Economy
What Awaits Nigeria’s Economy in Buhari’s 2nd Term
By Modupe Gbadeyanka
The presidential election in Nigeria may have come and gone, but the effect will be with the Africa’s largest economy for the next four years.
Last Saturday, Nigerians went to the polls to re-elect President Muhammadu Buhari for another four years.
In his first four years in office, which will officially end on May 29, 2019, the nation suffered its first recession in many years.
During the period, a lot of investors rushed to pull out their funds from the country and the stock market suffered for it.
Also, the President had to spend a chunk of his time in office treating himself at a hospital in London, creating the impression that he was not fully fit to govern the country.
As the country prepare for another four years of President Buhari, analysts at United Capital Research have given their views on the economic outlook in his second term in office.
“The outlook for the economy over the next four years is positive but modest as President Buhari’s victory signals policy stability,” the firm said.
It was stated that the administration will clearly continue to invest in infrastructure, sustain its welfare scheme, reinforce the drive to substitute imports for local production, and retain its intervention programs across the Agric, Power and the SMEs space, by building on its Economic Recovery and Growth Plan (ERGP).
“We expect the budget to remain large, broadly financed by borrowings. However, the role of the private sector may be limited by the absence of far-reaching liberal policies.
“This may keep investment low and output growth soft. Accordingly, we expect GDP growth to sustain a gradual uptick over the next four years, rising from 2.0% to 3.5% or more over the period.
“Inflation rate is likely to ease 10%/9%, though minimum wage implementation and power tariff adjustment may weigh on prices.
“Thus, interest rate may to revert to its long term 12% over the period. In the rest of the report, we highlight our views of the medium term economic outlook for Nigeria,” it said.
The firm further said beyond elections, the medium to long term outlook for the Nigerian economy depends on the position of government on the implementation of far-reaching economic reforms to fix the structural challenges in the economy.
“If not urgently addressed, structural constraints such as; the enormous infrastructural deficit, poor electricity supply, sharp rising population growth, dependence on oil export and oil revenue for budget funding, and the problem of the viability of sub-national governments, are bound to mar economic progress.
“Notably, system inefficiencies continue to undermine the ability of the federal government to diversify its revenue base, enhance social justice, allocate resources efficiently and drive economic diversification. If the stance of the current administration over the last four years is anything to go by, we do not envisage a significant drive for bold reforms.
“However, we expect investment in infrastructures such as rail project, road, and similar social amenities to continue in a bid to bridge the infrastructural gap.
“Again, the drive to diversify government revenue via improving the efficiency of tax authorities such as the FIRS, Customs and Ports Authorities, and support the SMEs boost job creation through intervention in the Agric sector will continue.
“Finally, efforts to ease doing business in Nigeria, via the initiatives of the Presidential Enabling Business Environment Council (PEBEC), by reviewing the bureaucracies and red tapes within the civil service and other government agencies, should be more obvious going forward,” the report said.
In its report, United Capital Research further during the period, it expects the present Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, if retained by the President for another term in office, to sustain its current fixed/multiple forex regime.
On monetary policy, it said aggressive liquidity mop-up via persistent OMO issuances may be retained considering that FX rate will broadly drive policy actions.
On the government’s anti-corruption war, the company said efforts to stamp-out corruption will be sustained and the EFCC will continue to clamp down on looters and individuals with allegations of misappropriation of public funds.
Over the last three to four years, the implementation of TSA, whistleblower’s policy and the efficiency unit of the Ministry of Finance, by the administration has supported significant improvement in independent revenue and recoveries.
“While this will remain appealing to the poor masses, it may rein in discretionary spending by the elite, ultimately limiting the growth rate of aggregate spending in the economy, especially on activities in the services sector,” it said.
On security and social political environment, it said a major aspect of the socio-political environment that seems to have benefited a lot from President Buhari’s first 4-year is the war against insurgency.
If the voting pattern from the region is anything to go by, the massive re-election of the President by voters in Borno and Yobe (the most affected States) suggests that the perceived containment of Boko Haram activities by the Buhari government is paying off.
“Hence, we imagine that another four years in office is positive for relative peace and security in the North Eastern region of the country,” it stated.
By Modupe Gbadeyanka
To unlock about $50 billion in deep offshore investment, President Bola Tinubu has signed the Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026, stressing that the aim is “to make Nigeria Africa’s regional hub for deep offshore project execution.”
In a statement personally signed by him on Wednesday, the Nigerian leader disclosed that he approved the executive order to create a clear and predictable framework for the sector.
According to him, the approval has already attracted approximately $10 billion for the Bonga South West project.
He stated that for projects accessing the supplementary incentives, the Order requires activities to be performed in Nigeria, subject to clearly defined exceptions and Nigerian content requirements.
