Nigeria Economy | |
Nigeria Economy | |
1323 VIEWS | |
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Tuesday, August
04, 2020 / 2:51 PM / FBNQuest Research / Header Image Credit: FBNQuest
Household budgets under further stress
Nigeria has a shortage of timely consumption
indicators so we are indebted to REACH Technologies and the National Bureau of
Statistics (NBS) to assess the impact of Covid-19. From REACH we find a few
isolated signs of Nigerians' sunny optimism. However, its urban clientele has
dropped the ambitious business and personal plans it had in January, and made
its largest spending cuts on personal care. Already weak spending has taken
another hit.
Timely boost to banks' loan books
One bright spot has been the 21% increase (N3.3trn) in
the loan books of deposit money banks over 12 months. For manufacturing the
increase has been closer to 35%. As well as leaning on the banks to boost
lending as their regulator, the CBN has also multiplied and deepened its own
credit interventions over the period. The beneficiaries are not identifying
themselves and probably include few SMEs yet the increase should help
businesses in their hour of need.
Less integration, less GDP contraction
Better access to bank credit and more government
spending on the agenda too but the principal driver of the (negative) growth
number this year is Nigeria's position a little apart from the global village.
Its large agricultural economy and sizeable domestic market, combined with
limits to its international integration, together mean that its GDP will
contract in 2020 by rather less than many of its peers. For the same reason
(its uneven development), the rebound next year is set to be modest.
Re-employment in a harsher environment
The NBS survey shows a better-than-expected return to
work after lockdown, particularly in rural areas. Most returnees work in
agriculture and non-farm household firms. However, respondents are returning to
companies with a fall in revenue relative to pre-Covid and with magnified
operating challenges. Farmers have generally reduced the area planted to crops.
There are large gaps in the safety nets of many households.
Central economic indicators
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Source:
CBN, NBS, Bloomberg, IMF, FBNQuest Capital Research |
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