Money market
IMF, experts project optimistic outlook for Nigeria in 2022
The International Monetary Fund (IMF) alongside some economic experts have projected an optimistic economic outlook for the Nigerian economy provided certain macroeconomic fundamentals and policies are met.
They made the assertion at the American Business Council (ABC) in partnership with KPMG Nigeria event with the theme: “The Opportunities and Imperatives for Business” on Wednesday in Lagos.
Recall that the IMF had projected a growth rate of 2.7 per cent for Nigeria in 2022.
Mr. Ari Aisen, IMF Country Representative to Nigeria, said the IMF had due to the COVID-19 pandemic extended emergency assistance of $6.8 billion in 2020 and 2021 to contain the negative impact of the pandemic.
Aisen noted that reports showed progress in the health sector with the Nigerian authorities responding in the best way possible to contain the pandemic albeit not so much progress in some other sectors of its economy.
He, however, stressed the need for the overall economic policy framework to change by adopting the right instruments to engender growth and development.
The IMF rep. emphasised that accessibility to foreign exchange for import was fundamental to growing the private sector which was identified as the main engine for economic growth.
He added that on the fiscal side, revenue mobilisation needed to be shored up as reports showed that Nigeria collected the least in revenue when compared to Gross Domestic Product (GDP) ratio among emerging countries.
“It is very difficult to make improvements in socio-economic indicators with such a low level of revenue to GDP ratio.
Therefore, strengthening tax administration, increasing tax compliance, using digitalisation to broaden the tax base is essential and also considering eventually to raise the Value Added Tax (VAT) rates to levels that are closer to the regional averages.
“The country also needs policy reforms that are more oriented to creating a more conducive environment for the private sector together with taking advantage of the Africa Continental Free Trade Area (AfCFTA),” he said.
Prof. Bongo Adi, Associate Professor, Department of Economics, Lagos Business School, noted that the country finished on a very strong note in 2021 with the biggest boost from oil prices that rebounded.
Adi noted that oil still had about 50 more years of dominance because the technologies driving manufacturing still leaned towards fossil fuel.
He stressed the need to shore local capacity and production volume to enable the nation to benefit from external crisis such as the Russian/Ukraine conflict that could favour export commodities for the country.
“External crisis has always favoured export commodities in Nigeria and so there’s need to shore up production volume of oil which is around 1.4 million barrels daily against the over two million barrels projected to improve earnings.
“Again, local content capacity shows that Nigeria is not on the budget of many of these major oil multinationals.
“This is an opportunity for these local investors to step into the gap they left so that whatever we get from oil sales can be used for the development of the country,” he said.
The Economist, however, reinforced the need for government to improve the country’s manufacturing capacity to drive import substitution by scaling up the work on rail infrastructure.
“Once that happens, you eliminate the logistics constraints for manufacturers seeing that this is one infrastructure that no company can solve for itself.
“There’s no innovation in rail and other logistics capacity, so this is where government should concentrate on as manufacturing runs on rails and not on roads,” he said.
Mr. Justice Derefaka, Technical Adviser, Gas Business and Policy Implementation, said that in 2022 the implementation of the contents of the Petroleum Industry Act (PIA) would transform Nigeria into a hub of huge business opportunities.
He said this would come with high returns for investments particularly in the gas sector.
He, however, called for the necessary critical infrastructure such as virtual pipelines aimed at easing the transportation and logistics of gas to maximise the potential of the sector.
“PIA would spur and serve as a resurgence of our economic development.
“2022 would be declared the year of gas with gas projected to bring in over $1billion annually, and create about 300,000 direct and indirect jobs across the country,” he said.
Mr. Dinesh Rathi, Chief Executive Officer, Lagos Free Zone, stressed the need for the three factors — good policy, availability of finance and support infrastructure — that spur the manufacturing sector to be in place.
He said that once those ingredients worked well, there was potential for the Nigerian manufacturing sector to grow to double digits.
He stressed the need to leverage the country’s abundant gas supplies by using natural gas as source of energy to make the manufacturing sector more internationally competitive due to its lower energy costs.
