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Chinwendu Obienyi
As Nigerians await President Muhammadu Buhari’s announcement of cabinet ministers to work with him in the next four years, capital market analyst have hinged the performance of the market on stable and favourable long term policies, as well as knowledgeable executive cabinet.
They have also argued that the diversification of the Nigerian economy in the president’s second term would bring more vibrance to the market.
This was the view of market analysts who spoke on what awaits the capital market in the next four years especially as President Muhammadu Buhari begins another 4 year cycle as Nigerian leader. The reactions came as most Nigerians felt Buhari’s Democracy Day speech was full of platitudes and quite uninspiring.
The president in his speech on June 12, 2019, said that with leadership and a sense of purpose, the government can lift 100 million Nigerians out of poverty in 10 years. He noted that following the 60 per cent drop in oil prices between 2015 and 2016, through monetary and fiscal measures, the current administration had stimulated economic growth, curbed inflation and shored up the country’s external reserves.
According to him, “We now have witnessed eight quarters of positive growth in the economy and our GDP is expected to grow by 2.7 per cent this year. Furthermore, our external reserves have risen to $45 billion enough to finance over nine months of current import commitments.
This Administration is laying the foundation and taking bold steps in transforming our country and liberating our people from the shackles of poverty”.
Buhari further said that in the next 4 years, the current administration will remain committed to improving the lives of people by consolidating efforts to address these key issues as well as emerging challenges of climate change, resettling displaced communities and dealing decisively with the new flashes of insecurity across the country, and the impacts on food scarcity and regional stability. He said, “We are not daunted by the enormity of the tasks ahead. Instead, we are revived by this new mandate to work collaboratively with State and Local Governments, Legislators, the Diplomatic Corps and all Nigerians to rebuild and reposition our country as the heartbeat and reference point for our continent”.
Mixed reactions have continue to trail the President’s Democracy speech with market experts saying that Nigeria needs accelerated growth as well as long term stable policies that will drive economic diversification.
Speaking to Daily Sun on telephone, Economic analyst, Dr Austin Nweze, said the economy is in a state of comatose and there is no magic that can happen without an administration having a vision or strategy. This is because if you have a good vision and strategy, it will strengthen the fiscal policy. The fiscal policy is weak and even if you have a strong monetary policy, nothing can be accomplished”.
According to him, “ there is need to expand production, good policies expand production which culminates ineconomic growth. Reduction of interest rate is key if the government wants to attain 2.7 per cent as regards GDP growth. The World Bank forecasted that by the end of this year, we should have a growth of 1.8 per cent and now the government is saying they are targeting 2.7 per cent and we are halfway in 2019, how is that growth even attainable when we are even yet to fix power sector and other sectors that have suffered severe dips?”
Chief Economist, Africa, Standard Chartered Bank, Razia Khan, noted that the wealth levels are much more lower than incomparable oil producing economies and there is not necessarily a vast amount accumulated wealth that even helped Nigeria see through the decline in oil prices in late 2014.
Khan added that most significantly, given the country’s population growth rate, per capita income growth in Nigeria has been negative for some time while adding that in order to have meaningful socio-economic transformation and lift millions out of poverty, Nigeria needs accelerated growth.
Her words, “The question that should be asked is what are the things that needs to be done to create resilience in the Nigerian economy? what is policy doing to be able to boost diversification prospects? we know that under the current administration, there has been a strong emphasis on capital expenditure and there would be continued emphasis on capital expenditure to put in the place the enabling infrastructure and that is important for it is good we see the acceleration in Nigeria’s investment rate in order to create the conditions that might facilitate economic diversification in the future. At the same time, it is equally important to look at policy holistically to see what kind of policies (long term)is needed to undertake that would boost economic diversification because this is not something that can be completed in 8 years. Nonetheless questions need to be asked for every specific policy proposal to see if it helps Nigeria’s economic diversification in the long term or hinders it”.
Khan further noted that investors’ focus is much likely to be on the reform credentials of anyone given key economic portfolio adding that until Nigeria is able to put together more resources, it is going to be strained in terms of development and this would be the key thing investors would be looking especially as Buhari begins another 4 years of leadership.
“This is because plans have been outlined and there needs to be an emphasis on capital expenditure, infrastructure funding and there is hope of a smooth passage of the budget and that Nigeria will not have to wait for a long time before budget will be passed and the capital expenditure for the year can get under way, this is going to be necessary to boost growth and investors will be looking very carefully at the kind of structural reforms that are proposed by whoever holds key economic portfolio”
Delivering a paper titled, ‘Issues and lessons on Nigeria’s economic diversification’, Former Director-General of Debt Management Office (DMO), Abraham Nwankwo asserted that regional efforts (state governments) would help to generate revenue to finance its development projects and programmes while contributing to the federal treasury for the running of the common services.
He said, “In essence, revenue base of the entire economy would be highly diversified because it would be a combination of a diversified range of revenue sources from the various sub-nationals, based on their varied natural resources.” He said that Nigeria’s experience in exploring the federalist state is a negation. Hence, its failure to appropriate the best out of its abundant resources.
