Inclusive Growth Should be Given Top Priority in Nigeria’s Economic Recovery Cycle - NESG


Tuesday, January 29, 2019 08.00AM / Ottoabasi Abasiekong and Bukola Akinyele for Proshare WebTV

Nigerian policy makers should give priority to inclusive growth, as the nation experiences an economic recovery cycle.

Dr Olusegun Omisakin, Head of Research of The Nigeria Economic Summit Group disclosed this at the 3rd edition of the Group’s macro-economic outlook report in Lagos.

Addressing the theme “Steering Nigeria through the inclusive growth pathway: What Strategy Should the Government Adopt?” the 2019 macro-economic outlook report, is an annual publication of  NESG that reviews the Nigerian economy and provides policy options.

Omisakin noted that, “There is a need for broad-based growth where more sectors are inclusive and the social welfare of the people are prioritised”

He further stated that the basic idea of growth globally is not just to assume or to achieve high growth, there is need to ask fundamental questions on what type of growth is required? Who are supposed to be the beneficiaries of this growth and the growth outlook?

In driving inclusive growth the NESG economist urged the federal government to carry out reforms in the following areas;

  • The growth of industry, we call it “industry governance” there must be a strong setting of national and sub national state level agenda.
  • There is need to develop new idea or review the existing ones on social inclusion strategy
  • There is need for a better policy coordination

Reviewing how Nigeria’s economy fared in 2018, Omisakin noted that the Federal Government capital spending suffered setbacks as a result of the delay in budget approval. Only 28.6% of budgeted capital expenditure (N820.6 billion) was released as at December 2018.

He buttressed the fact that the challenges with the execution of the fiscal framework are not only traceable to weak revenue mobilisation, but also to institutional weakness.

Speaking on the 2019 Nigerian macro economic outlook the NESG Head of Research said the outcome of the general elections will likely shape Investment policies, debt management, public sector spending, security and governance reforms.

He identified Six (6) policies and events that will shape 2019, which include;

  • 2019 General Elections
  • Delayed Passage of the 2019 budget
  • Review of the minimum wage
  • Relatively lower crude oil price
  • The launch of the Dangote Petrochemical refinery in Lagos
  • Actions of the US Federal Reserve.

Dr Omisakin also outlined three scenarios to watch in 2019 in the Nigerian economy.

Scenario 1: Best Case

Scenario 2: Business as Usual

Scenario 3: Worst Case

Crude Oil Averages $75 per barrel

Crude oil price averages $60 per barrel

Crude oil  price averages US$45 per barrel

Crude Oil production averages 1.8 million barrels per day (mbpd)

Crude oil production averages 1.7million barrels per day(mbpd)

Crude oil production averages 1.4 million barrels per day

Capital Expenditure at N1.4trillion

Capital Expenditure at N1.2trillion

Capital Expenditure at N700 billion

Real GDP grows by 3.2%

Real GDP  grows by 2.1%

Real GDP grows by -1.1%

Inflation rate moderates at 9.8%

Inflation rate moderates at 10.5%

Inflation rate increases to 14%

Government revenue increases by 20%

Government revenue increases slightly by 5%

Government revenue declines by 16%

Official exchange rate stabilises at N302/US$1

Official exchange rate stabilises at N310/US$1

Official exchange rate worsens at $350/US$1

Parallel exchange rate at N360/US$1

Parallel exchange rate at N360/US$1

Parallel exchange rate at N400/US$1

Unemployment rate at 21.5%

Unemployment at 22%

Unemployment rate at 24%

Underemployment rate at 20%

Underemployment at 23%

Underemployment rate at 24%

Source: NESG

Dr Doyin Salami, Head Board Committee on Research, NESG, noted that Nigeria was currently at the level of China 40 years ago, an oasis of thriving poverty.

He made a strong case for an enabling business environment that attracts private capital into the economy, which will be critically address the infrastructure deficit in the country.

The Lagos Business School economics lecturer said that Nigeria’s 2019 macroeconomic outlook hinges on three factors namely; The elections, Oil prices and Oil quantity (production).

Chairman of the NESG Board Mr Asue Ighodalo in his remarks said it was time for the government and policy makers to pay attention to the economic outlook report.

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