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NSE Predicts 0.6% GDP Growth

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Oscar Onyema, chief executive officer of the Nigeria Stock Exchange
  • NSE Predicts 0.6% GDP Growth

Mr Oscar Onyema, Nigeria Stock Exchange (NSE) Chief Executive Officer, has predicted that Nigeria’s economy would recover from recession in 2017 with a modest Gross Domestic Product (GDP) growth forecast of 0.6 per cent.

Onyema stated this at the NSE 2016 Market Recap and Outlook for 2017, in Lagos, on Thursday.

He expressed optimism that the nation’s economy and the equity market would rebound in 2017 with the right economic policies and strategies.

He said that the economy would be driven by vigoorous fiscal policy implementation with focus on articulation of desired goals.

He said that lower rates of disruptions to oil infrastructure from resolution of the Niger Delta conflict would increase foreign exchange inflows.

Onyema added that rise in crude oil prices above the Federal Government’s budget benchmark of 42.5 dollars per barrel and positive impact of the war against corruption would enhance investor confidence.

“We are cautiously optimistic, as consensus estimates suggest a moderate recovery for Nigeria in 2017, provided that policy makers implement the right combination of policy measures,” Onyema said.

He assured investors that the exchange would promote its unique value proposition to both global and domestic investors to increase market activities.

“Monetary policy will continue to play a
vital role in determining activity in the market,” he said.

Onyema said that the exchange would work with policy markers to drive policies that would free up the system and promote ease of doing business in Nigeria.

The chief executive officer called for an incentive schemes for sectors of the economy that could support export for enhanced foreign exchange earnings.

According to him, systematic removal of impediments to doing business and reduction of leakages will attract private sector investments.

He explained that the NSE would focus on achieving its goal of becoming a more agile and demutualised exchange in future.

Onyema added that the exchange would also hasten efforts toward developing innovative products such as exchange traded derivatives to provide investors with tools to better weather economic realities in 2017.

He gave the assurance that the NSE would enhance its cross-border integration efforts via African Securities Exchange Association (ASEA) and African Capital Market Integration (WACMI) programmes to enhance capital market liquidity.

“We will also continue our engagement efforts with the government to promote the listing of privatised state-owned entities as well as engage with the private sector issuers for listings across all of our product categories,” Onyema stated.

On the market performance in 2016, he said that the NSE Industrial Index recorded the steepest drop of the year, dropping by 26.37 per cent due to severe difficulties faced by companies in accessing capital for imported raw materials.

Onyema stated that the NSE All-Share Index in 2016 dropped by 6.17 per cent to close at 26,874.62 compared with 28,642.25 posted in 2015.

He added that NSE 30 index decreased by 7.18 per cent to close at 1,195.20 in contrast with 1,287.67 in the corresponding year.

The News Agency of Nigeria (NAN) reports that equities market capitalisation lost 6.12 per cent to close at N9.225 trillion against N9.859 trillion in 2015.

Total market capitalisation dipped 4.81 per cent to close at N16.185 trillion in contrast with N17.003 trillion in the preceding year.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Economy

Ogun Records N13.3B Internally Generated Revenue Monthly in Q1 of 2021

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Revenue - Investors King

Ogun State Government has recorded an average of N13.3billion monthly as Internally Generated Revenue (IGR) in the first quarter of 2021.

The government said it is also planning to raise its yearly Gross Domestic Product (GDP) rate from the current single digit by 25 percent.

The Commissioner for Finance, Dapo Okubadejo disclosed this to newsmen in Abeokuta ahead of the state’s investment summit tagged: ‘OgunIseya21: Becoming Africa’s Model Industrial and Logistics Hub’, slated for July 13th-14th, 2021.

Okubadejo who doubles as the State’s Chief Economic Adviser noted that the state’s IGR had experienced an upward movement after last year’s shortfall due to the Covid-19 pandemic and the attendant lockdown.

“We had a significant turnaround in the first quarter of this year. In fact, as of April, we have done almost N40bn in the Internally Generated Revenue. Our target this year is to exceed all the previous records we have set in IGR. That’s why we have put in place, all these transformation initiatives, friendly policies and also facilitate this investment summit to further showcase Ogun State as the preferred industrial destination,” he said.

The Finance Commissioner was supported in highlighting the investment potentials of the summit by his counterparts from the Ministries of Industry, Trade and Investment, Mrs. Kikelomo Longe; Works and Infrastructure, Ade Adesanya; Culture and Tourism, Toyin Taiwo; Budget and Planning, Olaolu Olabimtan and the Director-General, Public-Private Partnership, Dapo Oduwole.

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Unemployment To Push More Nigerians Into Poverty – NESG

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Nigerian Economic Summit Group- Investors King

On Friday, The Nigerian Economic Summit Group said that many more Nigerians are expected to fall into the poverty trap amid rising unemployment in the country.

