Nigeria After the Recession: 2018 Q1 Review and Economic Outlook for 2018

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The Nigerian-American Chamber of Commerce (NACC) recently held her March Breakfast Meeting, themed, NIGERIA AFTER THE RECESSION2018 Q1 Review and Economic Outlook for 2018. The breakfast meeting which was the first in the year was held at Oriental Hotel, Victoria Island, Lagos on Wednesday, 28th March 2018.

The Guest Speaker, Dr. Adedoyin Salami, Economist, Associate Professor Lagos Business School, Past Member Central Bank of Nigeria (CBN) Monetary Policy Committee and Federal Government of Nigeria’s Economic Management Team, attracted Government Officials, Bank Executives, Financial Consultants and Experts, Academic Professionals, Foreign and Local Investors, Product/Service Exporters and Importers; Oil and Gas Executives, CEO’s of Multinational and Local Companies, Representatives of Government Agencies and other key industry players.

L-R: Mr. Nixon Iwedi, Mr. Niyi Yusuf, Chief Olabintan Famutimi, Dr. Adedoyin Salami, Mr. Olufemi Alabi, Peter Folikwe, Mr. Oluwasegun Osidipe. Brand Spur Nigeria

In his welcome Address, Chief Olabintan Famutimi, the President, NACC, noted that it was significant to unearth and discuss the impact of the worst economic recession that plagued Nigeria, understand the implications of the changes that had occurred, the measures employed and the prospect for 2018 vis-à-vis trade relations with the United States and the rest of the world. Famutimi further stated that the Chamber was determined to promote the development of trade, commerce, investment and industrial technological relationships between the public and private sectors of the Federal Republic of Nigeria (Nigeria) and the United States of America (United States).

The breakfast meeting featured inputs from expert panelists in different fields including Mr. Nixon Iwedi, Deputy General Manager and Group Head, Food & Beverages Group, Access Bank Plc; Mr. Niyi Yusuf, Managing Director, Accenture Nigeria; Dr. Adedoyin Salami, Guest Speaker; Mr. Olufemi Alabi, Partner & West Africa Transaction Advisory Leader, Ernst & Young; Mr. Peter Folikwe, Managing Director, Berger Paint and Mr. Oluwasegun Osidipe, Director, Economics and Statistics Department, Manufacturing Association Nigeria (MAN).

L-R: Joyce Akpata, Director General, NACC, Mr. Olamilekan Adelana, Managing Director, Zenith Carex Limited, Chief Olabintan Famutimi, and Dr. Adedoyin Salami. Brand Spur Nigeria

According to Dr. Salami, there are major challenges Nigeria must resolve going forward. The country must determine the role of the price mechanism in resource allocation. To reduce interest rates, Government borrowings must go down, he stated that Government borrowing was increasing, advising that the way forward is to swap from domestic borrowing to international borrowing provided that the country does not experience another oil price problem.

He warned that tariff imposition, trade disputes, and trade wars by the United States Government could tip the global economy back into slower growth mode, saying that if that happened, the demand for oil could be imperiled.

Dr. Salami also raised the alarm over United States plan to spend over $1 trillion within the next three years on its infrastructure stock, stating that as the American Government borrows to bridge their infrastructure gap, interest rates would further rise and could stifle capital flows to Nigeria.

We have seen the tax reforms that the Americans are pursuing, and this is going to raise their deficit he said, it means that they will borrow more and borrowing means interest rates will go up further and that will create some problems.

He stated that the reasons why the nation’s foreign reserves are growing are due to the fact that the (CBN) has been intervening in the market, alongside Government borrowing and recovery in oil prices.

Mr. Peter Folikwe, said the Manufacturing sector was yet to recover from the recession, stating that manufacturers are still plagued with issues bothering around availability of raw materials, delay in access to forex window and the declining purchasing power of consumers.

On his part, Mr. Oluwasegun Osidipe, said the food, pharmaceutical, electrical and basic metal sectors of the economy have all experienced slight positive growth but stated that the sector is still faced with power supply challenges.

Mr. Olufemi Alabi, stated that it was important for businesses to think compliance in terms of attracting private capital, ensuring that they adhere to all requirements for capital investments.

Dr. Salami noted that the largest part of international cash investment goes to equity while the largest part of Nigerian Cash investment goes to energy. Solid minerals are the fastest growing sector of the economy, agriculture has since been growing, Government needs to fix facilities for the real estate sector to grow and technology is a major driver of growth but Nigeria is bedeviled with a massive shortage of skills resulting in high unemployment.

On projections for 2018, he stated that inflation will still be in double-digit, Healthcare will see a sharp rise in private position and increase in wages will lead to increase in demand as low disposable income translated to low purchasing power thereby hampering the manufacturing sector.

We hope to see trade Agreements and legislations in Consumer Protection Act, infrastructure bill and Petroleum Industry bill he added.

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