" /> Broad Street Watch: What really is Nigeria doing right? | Hallmarknews
Published On: Tue, Aug 15th, 2017

Broad Street Watch: What really is Nigeria doing right?

 

Teslim Shittay-Bey  |

It is almost cliché that Nigeria is the sick man of Africa. All things dark and ugly have gradually found a nestling home in Africa’s largest black nation.  Ranging from bloody insurgency, human trafficking, nepotism, ethnic irredentism to grand larceny and political misconduct, Nigeria has been punched into a squared corner by them all. But despite these notable sores and warts, surely not all things can be that bad in a country of 180 million people; Or can they? What is Nigeria really doing right?

Growth slow but better

On the economic front Nigeria seems to be pulling out of its first full blown economic recession since 1991. Gross Domestic Product (GDP), a measure of the country’s economic output, has gradually started to turn a corner rising from -2.34 per cent in the third quarter of 2016 to -0.52 per cent in the same period of 2017.

International Monetary Fund (IMF) forecasts that by full year 2017 GDP would have grown by 0.8 per cent (definitely cheerier than the auditing and consulting firm PriceWaterhouseCooper’s (PwC’s) projection of 0.7 per cent) and the international agency further projects a 2018 growth rate of 2.3 per cent. This is far from the more familiar quarterly average of 6 per cent in 2015  but a lot better than last year’s full year average of -1.8 per cent.


In a 2016 survey by PwC 61 per cent of companies surveyed experienced declining sales over the last eighteen months with the highest impact being across the healthcare, telecommunications and Oil and Gas sectors. The primary problem was their limited access to foreign exchange. The CBN’s recent introduction of a Nigerian Autonomous Foreign Exchange (NAFEX) window has eased this challenge and more companies and investors appear to be getting access to foreign exchange, especially the United States dollar.

      Source: National Bureau of Statistics, CardinalStone Equity Research, Business Hallmark 

Q=quarter, F=forecast

 

 

Inflation down but not out

The country’s Central Bank (CBN) has kept a firm fist over inflation rate over the last two years with the Banks boss, Godwin Emefiele, refusing to budge on the issue of increasing money supply to bring down interest rates and stimulate growth. The CBN has insisted that the economy was too fragile to let inflation (currently at 16.2 per cent down from 18.7 per cent at the beginning of the year) rise and that a rise in inflation would discourage foreign investors and lead to adverse pressure on the foreign exchange market which in turn would further worsen the domestic inflation situation. Those opposed to the position take a different tack.

Economists with an eye on faster-paced economic growth for Nigeria (currently at 0.52 per cent in the first quarter) have argued that if the CBN expanded money supply interest rates would fall and local manufacturing would see financing costs drop and bottom lines improve. This would in turn lead to higher rewards on investment and steeper stock prices resulting in portfolio investors coming back into the local stock market with brief cases stashed with dollars, thereby strengthening the foreign currency value of the Naira.

According to economist, Dr Biodun Adedipe principal consultant, BA Adedipe & Associates at a side discussion after a recent Financial Correspondents Association of Nigeria (FICAN) lecture in Lagos,

‘if we create conditions for economic expansion we might see both growth and inflation rate reductions over a relatively short period, but by keeping a tight lid on inflation we could create a storm that breaks into a tornado as unemployed youths unleash mayhem.’ he says.

 


The ticking unemployment bomb

Nigeria’s unemployment rate is about 14 per cent on average but above 20 per cent amongst those between the ages of 18 and 34. The challenge is not just the size of the population and the proportion of it that is unemployed, underemployed or unemployable but also its growth rate, Nigeria’s population is sprinting ahead at a thundering 2.8 per cent per annum while GDP growth is less than one per cent implying an alarming fall in GDP per capita or person. This means that every year there is less produced by the country per hands available and per mouths to be fed.


This explains the anxiety expressed severally by the Minister of Finance (MoF), Mrs. Kemi Adeosun that the economy needs to be reflated. The preferred policy direction of the MoF would be for the fiscal authority to expand the capital and recurrent expenditure which would be accommodated by the CBN by buying hoards of federal government treasury bills rather than selling them to the private sector which typically results in a rise in domestic interest rates and puts a downward squeeze on credit facilities available to local manufacturers and traders. Says Peter Aletor, financial economist and chief executive office of the Apel Asset &Finance Group,

‘We have got to rethink our priorities by taking a short, even if painful, kick to the shin by way of higher inflation while we wait patiently to receive the soothing balm of growth which is likely to be accompanied by productivity which in turn will lead to a drop in average prices. A local adage says that cutting off the head is not a sensible cure for a nagging headache. The monetary authorities need to realize that people need to be alive before they can appreciate the benefits of lower inflation rates.’

