said that Nigeria’s growth has declined from 3.8 per cent in the last quarter of 2024 to 3.1 per cent in the first quarter of 2025.
To stimulate growth, it emphasised the importance of a clear growth-oriented plan, which includes reducing debt and generating more revenue. Nigeria’s debt profile is currently above $100 billion, with significant debt service costs.
“However, there are no threats of default, and funding is primarily through market securities as ways and means of financing from the CBN, since it has been discontinued,” it said.
To reduce debt and generate more revenue, the advisory firm proposed that the government optimise equity in capital structure and increase investment in non-oil exports, particularly in agriculture, to drive growth.
“Sell Oil JV assets to raise $35-$40 billion, reducing debt and enhancing the balance sheet,” they said.
The CFG Advisory recommends the need for structural reforms, strategic fiscal management, and a coordinated approach to monetary, fiscal, trade, investment, and Industrial Policy implementation, to stimulate economic growth at 8-10 per cent sustainable levels.
“Implementing these measures will restore purchasing power and lift Nigerians out of poverty,” it said.