The NESG, a private sector-led think-tank, noted in its economic report for the first quarter of 2021 that the country’s economic growth in the period under review was relatively weak.

It said, “Nigeria’s economic growth trajectory is better described as jobless and less inclusive even in the heydays of high growth regime in the 2000s.

“While the Nigerian economy recovered from the recession in Q4 of 2020, the unemployment rate spiked to its highest level ever at 33.3 percent in the same quarter.

“With the COVID-19 crisis heightening the rate of joblessness, many Nigerians are expected to fall into the poverty trap, going forward.”

The group noted that the World Bank estimated an increase in the number of poor Nigerians to 90 million in 2020 from 83 million in 2019.

“This corresponds to a rise in headcount poverty ratio to 44.1 percent in 2020 from 40.1 percent in 2019. The rising levels of unemployment and poverty are reflected in the persistent insecurity and social vices, with attendant huge economic costs,” it said.

According to the report, huge dependence on proceeds from crude oil, leaving other revenue sources unexplored, indicates that Nigeria is not set to rein in debt accumulation in the short to medium term.

The NESG noted that public debt stock continued to trend upwards, with a jump from N7.6tn ($48.7bn) in 2012 to N32.9tn ($86.8bn) in 2020.

It said public debts grew by 20 percent between 2019 and 2020, adding, “This is partly due to the need for emergency funds to combat the global pandemic and alleviate its adverse economic impacts on households and businesses.”

According to the group, Nigeria needs more than an economic rebound, and there is a need to improve growth inclusiveness.

It said, “Nigeria has struggled to achieve inclusive growth for many decades. Since recovery from the 2016 recession, the economy has been on a fragile growth path until it slipped into another recession in 2020 due to the COVID-19 pandemic.

“This suggests that the country needs to attain high and sustainable economic growth to become strong and resilient.

“The relationship between economic growth and unemployment rate in Nigeria suggests that economic growth has not led to a reduction in the unemployment rate – jobless growth.”

The NESG said to reverse this recurring trend, there was an urgent need for collaborative efforts between the government and relevant stakeholders towards addressing the constraints to value chain development in high-growth and employment-elastic sectors, including manufacturing, construction, trade, education, health and professional services, with ICT and renewable energy sectors as growth enablers.

It noted that despite the re-opening of the land borders that the Nigerian government shut since October 2019, inflation reached a four-year high of 18.1 percent in April 2021.

“While we expect improved agricultural production in coming months to partially ease inflationary pressures, this positive impact could be suppressed by recurring key structural bottlenecks including insecurity in the food-producing regions, electricity tariff hike, fuel price increase and hike in transport and logistic costs,” it added.

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IMF Queries FG Strategies On Fuel Subsidy, Unemployment, Inflation

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IMF - Investors King

The International Monetary Fund has raised the red flag over Nigeria’s resumption of petrol subsidy payments, describing it as injurious to the economy.

It also reiterated the importance of introducing a market-based fuel pricing mechanism and deployment of well-targeted social safety nets to cushion any adverse impact on the poor.

In a report produced after a virtual meeting with Nigerian authorities from June 1 to 8, the IMF also expressed concerns over the rising unemployment and inflation rates, even as it admitted that real Gross Domestic Product was recovering.

The IMF team, led by Jesmin Rahman, further hailed the Central Bank of Nigeria for its efforts at unifying the exchange rate by embracing needed reforms.

The Fund said: “Recent exchange rate measures are encouraging, and further reforms are needed to achieve a fully unified and market-clearing exchange rate.

“The resurfacing of fuel subsidies is concerning, particularly in the context of low revenue mobilisation.

“The Nigerian economy has started to gradually recover from the negative effects of the COVID-19 global pandemic. Following sharp output contractions in the second and third quarters, GDP growth turned positive in Q4 2020 and growth reached 0.5 percent (y/y) in Q1 2021, supported by agriculture and services sectors.

“Nevertheless, the employment level continues to fall dramatically and, together with other socio-economic indicators, is far below pre-pandemic levels. Inflation slightly decelerated in May but remained elevated at 17.9 percent, owing to high food price inflation. With the recovery in oil prices and remittance flows, the strong pressures on the balance of payments have somewhat abated, although imports are rebounding faster than exports and foreign investor appetite remains subdued resulting in continued FX shortage.

“The incipient recovery in economic activity is projected to take root and broaden among sectors, with GDP growth expected to reach 2.5 percent in 2021. Inflation is expected to remain elevated in 2021, but likely to decelerate in the second half of the year to reach about 15.5 percent, following the removal of border controls and the elimination of base effects from elevated food price levels.”

The IMF also recognised that tax revenue collections were gradually recovering but noted that with fuel subsidies resurfacing, additional spending for COVID-19 vaccines and to address security challenges, the fiscal deficit of the Consolidated Government is expected to remain elevated at 5.5 percent of GDP.

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