Leading development economist and Group Managing Director of Afrinvest West Africa Limited, an independent investment banking firm, Mr. Ike Chioke, has described 2018 as a year of slow and anaemic growth in the nation’s economy, where critical structural reforms were abandoned and advised whoever that will emerge as new President to immediately press the reset button and set the country on a path of sustainable growth.
He noted that as the risk factors remain on the horizon and remain poised to break the bonds of the tenuous seal, the country will remain vulnerable to oil price shocks, given weak buffers.
He argued that whereas crude oil production levels are expected to increase, latent security risks in the Niger Delta region, amid volatile oil prices, could pressure government finances.
On exchange rate stability in 2019, which was relatively achieved in 2018, the currency faces a downward risk, as foreign capital flows may remain constrained by political risk and interest rate hike in advanced economies.
Relying on the imports of a new report which described the nation’s economy as being “on the precipice”, considering the 2019 general elections, Chioke called for a reset that will lay the foundation upon which the country will enter straight to phase of growth.
Explaining more on the Afrinvest West Africa Limited report tagged: “On the Precipice- The Nigerian Economy and Financial Markets-2018 Review & 2019 Outlook,” Chioke offered insights into the social, economic and political risks, as well as potential that will affect the growth of the economy in 2019 and beyond.
The report provides scenario-based projections for the economy, with a base case where the incumbent returns and there is policy continuity; a pessimistic case where political tensions escalate, leading to widespread insecurity; and an optimistic case where regardless of the winner, the country sees exciting policy reforms that could deliver real growth.
According to the report, “this will impact heavily on Nigeria’s external position and weaken external reserves accretion. On the Monetary Policy, the guidance offered by the bank so far is that the restrictive stance will remain in place for the early part of 2019.
“This is due to expected inflationary pressures from food shortages, fiscal spending and possible implementation of a new N30,000 minimum wage, as well as adjustments for electricity and petrol. With the economy expected to remain on a tentative path of growth, just as monetary policy is expected to remain tight in the face of expected pressure, in the year, more volatility is expected to cyrstallise, particularly, the potential change of the CBN leadership”.
On the associated risk factors, the Afrinvest Report averred that “Economically, the country is not doing well and Nigeria may fall into serious trouble. From our report, any slight issue, the whole country would be ignited, of which we are afraid of. The political distraction will send a very negative signal if we don’t pick up.”
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