The President noted that this part was included because “I want the work to come home to Nigeria. I want our engineers involved, our fabrication yards working, Nigerian marine and technical service companies securing contracts, and our young people acquiring world-class skills.”
“For me, the real measure of $50 billion will be what Nigerians see from it: good jobs, stronger Nigerian businesses, greater production, more revenue for the Federation and capabilities built here at home. Our natural resources must work harder for our people,” he added.
Mr Tinubu stated that this order is the tenth major policy directive of his administration targeted specifically at the oil and gas sector.
“We have been deliberate about removing the constraints holding back investment, production and value creation.
“For too long, some of our biggest offshore opportunities have remained stalled. We cannot afford to leave that opportunity beneath our waters for another decade. Capital moves, countries compete for it, and investors committing billions of dollars over many years need certainty,” he disclosed.
According to him, “We are providing that certainty, with a clear window for existing deep offshore leases to reach Final Investment Decision by 31 December 2029 and qualify for the full standard incentive.”
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange extended its stay in the red territory for a second consecutive session on Tuesday, August 11, declining by 1.81 per cent.
This pulled back the market capitalisation by N8.94 billion to N2.748 trillion from N2.798 trillion, and the NASD Security Index (NSI) dropped 84.44 points to 4,578.74 points from 4,663.18 points.
The market breadth index was at equilibrium yesterday, as there were four price gainers and four price losers.
On the red side, Central Securities Clearing System (CSCS) Plc depreciated by N12.86 to N116.88 per share from N129.74 per share, Afriland Properties Plc declined by N1.95 per cent to N22.00 per unit from N23.95 per unit, Food Concepts Plc weakened by 25 Kobo to N2.50 per share from N2.75 per share, and Geo-Fluids Plc lost 22 Kobo to sell at N2.05 per unit versus Monday’s N2.27 per unit.
On the green side, FrieslandCampina Wamco Nigeria Plc gained N11.50 to finish at N156.50 per share compared with the previous day’s N145.00 per share, Nitrox Industrial Gases Plc expanded by N2.11 to N23.36 per unit from N21.15 per unit, NASD Plc advanced by N1.90 to N36.00 per share from N34.10 per share, and Nipco Plc surged by 50 Kobo to N457.00 per unit from N456.50 per unit.
During the session, the volume of securities rose by 31.2 per cent to 1.5 million units from 1.1 million units, the value of securities improved by 315.9 per cent to N42.3 million from N10.2 million, and the number of deals skyrocketed by 45.7 per cent to 51 deals from Monday’s 35 deals.
Great Nigeria Insurance (GNI) Plc ended as the most active stock by value (year-to-date), with 3.4 billion units valued at N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 77.0 million units transacted for N5.5 billion.
GNI Plc also closed as the most active stock by volume (year-to-date), with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units exchanged for N6.5 billion, and Resourcery Plc with 1.1 billion units traded for N415.7 million.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited tumbled by 0.73 per cent on Tuesday on the back of profit-taking by investors.
The consumer goods counter shed 0.96 per cent, and the banking space crashed by 0.46 per cent due to selling pressure. But the insurance index gained 0.24 per cent, and the energy segment improved by 0.03 per cent, while the industrial goods sector closed flat.
When the bourse closed for the session, the All-Share Index (ASI) gave up 1,806.18 points to 246,723.57 points from 248,529.75 points, and the market capitalisation depreciated by N1.166 trillion to N159.256 trillion from N160.422 trillion.
Thomas Wyatt lost 9.97 per cent to quote at N2.89, AVA Capital declined by 9.60 per cent to N8.95, International Energy Insurance dipped by 6.32 per cent to N4.00, International Breweries dropped 5.98 per cent to close at N11.00, and Guinea Insurance shed 5.13 per cent to 74 Kobo.
On the flip side, UPDC REIT gained 10.00 per cent to end at N14.85, FTN Cocoa appreciated by 9.88 per cent to N8.90, C&I Leasing surged by 8.26 per cent to N5.90, Sovereign Trust Insurance went up by 6.74 per cent to N1.90, and Regency Alliance climbed 6.33 per cent to 84 Kobo.
Yesterday, Fortis Global Insurance was the busiest equity, leading the activity chart with a turnover of 3.3 billion units worth N9.6 billion. Trans-Nationwide Express transacted 84.6 million units for N181.9 million, Access Holdings sold 66.1 million units valued at N1.9 billion, Consolidated Hallmark exchanged 54.3 million units worth N379.4 million, and Fidelity Bank traded 46.9 million units for N1.0 billion.
Investors bought and sold 3.9 billion units worth N32.4 billion in 45,608 deals compared with the 1.1 billion units valued at N27.0 billion traded in 59,185 deals a day earlier. This indicated that the number of deals retreated by 22.94 per cent, the trading volume increased by 254.55 per cent, and the trading value soared by 20.00 per cent.