A growing number of local economic analysts are anxious about the unemployment rate. In a recent article on the state of the country, a veteran of Nigeria’s murky political waters, Professor Pat Utomi, a professor of Political Economy at the ivy –league Pan Atlantic University in Lagos notes that, ‘Elections have become wars and public office holders consume resources for infrastructure and growth, in the enjoyment of the perquisites of power.

All these may bring the normal to the brink of tears but they do not trouble me as much as the fact that those on whose watch a country is crumbling walk with such swagger you feel you have just left the requiem for a sense of shame.’


Politics and its darker side

Perhaps, therefore, the worst place Nigeria has seen failure is in the area of politics. The country’s politicians have shown a mastery of greed, pettiness and poor understanding of basic socio-economic issues.

The off handed manner in which the Senate recently shot down a bill to promote greater fiscal autonomy amongst the different levels of government, analysts have argued, shows a reluctance to change from a present ‘entitlement’ economy where largesse falls from the table of a single central authority to a more competition-driven economy where different parts of the country through dint of hard work and creativity map and pursue their own destinies.

According to Otti, ‘we have got to bring clarity to governance. We must map out the salient goals; figure out the paths to their timely attainment; and put in the long hours of work needed to turn policy input into socioeconomic output’, says Otti, ‘good things do not come easy, they are the product of diligence, even an omelette requires tossing eggs’.

Unfortunately Nigerian politicians believe that ‘hard’ work is meant for fools, and that ‘clever’ work is not only the natural preserve of the politician but also, and perhaps more importantly, comes with an oversized pay cheque. Intrigues, double speak and clandestine gang ups have left the presidency threadbare with the Acting President, Prof Yemi Osinbanjo, SAN, dodging rearguard bullets as he tries to weave a progressive path for the country’s economy.

So far the Acting President has done a decent job: he has increased the frequency and intensity of interface between the public and private sector; he has pursued an energy-sapping round of visits across the country to assure the different ethnic groups of their importance in the federation; he has also visited the restive Niger Delta to address issues related to rehabilitation of former militants and the cleaning up and rebuilding of their communities worsted by decades of oil spillage. The Acting President has had to run the economy as best he can with a hand tied behind his back.

The absence of President Mohammed Buhari, who is convalescing from illness in the United Kingdom, has raised Osinbajo’s profile but has equally restrained his actions as he tries to avoid being accused of over ambition by an insecure inner circle of presidential loyalists. This gang of gumshoe officers and relations of President Buhari have formed a loose pact with the leadership of the Senate to constitute a bulwark to check, what they may perceive as, exuberant executive action by Osinbanjo; this has proven a drag on the Acting Presidents performance and inhibited his firmness and self confidence.

Since the Presidents return to London for medical examination in May, Osinbajo has had to play a cool hand to steer clear of allegations of trying to make himself electable in 2019 against the desires of the Northern Hausa-Fulani leadership in government. Mindful of how former President Goodluck Jonathan emerged on the shoulders of the sickness and eventual death of his predecessor President Umar Yar Adua, administration hawks are not predisposed to a highly performing Acting President from the South West, who could upstage the emergence of a Northern Nigerian President two years down the road. Indeed the flow of emotions and political calculations from the Presidential Villa to the Green dome of the National Assembly is still very much a cloak and dagger affair.


So what is Nigeria doing right? Good fiscal policy (maybe with the exception of a worrisome rise in public debt profile), cagey monetary policy (the jury is still out on tight money supply and high interest rates), and domestic politics (a phenomenon that scares the living daylights out of local and foreign investors wary of the parlour party tricks of a fractious executive and a conniving parliament).

Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Recent posts

  • PDP in fresh crisis over chairmanship zoning, threatens 2019

    By Obinna Ezugwu The December 9 Convention of the People’s Democratic Party (PDP) will be the most critical in its history; it is a convention that would, to a large extent, determine its fate and course for action ahead of the much awaited February 2019 general election and may also determine its chances of returning […]

  • Why South East should ignore President Buhari

    By UCHE CHRIS   President Buhari’s last week visit to the south east on APC campaign for Anambra governorship poll and his promise to give more appointments to the region is a clear and abundant proof that he is either a bad politician or he takes the Igbo for a fool. It is sad and […]

  • GTBank doubles stock value as investors go bullish

    By OKEY ONYENWEAKU GT Bank’s share price has doubled in the last one year, leading investors to grin satisfactorily as there gambit on the stock seems to have panned out. The stock’s price has risen from N24.00 in January 2017 to N43.00 as at November 17, 2017, creating a capital gains opportunity of 79.2 per […]

