Analysts Call For Diversified Export Revenue And A More Productive Economy


Thursday, January 23, 2020 / 8:47 PM / Ottoabasi Abasiekong for WebTV / Header Image Credit: WebTV


Nigeria's economy must be fully diversified in terms of export revenue and productive if it is going to create jobs for millions of people and lift them from poverty.


Dr. Nonso Obikili the Chief Economist of BusinessDay and Mr. Niyi Yusuf both gave their different perspectives at the 2020 Lagos Chamber of Commerce and Industry Economic and Business outlook seminar.


The seminar, which centred on the theme "Private Sector Investment: Opportunities and Risks 2020," brought together stakeholders in the Nigerian business community.


Dr. Obikili projected that for 2020 the Nigerian GDP growth would continue to be sluggish hovering around the 2 to 2.5% figure.


He highlighted the challenge that Nigeria continues to depend heavily on crude oil exports as its major source of revenue, which has exposed to the economy to the booms and busts of oil prices.


Obikili said it was time for the nation to make the conscious effort to diversify its export revenue base to build fiscal buffers and achieve economic stability.


He decried the fact that Nigeria failed to address structural issues in the fiscal space, which was characterized by ballooning public expenditure, rising domestic debts during boom years and, most recently the depletion of fiscal buffers (excess crude account).


The economist noted that the monetary policy space experienced High-interest rates and  Low Foreign Direct Investment. He noted that the government had explored the following measures to stimulate the economy; Border Closure, higher Loan to Deposit Ratios and FX window policies to force lower rates.


For the 2020 economic outlook, he highlighted the following developments on the Fiscal side that would shape the socio-economic landscape;

  • Continuation of Debt Financing by the Federal Government
  • Revenue might increase but will not attain budget expectations
  • The Value Added Tax increase from February 1, 2020, will bring some Cushion for states
  • CBN financing to support the economy will continue in the year.


On the Monetary side, he stressed that there would be a deployment of unconventional policy measures at least until the data exposes the challenges. He said additional developments to watch would be the Border Closure, Loan to Discount Policy and More Foreign Exchange Restrictions.


He advised businesses to reposition and align their strategies to be export-oriented, which will insulate them from policy shocks.


For Mr. Niyi Yusuf the Managing Partner of Verraki, the key considerations in Nigeria's socio-economic space include;

  • The African Continental Free Trade Agreement, AFCFTA
  • The Completion of the Dangote Petrochemical Fertilizer Plant
  • Oil Price and Production stability
  • Post Brexit: UK and Africa Focus
  • Population growth v GDP growth
  • Border Closure
  • Lagos Ports gridlock
  • Intellectual Property Rights Enforcement
  • Multiple Exchange rates & FX Controls - 45 items


He identified the following areas as the positives to watch in 2020;

  • Infrastructure upgrade across the Rail, Airport and Major roads
  • The Finance Bill Incentives
  • Impact of the Minimum wage increase
  • The scaling of the National Social Investment schemes
  • The CBN actions to stimulate credit to the private sector increased Loan-to-Deposit ratio and low-interest rate
  • CBN intervention efforts targeted at specific sectors
  • The level of Diaspora Remittance
  • Actions on the Ease of Doing Business in Nigeria
  • Impact of Tech Disruption
  • Political stability
  • New Budget Cycle (January to December)


Some of the challenges for 2020 that businesses will have to watch according to Mr. Niyi Yusuf are the Tax drive from the Federal, State to Local Governments, High FG Debt service burden, Internal security and displacements, External migration/talent drain, Corruption and the fight against Corruption.


Giving her opening remarks the President of the Lagos Chamber of Commerce and Industry (LCCI), Mrs. Toki Mabogunje,  said the forum came at a time Nigeria required huge investment inflows to catalyze economic growth.


She decried the fact that from the Q1 & Q2, the 2019 investment report of the National Bureau of Statistics (NBS) which showed the country attracted about $19.7bn in portfolio investments representing 73% of inflows while Foreign Direct Investments (FDI) constituted less than 4%.


The LCCI President believed the size of investment inflows was key to Nigeria's economic growth.


Mrs. Toki Mabogunje said the LCCI would continue to engage the government in ensuring that there is an enabling environment for attracting critical private investments into the economy.

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