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By Merit Ibe
The Centre for the Promotion of Private Enterprise (CPPE) has projected that the economic headwinds and shocks of 2024 would not be as severe as what was obtained in 2023.
Director of the centre, Dr Muda Yusuf, who made the forecast said he believes that 2023 was very difficult, but noted that 2024 would not likely be so bad, explaining that last year, the nation witnessed two major transitions; political and the naira redesign policy. He also pointed out that two major economic reforms came with severe shocks that pressured the economy. Yusuf noted that between the time the reforms were introduced and now, there had been some major adjustments to the realities of these reforms.
“The efforts of the CBN in clearing the forex mature obligations, the removal of policy barriers to forex inflows and the import substitution effects of domestic refining of petroleum products would have a considerable impact on the economic outlook for 2024.”
The Director noted that efforts of the government to curb the menace of oil theft and boost crude oil output would positively impact on the outlook for foreign reserves and the stability of the exchange rate.
“Already the fiscal space is getting better following the revenue effects of the fuel subsidy removal and the steps towards exchange rate convergence.
“However, the challenge of insecurity, crude oil theft, rising recurrent expenditure and the social outcomes of economic reforms are potential risks to the outlook.
“The biggest challenge to our manufacturing sector is the huge exposure to the external sector, specifically imported raw materials. The sector’s outlook will depend to a large extent on the stability of the foreign exchange market and the related forex liquidity.
“However, to the extent that the CBN had demonstrated a clear commitment to the stabilisation of the foreign exchange market, the manufacturing sector outlook may be more on the upside in 2024. “The rising prospects of heightened domestic petroleum refining activities would impact positively on backward integration outcomes for the manufacturing sector. The expected increase in domestic petrochemical output will hopefully ease the pressure of importation of raw materials by manufacturers.
“So, with all these efforts, I don’t share the view that 2024 will be worse than 2023, Muda said.
He agreed that the indicators are not that good and advised that government has to support the manufacturing sector by ensuring facilitation of investment in upstream or core industries. “Government has to facilitate the steel industry and the petro chemical industry and more others. We need to be strategic when it comes to industrialization in order to have a sustainable manufacturing sector.”
