Dr. Yemi Kale, Group Chief Economist and Managing Director, Research and Trade Intelligence, Afreximbank, has declared that a business-as-usual approach in a volatile global environment is no longer tenable.
Dr Kale made this declaration at the 2025 Vanguard Economic Discourse held at Civic Centre, Victoria Island, Lagos, last week, under the theme: “Economic Hardship and Pathways to Recovery.”
“The Nigerian economy in 2025, much like its counterparts across the continent and the broader global economy, stands at a critical strategic juncture.
“The confluence of heightened global volatility, systemic domestic vulnerabilities, and a shifting geopolitical equilibrium has redefined the parameters within which we must now operate.
“These dynamics have disrupted traditional policy levers, complicated macroeconomic forecasting, and constrained the latitude available for both fiscal and monetary intervention.
“In this environment, a business-as-usual approach is no longer tenable.
“What is required is a comprehensive reorientation of our economic strategy—anchored on structural reforms, productivity-enhancing innovation, and a deliberate pivot toward inclusive, human-centred development.
“The success of this transition will hinge not only on the policies we enact, but on the institutional capacity, inter-agency coordination, and political resolve we bring to bear in executing them”, Kale said.
Kale says that because of the fact that the world is in a state of flux, the signals are often mixed, and the outlook is riddled with contradictions, thus necessitating a reassessment of data and analysis and conclusions.
Kale summarises the current state of the world as being that of turbulence closely by uncertainty.
“These are not just buzzwords—they are real forces shaping global and domestic economic behaviour and outcomes. And for developing economies like Nigeria, which are already navigating significant structural and institutional weaknesses, this turbulence create profound challenges”, Kale says.
Kale says further that “Planning in such an environment becomes exponentially more difficult. This is because economic uncertainty disrupts decision-making across the board. Households, businesses, governments, investors, and financial institutions all behave differently under conditions of volatility and uncertainty—and often in ways that reinforce economic fragility.”
“Households, for instance, tend to reduce discretionary spending and increase precautionary savings during periods of uncertainty—that is, if they have any disposable income to save in the first place.
“For the vast majority of Nigerians who live hand-to-mouth, even minor economic disruptions can be catastrophic.
“We witnessed this vividly during the COVID-19 pandemic, when lockdowns— however necessary—quickly escalated into widespread unrest.
“The core issue wasn’t noncompliance; it was economic desperation.”
Dr. Kale says that “For many Nigerians, the ability to earn a livelihood is not guaranteed tomorrow—it is negotiated daily. So taking even a single day off work is often not a choice, but a luxury they simply cannot afford.
“The stark reality is this: most Nigerians lack the economic buffers—be it savings, social protection, or institutional support—required to withstand macroeconomic shocks, however temporary
“Unfortunately, too often, policy responses—however well-meaning—fail to adequately grasp the depth and immediacy of this reality. There is a persistent tendency among governments and elite decision-makers to underestimate the lived experience of hardship at the base of the socioeconomic pyramid.
“We often respond not with foresight, but with reaction. Interventions are frequently triggered only after economic distress erupts into social unrest—at which point, palliative measures are deployed hastily and unevenly rather than pre-emptively cushioning citizens against foreseeable disruptions.
“What is required therefore, is a decisive shift toward anticipatory governance—where policies are not only designed to respond to crises, but to foresee and mitigate them before they inflict widespread harm.
“This means proactively cushioning vulnerable populations, strengthening social safety nets, and reinforcing public trust in state institutions.”
Kale says that “What is particularly concerning in the Nigerian context is that, in many cases, the disruption is not an unanticipated external shock beyond the government’s control.
“Often, the hardship stems from policies introduced by the state itself. These are not unanticipated events—they are planned decisions.
“Yet even then, despite the policies being needed, the necessary safeguards are either absent, poorly implemented, or deprioritized. In some instances, the likely socioeconomic impact is understood, but there is insufficient political will, fiscal space, or administrative capacity to do what is required to protect the most affected.
“And in Nigeria’s case, the most affected constitutes the majority of the population.
“In high inflation environments like Nigeria’s, economic agents also hoard foreign currency or durable goods to preserve value. The result? Consumer demand softens, GDP growth slows, private sector investment declines, unemployment rises, and poverty becomes more entrenched.
“The outcome is unmistakable: hardship—deep, persistent, and widespread— and felt most acutely at the household level.
“Businesses, too, adapt defensively in environments characterized by uncertainty and macroeconomic turbulence.
“Faced with volatile market conditions, unpredictable policy shifts, and elevated costs, firms often adopt a risk-averse posture.
