Ahead of Elections 2019: Where is the Economy Now? – Doyin Salami

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Thursday, November 01, 2018  06.57AM  / By Doyin Salami, LBS / Proshare WebTV 


Dr Doyin Salami a seasoned Nigerian economist was the keynote speaker at the Lagos Business School 2018 Alumni lunch networking session, discussing the topic “2019 Elections And Your Business”. 

The presentation which was a robust discourse on the forthcoming general elections in 2019, provided an opportunity for Dr Salami to share his perspective on how the build up to the polls and post events will likely shape the economy, business environment and the markets. 

This is the first of a 3-part coverage. In this first part, we highlight his views on the state of the Nigerian economy and where it is headed.


Drivers of the Nigerian Economy

Dr Salami from his presentation outlined the Drivers of the economy covering Global conditions, Policy, Financial markets, Cost, Activity, Economic and Social Development. 

In the area of Global conditions, the economist identified the following as drivers;

  • Trade
  • Capital Flows
  • Diaspora Transfers
  • Policy


On the Policy side he shared that the key areas are the fiscal and monetary policies which continue to play roles, in dictating the pace of the economy. 

From the Cost perspective inflation, interest rate and exchange rates were listed as the determinants of activities in the economic space. 

Looking at economic activities Salami said the Output, Income & Expenditure, Volume of foreign trade and Credit volumes showed how the economy is faring. 

The financial markets also play a key part in the economy, especially the equities and fixed income segments.


In addition to the economic drivers Dr Salami noted the importance of the Economic and Social Development Indices which cover the following;

  • Changes in Structure of Output
  • Competitiveness-Global
  • Competitiveness Index and Ease of Doing Business
  •  Inequality
  • Human Development Index


International Conditions are Favourable on Balance, Albeit with Significant Tail Risks  

  • At the international level, Dr. Salami highlighted the following scenarios;
  • Oil prices are ascendant but volatile
  • Oil prices are poised to moderate in the coming months
  • US interest rates are expected to be on the ascendancy
  • The US dollar is strengthening


External Balances are Improved Compared to Crisis Period, but are Running Into Headwinds

The economist stated that the gains from higher oil prices are constrained by renewed production challenges, whilst capital flows, once recovering, begin to taper, induced by rising international interest rates and uncertainties associated with the 2019 elections. 

Deployment of Accumulated Foreign Exchange Reserves by the CBN in Defence of the Naira

According to Dr Doyin Salami efforts to manage the impact of external headwinds, are manifest in the deployment of accumulated foreign exchange reserves by the CBN in defense of the Naira. 

From the presentation made by the LBS lecturer the Nigerian gross foreign reserves has gone down by nearly $4bn since peaking in July, 2018.


A Fragile and Weakening Economic Recovery

The economy according to Salami is experiencing a fragile and weakening economic recovery pace, as Nigeria has failed to grow higher than its population rate of 2% at the moment. 

The current economic growth rate is 1.8% and the Central Bank of Nigeria has warned that the nation could plunge back into a recession.


Here is an overview of the analysis of the last three quarters;



Oil GDP 3.53%

Non-oil GDP: 0.45%

21 Sectors Contracting

14 Slow Growing Sectors (Growth <3%)

11 Fast growth sectors (Growth >3%)



Oil GDP: 14.77%

Non-oil GDP:0.76%

10 Sectors Contracting 23 Slow Growing Sectors (Growth <3%)

13 Fast growth sectors (Growth >3%)



Oil GDP 3.95%

Non-oil GDP: 1.80%

15 Sectors Contracting

13 Slow Growing Sectors (Growth <3%)

18 Fast Growing Sectors (Growth >3%)


Failing Recovery Reflects Limp Growth or Contraction in Major Sectoral Growth Drivers

The major sectoral growth drivers that have either experienced limp growth or contraction include;

·         Agriculture

·         Distribution

·         Manufacturing

·         Real Estate

·         Telecoms

·         Oil and Gas


Once Easing, Inflation has Bottomed Out and is poised to Rise in Coming Months

The season of an easing inflation in Nigeria has now bottomed out and Salami projects that it will rise in the coming months. 

It has always been analysed and argued that during the pre-elections season inflation rates tends to be spike due to spending during the period. 

Nigeria’s inflation rate is currently 11.28% and the Federal Government in its 2018 budget, set an inflation target of 12.4%.



From his presentation, Salami showed that the recent trajectory of short term rates suggest a tightening of liquidity conditions. 

This also revealed the issues around the Monetary Policy Rate v Treasury Bills Primary stop rates and The Asymmetric Corridor v Overnight  Rate.


Lending rates remaining High

Giving further insight into developments in the financial market, Dr Salami acknowledged the fact that lending rates still remain high the monetary policy retained at 14% . 

He identified the concerns around the Headline Inflation v Monetary Policy Rate and Headline Inflation v Lending rates as key issues to be considered.


Sluggish Credit Growth

From the analysis the Credit growth in the country has been sluggish looking at the Credit v Output growth and the Inflation-adjusted Credit growth shows a lot needs to be done in this space.


Fiscal Realities and FG’s Plan for  Asset Sales to Rebalance the Fiscus in 2018

The challenging fiscal realities in the country has clearly led the Federal Government to  mull  asset sales,  in an attempt to rebalance the fiscus in 2018. 

Dr Salami notes that the FG has  lined  up 10 State Owned Enterprises  for sale to raise N289bn (US$797m) in Q4, 2018. 

With fiscal deficits and the need to mobilize resources and revenue for public expenditure, the FG has to be innovative in its strategy.



Proshare Nigeria Pvt. Ltd. 


Coverage of the Presentation

  1. Ahead of #Elections2019: Where is the Economy Now? The State of the Nigerian Economy – Doyin Salami
  2. What Will Be The Impact Of #Elections2019 On Business - Critical Issues Identified By Doyin Salami
  3. How Corporates are Faring Going into the #Elections2019 – Doyin Salami


 Download Presentation 

PDF : The 2019 Elections And Your Business - Doyin Salami, LBS - Oct 25, 2019


Other Related Post From Doyin Salami

  1. #NES24: Leveraging Domestic Resource Mobilization For Sustainable Development(2) Oct 29, 2018
  2. #NES24: Fiscal Governance And Taxation in Nigeria - Dr. Doyin SalamiOct 25, 2018
  3. #NES24: Economic Questions for Nigeria’s Transition from Poverty to Prosperity – Dr. Doyin Salami Oct 24, 2018
  4. #NES24:Stakeholders Explore Leveraging Domestic Resource Mobilisation for Sustainable Development Oct 24, 2018



Proshare Nigeria Pvt. Ltd. 


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