Reviews & Outlooks | |
Reviews & Outlooks | |
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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;
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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