“Hiring plans are deferred, investment pipelines are stalled, and operational expenditures are trimmed to preserve liquidity. The emphasis shifts from growth to survival, and from innovation to cost containment.
“This weakens private sector activity, limits job creation, and suppresses productivity and competitiveness.
“Governments, meanwhile, face their own set of constraints in uncertain economic environments.
“Revenue forecasting becomes increasingly unreliable due to volatile commodity prices, exchange rate fluctuations, and inconsistent tax performance.
“In response, policy often shifts toward reactionary short-term, and often poorly though out and badly implemented populist interventions—such as expanding public sector employment, increasing cash transfers, or, in more constrained scenarios, resorting to monetary financing to bridge fiscal gaps. Does this sound familiar?
“While these measures may provide temporary relief or political expediency, they carry significant long-term costs. They exacerbate fiscal deficits, undermine macroeconomic stability, and erode the credibility of public institutions.
“Just as importantly, such reactive policies can crowd out productive investment, distort incentives, and reduce the confidence of both domestic and international investors. In effect, the attempt to manage volatility and curtail economic hardship through short term politically expedient means often ends up entrenching it.
“Meanwhile, investors react to the environment by seeking safe havens, demanding higher returns for risk, and favouring short-term portfolio investments over long-term FDI.
“The consequences are familiar and deeply disruptive: capital flight accelerates, asset valuations decline, and renewed pressures mount on the domestic currency.
“In effect, investor behaviour becomes both a reflection of and a reinforcement of underlying fragilities—tightening the feedback loop between macroeconomic instability and constrained investment flows.
“Finally, financial institutions tighten lending conditions, raise interest rates, and retreat to low-risk assets. Credit becomes more expensive and less available, weakening financial intermediation and further depressing economic activity.
“In many ways, this sounds like a description of Nigeria’s economic condition for most of its existence—not just in 2025. But this time, it is also a description of the global economy. The same forces acting globally are amplifying our domestic vulnerabilities.
“In countries like Nigeria, where the economic base is already fragile, where buffers are weak, and where the social fabric is under strain, the compounding effects of uncertainty can therefore be devastating.
“As policymakers and business leaders, we must reframe our understanding of economic disruption—not as a technical challenge, but as a social emergency.”
On the strategic issue of the energy sector and the imperative of energy transition, Dr. Kale says Nigeria needs to act decisively if it is to achieve the goals of energy transition to a sustainable level.
“Another key consideration, which is strategic both economically and geopolitically, is the urgent need to position Nigeria within the global energy transition.
“The global pivot toward green energy is not just a technological shift—it is a geopolitical and economic realignment. As advanced economies accelerate investment in electric vehicles, battery storage, renewable power infrastructure, and clean manufacturing, demand for critical minerals is expected to surge over the next two decades.
“Nigeria, with its deposits of lithium, cobalt, graphite, nickel, and rare earth elements, is strategically positioned to benefit—but only if it acts decisively.
“To realize this potential, Nigeria must craft a coherent energy transition strategy that positions the mining sector as a foundational pillar of future industrialization.
“This requires far more than simply attracting extractive capital. It means:
- Building the enabling infrastructure—power, water, transport corridors, and digital systems—to support commercial mining and processing operations.
- Establishing clear, transparent, and enforceable regulations to govern exploration licenses, environmental compliance, and community engagement—thereby reducing policy uncertainty and investor risk.
- Investing in value addition and beneficiation, to ensure that raw mineral extraction feeds into domestic processing, manufacturing, and export of higher-value products.
- Linking mining development to industrial policy, by fostering mineral-based clusters for batteries, solar panels, electronics, and other green technologies.
“However, unlocking this opportunity will require confronting a well-documented set of governance risks.
“Nigeria’s extractive sectors have historically suffered from weak regulatory enforcement, rent-seeking behaviour, and underinvestment in community development. If not addressed, these issues could lead to a new wave of enclave exploitation—where resources are extracted, but little value is retained domestically.
“The lessons from the oil and gas sector must not be repeated. We must ensure that the governance of our critical minerals is rooted in transparency, accountability, and shared prosperity. This includes:
- Strengthening institutional capacity in regulatory agencies and geological surveys.
- Mandating public disclosure of contracts, production data, and royalty flows.
- Establishing community development agreements that are enforceable and inclusive.
- Proactively managing environmental and social risks through rigorous oversight and early consultation.
“If Nigeria gets this right, the mining sector can become a catalyst—not only for foreign exchange earnings—but for structural transformation, regional development, and global competitiveness in the green economy”, Dr. Yemi Kale concludes.
- Alex Ekemenah