Analysts warn of impending bubble as economic agents remain upbeat

by | January 17, 2018 1:09 am

Analysts in the financial services sector on Tuesday advised the Federal Government to position itself against any impending crisis in the financial market as Nigeria’s economic agents remain upbeat.


This is as Laoye Jaiyeola, chief executive officer; The Nigerian Economic Summit Group (NESG) on Tuesday placed seven topical issues in the country on a watch list.


These include electoral cycle, risk of Middle East tension, insurgency in the Niger Delta, management of Cattle Rustlers Challenges, Brexit impact, minimum wage review and aggressive tax collection- VAIDS.


Jaiyeola said a major concern for 2018 is not whether the economy will grow but rather how inclusive Nigeria’s growth will be.


The stock market closed higher in 2017 with 42 percent All Share Index (ASI) growth, and at 44,054.72 points is within 51 percent of the historical peak achieved in February 2008.


The market was among the top-5 global markets in 2017 – behind Argentina, followed by Turkey, Hong Kong and S&P 500. Many analysts are optimistic that stocks could keep rising in 2018, according to Biodun Adedipe, chief consultant, Adedipe Associates limited.


“The euphoria over the seeming forex liquidity is gradually pushing Nigeria to another worrisome strait: a combination of highly mobile portfolio investment and unreliable crude oil earnings, both of which can unravel without warning and make the external reserves melt the same way it did during April to November 2008”, Adedipe said, at the 4th Economic Outlook: Implications for Businesses in Nigeria in 2018, organised by the Chartered Institute of Bankers of Nigeria (CIBN) Center for Financial studies.


His macro expectation for 2018 include GDP Growth rate of 2.65 percent – 2.85 percent, inflation rate 13.45 percent, interest rate double digit, exchange rate (N/$) N305/$ vs N382/$, Crude Oil price, $56/bbl, and external reserves, $45 billion.


Jaiyeola said the weak relationship between growth and employment calls for concern. Despite the economic growth experienced in 2017, unemployment and underemployment rates rose to 40 percent as at the third quarter of 2017.


“Government policies and interventions must focus on “value-addition” sectors that have the potential to create jobs on a large scale”, he said at the forum.

In his sneak Peek into 2018, Jaiyeola said Ease of doing business reforms will likely to continue in 2018, Procurement of made in Nigeria goods, rebalancing of government debt in favor of external loans will result in lower borrowing costs and lower interest rates.


He believes that PIB process will continue but oil companies will not respond, and that alternative cash call arrangement will be entrenched.


Under trade and investment policies, he said economic protectionism will give way partially to market reform and competitiveness, excise duties to be introduced and increased on alcohol, tobacco and soft drinks and that Government will concession airports in a curious process.


Other speakers at the event include Yemi Kale, Statistician-General, National Bureau of Statistics (NBS), represented by Lola Talabi, Nkechi Obi, executive vice chairperson, Techno Oil limited, Mike Olajide, executive director, Sidmach Technologies Nigeria limited, Femi Oke, executive secretary, Chemical and Non-Metallic Products Employers Federation (CANMPEF) and Tunde Lemo, former deputy governor, Central Bank of Nigeria (CBN) and chairman, Lambeth Trust and Investment Company limited. In his welcome address, Segun Ajibola, president/chairman in council, CIBN, said a state of emergency should be declared across the country on security, particularly between farmers and the Fulani Herdsmen in order not to scare away foreign investors from prominent economic hubs of the nation.