Highlights of Emerging Africa Capital Group’s 2019 Nigeria Economic Outlook, “Cautious Optimism”


Wednesday, February 06, 2019 03.00PM / Nifemi Taiyese for Proshare WebTV


The Emerging Africa Capital Group launched its report “Cautious Optimism” at the Nigeria Stock Exchange (NSE) on Monday February 4, 2019.

The report contained an overview of key economic activities that took place in 2018 and an outlook for 2019.

Dr Biodun Adedipe, Chief Consultant, B. Adedipe Associates Limited gave the review of the Outlook report.

Outlook for 2019

Dr Adedipe noted that the report had taken into consideration, the 2019 general elections which will be a major factor in dictating the pace of the economy for the year.

He described the report as balanced, looking at the Buharinomics(Policy of Incumbent President Muhammadu Buhari of APC)  and Atikulated plans(Policy of Major Opposition Candidate Alhaji Atiku Abubakar of PDP).

The investment environment in Nigeria according to him has less tension relative to previous elections in the last 20 years.

He said, the report makes it clear that  the continued bridging of the pump  price of petrol; because diesel and kerosene are deregulated  is costing the government between N40bn and N85b monthly.

Dr Adedipe stressed that the report described the 2019 FGN Budget as  over ambitious.

The economist also acknowledged the fact that the report expects a decline in the current account surplus in 2019,  because imports are likely to grow faster.

Speaking on the current account, he cited the report as stating that Nigeria is likely to end up with a surplus which is encouraging news.

Speaking on Foreign portfolio investments, it will be strong in the first half of the year, with an estimated $3.6bln inflow, but it will be lower in the second half, with an estimate of about $2bln, making an entire year expectation of about $5.6bln.

He said the CBN is constrained by capital flows and  will continue to intervene in the FX market, which  will result in a decline in external reserves by about $4.8bln as against a growth of $3.7bln in 2018.

Exchange rate is expected to remain stable; the report places it in a range between N365/$ and N370/$

Average inflation rate for the year is  expected to be 12.8%, in spite of the increase in minimum wage, because inflation in Nigeria is cost-driven.

Monetary policy will remain contractionary, and the fixed income market will post higher yields which is good for prospective investors.

The report gave space to the Nigerian energy sector, due to the rate of urbanisation in Nigeria, which sees 51% of Nigerians in urban areas for now.

This means that demand for power in 2019 will be  higher than 2018, which is why special attention needs to be given to the energy sector, with emphasis on broadening Off grid and On grid solutions.

Adedipe said a key takeaway  from  the report,  is the remarkable profile of Nigeria as an attractive investment landscape with diverse opportunities.

Also speaking the Head, Advisory and Capital Market for Emerging Africa Capital Group, Mr. Dele Akinjo from the report gave the following highlights of what to expect from the Nigerian economy in 2019;

  • GDP growth projected to close at 2% in 2019
  • CBN will continue to be resilient in keeping exchange rate stable
  • There might be a slight devaluation in the later part of the year.
  • High Interest rate with capital flight and a likely low crude oil  price regime, which will drive FGN Borrowing.

Mr. Akinjo also noted that the report provides a broad-view of some of the recent activities and successes of the off-grid energy subsector, for instance, the Rural Electrification Agency received N86bln from 2016/2017 capital budget provision with which the REA has successfully contracted 386 rural electrification projects across the 6 geopolitical zones, 329 of these projects have been completed while 57 are on-going.

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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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