Economy
Nigeria’s 2018 Economic Outlook Remains Challenging—IMF
By Modupe Gbadeyanka
The International Monetary Fund (IMF) has warned that Nigeria’s economic outlook for 2018 still remains challenging.
The global lender made this observation at the end of its visit to the country this week.
From June 27 to July 9, 2018, an IMF staff team led by the Senior Resident Representative and Mission Chief for Nigeria, Mr Amine Mati, visited Nigeria, where they held “productive discussions with senior government and central bank officials.”
The team also met with representatives of the banking system, the private sector, civil society, and international development partners.
In a statement issued at the end of the visit, which was obtained by Business Post, the IMF said, “Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging.”
The global financial institution said Nigeria’s external reserves have remained stable at about $47 billion, supported by some convergence in existing foreign exchange windows, and despite some reversal of foreign inflows since April.
It noted that inflation declined to its lowest level in more than two years with real GDP expanding by 2 percent in the first quarter of 2018 compared with the first quarter of last year.
“However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending,” the bank stressed.
It pointed out that, “Corporate tax collection efforts improved but revenue shortfalls and the late adoption of the 2018 budget impede its implementation.
“Revenue from higher oil prices is limited by net losses from retail fuel sales while non-oil revenue remains below expectations, with yields from tax administration measures—including the Voluntary Asset Income Declaration Scheme (VAID) and increased tax audits—yet to fully materialize.
“Current spending remains in line with expectations. Carryover from 2017 to 2018 helped increase capital spending in the first four months of 2018, despite delayed approval of the 2018 budget.
“Lower yields have kept interest payments within the budgeted envelope, but the Federal Government’s interest-to-revenue ratio is expected to absorb more than half of revenues this year.”
“Reforms to improve the business environment are progressing, including through identification of priority investment projects and the adoption of the Company and Allied Matters Act (CAMA)—a legislative landmark for private sector development.
“The implementation of the Power Sector Recovery Plan is advancing through a mini-grid policy, and regulations on eligible customers and meter asset providers,” the IMF said in the statement.
It emphasised that, “Under current policies, the outlook remains challenging. Growth would pick up to about 2 percent in 2018, weighed down by lower than expected oil production and relatively weak agriculture growth. The fiscal deficit would narrow slightly, with higher oil revenues offsetting increased spending, including those planned in a supplementary budget.
“Inflation would pick up in the second half of 2018 as base effects dissipate and higher spending and supply constraints in agriculture put pressure on prices.
“Increased oil exports would keep the current account in surplus, helping stabilize gross international reserves even if the current pace of foreign portfolio outflows continues.”
Furthermore, the IMF said, “A coherent set of policies to reduce vulnerabilities and increase growth remains urgent.
“This includes specific and sustainable measures to increase the currently low tax revenue—including through avoiding new tax exemptions — and ensuring budget targets are adhered to even in an election year.
“This process should be supported by keeping monetary policy tight through appropriate monetary policy tools that will help contain inflationary pressures and support a move towards a uniform market-determined exchange rate.
“Moving ahead with structural reforms is needed to invigorate inclusive growth, particularly in the power sector where faster progress would be needed to ensure financing shortfalls in the sector are met in a sustainable manner.”
By Adedapo Adesanya
The chief executive of the Central Securities Clearing System (CSCS) Plc, Mr Shehu Yahaya Shantali, says Nigeria’s shift to a T+1 settlement cycle goes beyond faster transactions and is intended to deepen long-term growth in the capital market.
Speaking at a ceremony marking the commencement of T+1 settlement in Lagos, Mr Shantali described the development as a strategic milestone that goes beyond faster transaction timelines to reinforce the market’s structural strength and future readiness.
According to him, the shortened settlement cycle reflects years of investment in infrastructure, technology, and stakeholder collaboration aimed at transforming Nigeria into a globally competitive investment destination.
Nigeria recently became the first market in Africa to adopt the T+1 framework, reducing the settlement period for securities transactions from two days to one.
According to the boss of the securities depository firm, the shortened settlement cycle reflects years of investment in infrastructure, technology, and stakeholder collaboration aimed at transforming Nigeria into a globally competitive investment destination.
“These investments are not solely for T+1 settlement but to position Nigeria’s capital market for sustained growth and longterm competitiveness,” he said.
The migration from T+1 settlement is expected to enhance liquidity, improve capital efficiency, and reduce counterparty risk across the market.
Mr Shantali explained that the T+1 transition represents the culmination of a decades-long evolution from a manual, paper-based system to a fully automated, technology-driven post-trade environment.
He recalled that investors previously waited several months to complete transactions under the old system, but successive reforms, including transitions to T+5, T+3, and T+2, steadily improved efficiency and market integrity.
