December 17, 2019 / 1:07 PM / Nifemi Taiyese for Proshare WebTV / Header Image
In a pre-panel discussion looking into the opportunities and threats to the Nigerian economy in 2020, Mr. Olufemi Awoyemi, FCA, Chairman Proshare Nigeria Limited, noted that 90% of wealth-earning families in Nigeria could not transfer wealth to second-generation individuals. He noted that most businesses were unable to last because businesses could not rely on the current business ecosystem as presently configured or could not plan based on the country's existing economic architecture. He referred to the 2018 Andersen Tax report titled "Building to Last.", to support his argument.
Speaking on the theme "2020: Opportunities and Threats in the Nigerian Economy," Awoyemi insisted that Nigeria's economy, contrary to widely-held opinion, is diversified. The challenge is not with the diversification of the economy but with the revenue structures supporting the economy, disconnected from a market-determined value chain. It was only with the re-basing of the Nigerian GDP that it became clear that the economy was diversified, but what was missing was a coherent integration of sectors into a value-creating network of economic activities.
The Nigerian healthcare system, noted Awoyemi, who was Chairman of the panel session of the event, needs to improve while the Federal government's economic plan must work for all citizens.
He referred to a recent Moody Investors Services Report on the Nigerian economy, which rated companies, banks and a few other financial institutions, noting that many suffered severe collateral impairment in the year. He observed that the impairment of loan assets and the slowing down in the growth of domestic credit to the private sector could limit the capacity of the banking system to support the growth and development of the larger economy.
Other panelists gave their thoughts on the state of the economy and what should shape the new year 2020.
Ambassador Ayo Olukanni, Director General (DG) NACCIMA, said the threats themselves create opportunities. He made mention of the AFCFTA as an avenue for Nigeria to leverage its strength while trading with other African nations.
He said the Chambers (NACCIMA), was conducting an internal examination to identify areas where it can support members to excel in their commercial activities. Speaking from his experience as an Ambassador, he said he sees Nigerians doing well in even the most difficult of places in the world.
He said the resilience of Nigerians was the principal way of confronting threats in the coming years.
As DG of NACCIMA, he said he had seen up close and personal the raging entrepreneurial spirit of Nigerians, which the country could take advantage of to become global leaders in a variety of goods and services. He cited the Agriculture sector as an avenue to deepen the "Agripreneur" initiative that can create new jobs.
He said NACCIMA is in discussions with the International Institute for Tropical Agriculture, IITA to get young people from the Chambers to develop their entrepreneurship skills. Amb. Olukanni also identified the creative industry as an area for increased investments by the government and private sectors, which could create opportunities for the vibrant, youth population.
Dr. Ayo Teriba, CEO Economic Associates, in his remarks, said Nigeria's economy presented a very interesting dialogue and noted the economic narratives. According to him from 2004-2014, the Nigerian economic narrative was positive.
The economic team at the time released an economic policy document called "NEEDS" in 2004, which signposted the end of Africa's lost decade of instability and stagnation between the 80s and 90s. The 90s saw an inflation rate of 75% before the return to civil democracy.
He noted that between 2007 and 2008, Nigeria had $60bn in external reserves, a positive for the economy, and a buffer against external economic trade shocks.
Dr. Teriba acknowledged the fact that Nigeria's economy was able to rise from the 52nd largest economy in the world as of 2000 to the 22nd largest economy by 2012.
Speaking further, Dr. Teriba said that in the second half of 2014, a global supply glut has persisted up till now, resulting in two economic forces adversely affecting the country. There are Weak commodity prices and weak global demand.
Speaking on the threats and opportunities in 2020, Teriba said the unexpected liquidity windfall from oil price lifted Nigeria's economy, improved the fiscal and foreign exchange situation in 2019 but could not be guaranteed to reoccur in 2020.
He stressed that if there is adequate liquidity in the economy, then entrepreneurs can thrive. He highlighted illiquidity as the primary threat to Nigeria's 2020 economic outlook.
"The federal government doesn't have enough revenue to cover recurrent spending. Interest payment on debts alone consumes more than 60% of government revenue; what is left cannot pay wages, which is a sobering reflection on the illiquidity in government," Teriba said.
The economist believed that Nigeria, as a nation, must face its threat of illiquidity, which also could lead to Weak economic growth.
Amb. Olukanni spoke on Agriculture within a new digital ecosystem and noted that investors need to technological applications as they see funding from global perspectives.
She emphasized the need for deepening Nigeria's economy to be inclusive in growth, with a robust structure in place.
According to her, Nigeria needs to find a way to make all the states work in the interest of their citizens.
Mrs. Awosika emphasized the need to promote development across several states in the country to reduce overpopulation in Lagos, Nigeria's economic capital.
She singled out Diaspora funds as a major source of foreign inflow that can be tapped into to address the socio-economic challenges of the country.
Awosika was of the view that Nigeria should be investing in developing its human capital in being competitive in the global economy.
The Conference had, Mrs. Ibukun Awosika, Chairman, First Bank Nigeria Limited, Dr. Ayo Teriba, CEO Economic Associates and Ambassador Ayo Olukanni, Director-General, Nigeria Association of Chambers of Commerce, Industries, Mines and Agriculture, NACCIMA as key panel speakers.