“The infrastructure at the Lagos Free Zone, with regard to energy, roads, efficient port system to be finished by the end of the year, among others has ensured ease of doing business for those operating in that environment.
“With those things, it is a perfect world for operators to come and thrive,” he said.
Demand deposits have jumped by 206.83 percent from N9.67 trillion in May 2019 to N29.67 trillion this year’s May, according to data from the Central Bank of Nigeria’s website.
The data showed that the country’s demand deposits grew by 9.31 percent between May 2019 and May 2020 to N10.57 trillion, despite global economic uncertainties caused by the COVID-19 pandemic.
The growth continued into 2021 and beyond, surpassing N20 trillion in early 2023.
Factors contributing to the growth include increased economic activities, government stimulus measures, and enhanced liquidity in the banking system.
An economist at Lotus Beta Analytics, Shedrach Israel, in a conversation with our correspondent on Friday, noted that the surge in demand deposits signified robust consumer confidence and liquidity in Nigeria’s financial system.
“It reflects heightened economic activities, investments, and savings mobilisation within the country, supporting lending activities and stimulating economic growth,” he added.
However, the rising trend in demand deposits also raises considerations for monetary policymakers, necessitating vigilant monitoring to ensure financial stability, manage inflationary pressures, and sustain long-term economic growth.
Experts noted that while the growth in demand deposits reflected a resilient financial sector, it also required careful management to mitigate potential risks and ensure sustainable economic development.
An analyst at Phemmy Gracey Limited, Olorunfemi Idris, noted that the increase in demand deposits had important implications for the economy, providing banks with more funds to lend and potentially boosting credit availability and economic growth.
However, he also raised concerns about inflation and the potential surge in money supply, which could lead to economic instability if not managed properly.
…Extends probe panel’s deadline by two months
The Senate has approved an additional two months for the Ad-hoc Committee investigating the N30 trillion Ways and Means facilities granted to the Federal Government by the Central Bank of Nigeria (CBN) between 2014 and 2023.
The Committee, chaired by Senator Isah Jibrin, APC, Kogi East, had requested more time to receive vital information from relevant agencies involved in the spending of the monetary facilities.
Senator Jibrin stated, “Most of the relevant agencies have been contacted, and their documents are being thoroughly scrutinised as regards spending of the disbursement gotten from the ways and means.”
He added, “Being a very sensitive national assignment, the committee is carrying out a very thorough investigation devoid of rushing into conclusion.”
The Committee has intensified its efforts to ensure a thorough investigation, and the additional time frame will enable them to submit a comprehensive report in September. Senator Jibrin warned that the Committee may summon heads of agencies that fail to respond to vital information requests.
The investigation into the N30 trillion Ways and Means facilities was initiated by the Senate in March, with a six-week deadline. The Committee’s report will shed light on how the funds were disbursed, for what purposes, and whether they were expended efficiently.
The Committee that is probing the humongous N30 trillion ‘Ways and Means’, which was released as loan to the Federal Government during the former President Muhammadu Buhari administration which is chaired by Senator Jibrin Isah, APC, Kogi East, has Senators Asuquo Ekpenyong, APC, Cross River South; Mohammed Tahir Monguno, APC, Borno North; Victor Umeh, LP, Anambra Central and Olamilekan Adeola, APC, Ogun West as members.
Others are Senators Sani Musa, APC, Niger East; Aliyu Wadada, SDP, Nasarawa; Abdul Ningi, PDP, Bauchi Central and Ipalibo Banigo Harry, PDP, Rivers West.
The ‘Ways and Means’ is an overdraft taken directly from the Central Bank of Nigeria to solve contingency needs of the nation following approval and directive of the executive arm of government which would have to be ratified by the parliament.
The financing of government deficits through Ways and Means facilities often leads to macroeconomic instability, causing inflation and high exchange rates due to excess liquidity in the economy.
Although the CBN law restricts Ways and Means advances to 5% of the previous year’s revenue, this limit has been frequently exceeded in past years.