The latest upgrade, he said, builds on extensive preparations undertaken over the past three years, including system enhancements, process optimisation, and market-wide readiness assessments coordinated by the SEC and industry stakeholders.
On his part, the Director-General of the Securities and Exchange Commission (SEC), Mr Emomotimi Agama, said the reform signals Nigeria’s readiness to compete at the highest levels of global finance, noting that the country transitioned from T+2 to T+1 within six months.
“The era of T+1 has begun,” Mr Agama said, adding that shorter settlement cycles are critical to attracting global capital and strengthening investor confidence.
He noted that leading markets such as the United States, Canada, and India have already adopted T+1 settlement, while several European markets are preparing to migrate, making Nigeria’s transition a crucial step in maintaining international relevance.
By Adedapo Adesanya
Many private sector operators have yet to experience the anticipated gains of President Bola Tinubu’s reforms as they continue to grapple with inflation, energy costs and exchange rate volatility, the Director-General of the Nigeria Employers’ Consultative Association (NECA), Mr Adewale-Smatt Oyerinde, has said.
Mr Oyerinde acknowledged that the removal of fuel subsidy and liberalisation of the foreign exchange market reflected the government’s commitment to market-driven economic policies and improved transparency across sectors.
He said the reforms had enhanced fuel availability, reduced recurring supply disruptions and signalled policy consistency to both local and foreign investors, but noted that while there are indications of improved investor confidence, many domestic businesses, particularly Micro, Small and Medium Enterprises (MSMEs), continue to contend with operational challenges.
The NEC chief said the depreciation of the Naira had increased production costs, affected competitiveness and heightened operational risks for many businesses.
“Many private sector operators are yet to experience the anticipated gains of the reforms as they continue to grapple with inflation, energy costs and exchange rate volatility,” he said in a recent interview with the News Agency of Nigeria (NAN) while assessing the administration’s economic performance.
Mr Oyerinde said declining consumer purchasing power and increasing production expenses had placed pressure on businesses, with some firms adjusting investment plans and operations in response to prevailing economic conditions.
On infrastructure and refining, the NECA DG said developments in housing, industrial investments and local petroleum refining had created opportunities and contributed to improved fuel supply.
He, however, identified power supply as a major challenge facing businesses, citing persistent grid instability and reliance on alternative energy sources.
“In spite of the ongoing reforms in the power sector, insufficient electricity supply remains the number one constraint to business productivity and competitiveness across the country,” he said.
Mr Oyerinde said that although some macroeconomic indicators, including foreign reserves and government revenues, had shown improvement, the gains were yet to be broadly reflected in business operations and household welfare.
“Inflation, high energy costs, multiple taxation, logistics challenges and weak consumer spending continue to constrain productivity and limit business expansion,” he said.
He said employers remained cautious about large-scale recruitment amid high borrowing costs, foreign exchange volatility and rising operating expenses.
According to him, sustainable job creation will depend on deeper structural reforms that reduce the cost of doing business and improve access to affordable finance.
He urged the government to prioritise stable power supply, lower energy costs, tax harmonisation, policy consistency and foreign exchange stability to accelerate economic recovery and strengthen investor confidence.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded its best performance this year on Tuesday, June 2, closing higher by 1.89 per cent.
During the session, the NASD Unlisted Security Index (NSI) went up by 81.62 points to 4,406.30 points from the preceding day’s 4,324.68 points, and the market capitalisation added N48.48 billion to close at N2.636 trillion compared with Monday’s N2.587 trillion.
Business Post reports that the bourse recorded five price gainers and one price loser, Geo-Fluid Plc, which fell by 1 Kobo to N2.87 per unit from N2.88 per unit.
Conversely, Nipco Plc gained N31.57 to sell at N347.27 per share versus N315.70 per share, FrieslandCampina Wamco Nigeria Plc grew by N9.86 to N196.51 per unit from N186.68 per unit, Central Securities Clearing System (CSCS) Plc improved by N3.13 to N76.10 per share from N72.97 per share, Food Concepts Plc added 27 Kobo to sell at N2.95 per unit compared with the preceding day’s N2.68 per unit, and UBN Property Plc expanded by 17 Kobo to N2.20 per share from N2.03 per share.
Yesterday, the volume of securities transacted by investors depreciated by 91.4 per cent to 307,363 units from the previous session’s 3.6 million units, and the value of securities dropped 75.9 per cent to N42.8 million from the preceding session’s N177.4 million, while the number of deals went up by 13.5 per cent to 42 deals from Monday’s 37 deals.
At the close of trades, Great Nigeria Insurance (GNI) Plc was the most traded stock by value on a year-to-date basis with 3.4 billion units traded for N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 64.3 million units exchanged for N4.4 billion.
GNI Plc also finished as the most active stock by volume on a year-to-date basis with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units valued at N6.5 billion, and Resourcery Plc with 1.1 billion units sold for N415.7 million.
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