With less than 160 days to the general election, Nigerians are torn between a sense of trepidation, hope and gloom. Not many of them are expecting that 2023 February will be Uhuru (i.e. freedom & prosperity), but maybe a new beginning.
Depending on how fast the Nigerian economy recovers from its current state, the election will be a referendum on the economy or a vote of anger.
Like most other African countries, Nigeria is not alone in facing a myriad of problems like spiralling inflation (19.7%), currency weakness (710/$), oil theft, and high unemployment.
160 days to make tough decisions or muddle through
There is a ray of hope for the economy, if only some policy steps are taken immediately. One of which is protecting the oil pipelines (Nigeria loses approx. $1.3bn per month). A combination of orthodox drone technology and the non-conventional tactics (Tom Polo project) could help protect approximately 400,000bpd of crude oil. The macroeconomic, fiscal and forex benefits to Nigeria are all Naira supportive and external reserves accretive. The Naira has depreciated again to N710/$ in the parallel market.
The good news is that with the slow and steady adjustment of the official I&E rate (N431/$), the Naira is likely to stop hemorrhaging very soon and begin to appreciate towards N670/$ – N680/$ in October.
Since the exchange rate pass-through to domestic prices is a major culprit behind spiralling inflation. We expect a noticeable moderation of Nigerian inflation in Q4 2022 (17.5%).
We are also projecting that GDP growth in Q3 will be positive even though lower than Q2 (3.54%). With these imponderables and election uncertainty discounted, the economy may be on a slow mend path before Christmas.
In this edition of the LBS Breakfast Session, Bismarck Rewane and the FDC Think Tank analyze the current developments in the market, the economy and its impact on your business and strategy.
Enjoy your read….HERE