  • Moody’s rating exposes poor state of banks

      .           Experts predict more recapitalization next year FELIX OLOYEDE Deposit Money Banks (DMBs) in the country have been caught in the web of liquidity squeeze, capital adequacy challenge and the encumbrance of raising fresh funds  as Moody’s Investors Service (Moody’s) downgraded their long-term local currency deposit and issuer ratings. The credit rating agency lowered […]

  • Brain drain: Doctors, nurses’ exodus cripples Nigeria’s health sector

    By AYOOLA OLAOLUWA The mass emigration of health care professionals, especially doctors, pharmacists and nurses, is on the verge of crippling the nation’s health sector, Business Hallmark findings have revealed. Though, the mass exodus of these skilled health workers abroad for greener pasture has been on unabated over the years, it has now reached an […]

  • S&P rates UBA highly, affirms ‘B/B’ credit ratings

    FELIX OLOYEDE S&P Global Ratings has given United Bank for Africa (UBA) a B/B rating based on the rating agency’s interpretation of UBA’s competitive strength in the Nigerian banking market. The agency’s latest report released on Friday showed that the bank has benefited from a strong brand franchise in the corporate and retail segments of […]

  •  Nigeria: The disquieting nuisance of elitism

    By TESLIM SHITA-BEY   At the heart of Nigeria’s social and economic dysfunction is not just the usual suspects of tribe and religion but also, and quite disturbingly, the self-preening and self-adulation of Nigeria’s elite. The failure of the educated leaders of the country to bring about a collective sense of nationhood and build a […]

  • (Across the counter) University of Ibadan banking services waiting for relief

    Banks within university environment usually have a large turnout of customers. It wasn’t any different when our across the counter team visited some banks within the University of Ibadan environment to review the quality of service being rendered. Our criteria included bank professionalism, customer care efficiency, security consciousness, corporate environment and ATM efficiency. Here is […]

  • Time is ripe for rates cut, says Rewane as inflation slows further in Oct.

    FELIX OLOYEDE This is the appropriate time for the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to cut benchmark monetary rates after inflation rate slows down for the ninth consecutive time in October, said Mr Bismarck Rewane, Managing Director, Financial Derivatives. The National Bureau of Statistics on Tuesday released Consumer Price […]

  • ELAN National Lease Conference Focuses on Revamping Nigerian Economy

    FELIX OLOYEDE In furtherance of its objective of promoting the business of leasing in Nigeria, Equipment Leasing Association of Nigeria (ELAN) has concluded plans to organise the 15th Annual National Lease Conference with focus on revamping the Nigerian economy. The conference which is the biggest gathering of stakeholders in the leasing industry is expected to […]

  • Nigeria-centric restaurant, Labule, opens new outlet in Lagos

    Labule, Nigeria-centric restaurant, operated by an indigenous company, Roots Foods Limited, offering real Nigerian local delicacies in a unique environment that combines the setting of a modern quick service restaurant with that of an African setting of a local ‘buka’, has opened a new outlet on Admiralty Road in Lekki Phase 1, Lagos. The brand […]

  • Nigerian banks shine in Ghana

    By JOHNMARK UKOKO Nigerian banks have been credited with “revolutionizing “the banking sector in Ghana, due to the many innovations they brought to Ghana’s banking sector. The Ghana Deputy Minister of Trade and Investment Hon. Carlos Kingsley Ahenkorah said in Lagos that the innovation and transformation of the Ghana’s banking sector is credited to the […]

  • Ajimobi moves to save Oyo APC from disintegration

    By OLUSESAN LAOYE The seeming crisis in Oyo APC has now forced the Governor of the state, Abiola Ajimobi, to begin consultations with stakeholders to convinced members on why they must come together as a body to face the 2019 general elections, Although the internal crisis is yet to break open as the aggrieved party […]

  • YolaDisCo sale stalled as no potential buyers emerge

    By ADEBAYO OBAJEMU Two years after the core investors of the Yola Electricity Distribution Company, YolaDisCo, declared a force majeure owing to their inability to operate under the reign of terror unleased by Boko Haram, the Federal Government is yet to find any investor interested in operating the utility company, it has been learnt. In […]

  • Company Analysis: Much Ado about Seplat

      By TESLIM SHITA-BEY The oil and gas sector has had a bumpy since the beginning of 2017 with local oil major, Seplat, seeing its financials whipped raw by prior year liabilities despite rising revenues over the nine months (9M). The company in the last two years has moved from being distinctively bad to singularly […]

  • How to start a photography business

    By ZUBAIR DANIE While photography could be accounted for as a full blown course in any offering institution of learning for professionalism, the field equally provides a platform for individuals whose passion it is to project images as a form of livelihood. The socio-cultural aspect of Nigerians that play host of events like: wedding, naming, […]


Visit us on Google+