In an effort to address this issue, CBN Governor Olayemi Cardoso announced in February that the bank will no longer provide Ways and Means advances to the government until all outstanding debts are repaid.
Access Bank, Africa’s leading full-service commercial bank, has partnered with the British Council for the seventh edition of the British Council Recognition and Outstanding Cambridge Learner Awards (BROCLA).
The partnership is in line with Access Bank’s commitment to supporting the educational sector and recognizing students who have excelled on national and global stages in the May/June 2023 and Oct/Nov 2023 Cambridge International Examinations.
The well-attended event which took place last week at the Civic Centre in Victoria Island, Lagos, testifies to Access Bank’s brand positioning and its strategic alliances with reputable partners.
Access Bank said the partnership offers it a unique blend of global prestige, strategic networking opportunities, enhanced brand visibility, alignment with corporate social responsibility (CSR) goals, and positive public relations.
Speaking at the British Council Recognition and Outstanding Cambridge Learner Awards, Chioma Kema Ogwo, Head, Emerging Businesses Team at Access Bank said the importance of education cannot be overstated, noting that it is a sector Access Bank is heavily investing in.
She stated that it partnered with the British Council in the 7th edition of the British Council Recognitions and Outstanding Cambridge Learner Awards (BROCLA) because of Access Bank’s value for education.
Ogwo said that in addition to the awards presented at the event, Access Bank will be giving the successful students some financial support as they begin this new phase in their lives.
“We at Access Bank are big on education and we have several offerings for the education value chain, from the parents – including access to finance for the school fees of their wards, access to exclusive offerings while transiting to visit their wards abroad, supplementary cards that can be used by their wards abroad and so much more.
“The schools are also not left out as we have access to affordable finance options for the schools for working capital, asset finance, and school expansion projects. We have a special school account for schools that recognizes their unique term cycles and offers a wide range of non-financial offerings,” Ogwo said.
Earlier in his address, Senior Manager, Sub-Saharan Africa, Cambridge International Education, Der Riet commended the 48 recipients of the high achievement awards and eight students who have excelled across multiple subjects to earn the best awards, describing their dedication to studies and ability to excel across a diverse range of subjects as truly commendable.
He acknowledged Access Bank for partnering with the British Council for the Recognition and Outstanding Cambridge Learner Awards 2024 saying that it is a vindication of the Bank’s commitment to promoting education in Nigeria.
“I also want to acknowledge Access Bank. Access Bank is also playing a big role here and is going to additionally recognise the awardees who are present in the room with awards. We want to thank the bank for this support and partnership; it’s a testament to the bank’s commitment to promoting education,” he said.
Regional Director, Sub-Saharan Africa, Cambridge International Education, Juan Visser said of all the outstanding learner events across the world, Nigeria is by far the most glamorous, and acknowledged all the successful students for their brilliance, ambition, strength, and for simply being outstanding.
“We are here to celebrate 95 Cambridge learners coming from 37 Cambridge schools, or international schools accredited to offer Cambridge, with a total of 134 awards. Cambridge has an important role to play together with the British Council in Nigeria in providing quality education to our schools and learners worldwide,” he said.
Visser who averred that quality education is the greatest driver to transforming societies and lives, said that the students gathered for the event are a testament to that adding “I know this is a big day for you all and you have worked so hard for this moment. Even with the disruption of a global pandemic, you continue to study hard and achieve excellence. People often forget that the cohort of learners here today was highly impacted by the pandemic and had to work through that.”
The Outstanding Cambridge Learner Awards are a group of awards that recognise exceptional learner achievement in Cambridge examinations around the world. Awards results are generated electronically using Cambridge’s awards data generation system.
Cambridge awards are based on overall standard marks rather than percentage marks or grades. The learner with the highest overall standard mark in the world or the country/territory will receive the award for that particular subject.
The 2024 British Council Recognition and Outstanding Cambridge Learner Awards event was witnessed by students from various schools, parents, teachers, British Council Nigeria officials, and other distinguished guests including Hon. Jamiu Tolani Alli-Balogun, Lagos State Commissioner for Basic and Secondary Education.
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