Slower Economic Growth in Europe likely to impact Capital Inflows to Nigeria

Category: Nigerian Economy


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Slower Economic Growth in Europe likely to impact Capital Inflows to Nigeria

 

May 23, 2012 / Temple ASAJU / PROSHARE WEBTV
The Nigerian-South Africa Chamber of Commerce held its breakfast meeting for the month of May, 2012 today. The theme this time was “Economic Performances and Indicators in 2012”. Opening the session, the Executive Secretary of the chamber, Ms.Toyin Cameron said, “although the effects of the Eurozone crisis have not been enormous on Nigeria , the issue still has to be checked.”
Guest speaker at the forum, Emerging Markets Strategist, Samir Gadio notes that the slow economic growth experience remains a world-wide trend. He says, “The slower economic growth in Europe is likely to have an impact in capital inflows to what has been noticed in Nigeria – if there is disconnect in Europe, people will be more cautious with the way they invest in their portfolio flows.”

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Lately, the increased pressure on most African currencies in the area of Treasury bills and other instruments has been attributed to the risks resulting from the on-going crisis in the Eurozone. Samir indicated, “Once there are slow paces of economic growth in the U.S, Europe and China , then the oil price consequently falls.” He adds, “That is the major risk in Nigeria ’s case where crude oil accounts for 80% of revenue generation and 50% of GDP contribution.”
Meanwhile, reports have shown that Nigeria ’s oil revenue may experience a drop as the U.S cuts importation by 64%. The Energy Information Administration (EIA) agency of the U.S. recently stated that “declines are attributed to the quality of Nigerian crude as many of the refiners preferred to use domestic crude oil like West Texas intermediate, Bakken and Eagle Ford that were cheaper.”
Going forward, the strategist posits, “in Nigeria , there has always been the issue of boom and burst oil price-cycles, so obviously, the oil price cannot be high forever. As a result, when it is high, fiscal savings have to be accumulated alongside Foreign Reserves so that any further declines can be addressed.” “The excess crude account proceeds being monetised and shared amongst the 3 tiers of government may be commendable as boosting capital expenditure but fiscal savings must be improved”, says Samir. 

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Tags: Nigerian-South Africa Chamber of Commerce, Economic Performances , Eurozone crisis ,  Nigeria ,  South Africa , GDP , Proshare News,  News, 


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