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Discourse on 2018 Nigerian Economic Outlook(1)

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Friday, January 05, 2018 5.00PM / Proshare WebTV


The prospects for Nigeria’s economic and business landscape in 2018, was the major discussion in an exclusive interview, anchored by Funke Medun Director, LeapWorld with notable Nigerian financial analyst Mr Olufemi Awoyemi, CEO of Proshare Nigeria.

Giving his perspective on  how the socio-economic space will evolve in 2018, Mr Awoyemi said  “2018 started off on a very sad note in terms of socio-political issues. In terms of the economies we have, we have a budget which defines how the economy will look, and we are not yet anywhere near passing the budget. By the time we ended the year, most of all the indices that should show progress are looking southwards. The budget should be passed between March and April, and given the records in terms of what we have done we may not be able to achieve much.

Considering the fact that 2018 is a pre-election year for Nigeria, Awoyemi was of the view that the government will try as much as possible to do a lot of things. Some tokenism, some symbolic, and most in time they will try to pump money into the economy.

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Looking at the Budget 2018, the Proshare CEO noted that Nigeria is expecting at the most, maybe about a 2% growth rate. According to him “Any economist will tell you that if Nigeria cannot achieve any growth rate matching the rate of growth in population it is not a good one. The signs are good that there will be some great opportunities and signals here and there, but generally it is one in which I think that we are just extending 2017 post recession recovery blues.

Speaking further on the nexus between the Federal Budget and Household income, he said “Every time you do a budget or economic plan you must always be willing to reduce it to the level of the household. That is the most important factor in any budget but unfortunately there is a lack of kinship between the budget and the household, perhaps because there is no access to credit”.

So if they say there is an increase in the interest rate it does not affect you because you do not run on credit. You provide your own power, your own water; we are almost in some ways detached from the government. Given the resilience of the Nigerian person, there will be pockets of new areas where people will grow. However, I do not see that quantum leap that will deliver the results that people will need to be excited about. Businesses will naturally right-size or adjust in order to cope. With the challenges with power that means we spend more on energy. With the possible increase in fuel prices, that means we would also have to spend much more again. We need to know, what is that one thing that will create that spark?.

Assessing the current unemployment rate and other indicators the financial expert said Let us not forget that the employment figures are terrifying to contemplate. We had increase in unemployment, increase in underemployment, increase in youth unemployment; the misery index went up from 52.5% to 55.9%, which means that it is really a tough period. Of course this should be the situation when an economy is just coming out of a recession but there is really not that one thing that is going to spark that growth.

He however asserted that Consumer confidence is better than what it was in the early parts of 2017 because of the stable foreign exchange which is always a key determinant because of the way the Nigerian economy is structured.

The Proshare CEO shared that We got into recession because of the drop in oil prices. Similarly, we got out of recession because of the increase in fuel prices and increase in production. Because of this Nigeria is able to achieve about 0.8% to 1% growth, which shows you how tightly the Nigerian economy is structured around the oil sector. Fortunately we have external reserves steadily climbing up quarter on quarter, enough to provide at least four months import cover for Nigeria. Those are positives, but in a country of over 180 million people we cannot continue to focus on factors that actually only influence the rich people. As a positive in the society you need to look at the larger population.

On the area of the tax policy, he identified the fact that due to the low tax contribution rate Nigeria has had over the years, the government has a challenge in bringing us up to speed in compliance. Awoyemi stressed that it was not just about civic responsibility; but the need for a concerted effort from all stakeholders in contributing to the economy.

Of course there is the challenge of misappropriation and embezzlement, but that is an argument for another day. Officials of the FIRS must also have a tax management mind set as opposed to a tax collection mind set. For now, the key focus should be compliance with the willingness to afford some leeway and benefit of doubt to small business owners who are struggling and make available their business records for perusal”.

For the business environment in 2018,he identified that it was challenging at the moment, but advised businesses to be innovative, noting that when there is confusion and dysfunction in the economy, it leads to the development of a new order. Awoyemi urged Nigerians to stay ahead of the news, and understand what people are doing to make money.

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