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Nigeria, Others’ GDP Seen Growing at 5% in Next Five Years

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South Africa Economy
  • Nigeria, Others’ GDP Seen Growing at 5% in Next Five Years

One of the leading financial advisory firms in the world, UBS Wealth Management’s Chief Investment Office (CIO), has predicted that the Gross Domestic Product (GDP) of some economies in Africa, such as Egypt, Kenya and Nigeria, can comfortably grow at five per cent or more in the years ahead.

The firm stated this in its latest report titled: ‘Africa – Cradle of diversity’. It noted that the region’s young and growing population and its prospering middle class would be the key to sustaining such high growth rates.

For Nigeria, figures from the National Bureau of Statistics (NBS) last week showed that the economy exited recession by expanding marginally in the second quarter (Q2) of the year. The NBS figures showed that the economy grew by 0.55 per cent (year-on-year) in Q2 2017.

However, the UBS-CIO report stated that achieving sustainable economic growth would require necessary economic reforms, infrastructure investment and measures to encourage a more diversified economy continue and expand, especially in countries that are the least diversified, especially Nigeria.

It further stated that fostering economic integration within the region and nurturing its role as a global manufacturing hub were two of the many exciting trends that would help shape Africa’s future.

For Nigeria, it held the view that Africa’s largest economy offers significant potential but it must widen its tax base and broaden its activities away from oil.

It also argued that liberalisation of naira exchange rates will be crucial in attracting foreign investment.

The report highlighted 64 nations the International Monetary Fund had projected to have average real GDP growth of more than four per cent in the next five years, stating that more than half are in Africa.

According to the report, as Africa’s largest country both in terms of GDP and population, Nigeria offers enormous potential for the nation’s domestic market.

The UN expects Nigeria’s population to reach up to one billion people by 2100, offering unusual potential for growth. At the same time, population growth presents a significant challenge in terms of job creation for new labor market entrants and the nation’s geographic limitations, considering Nigeria’s territory is approximately the size of Texas.

In addition, the UBS CIO research showed that indicators relating to governance and ease of doing business were clearly weaker than for peers, thus underpinning the need for reforms as foreseen in Nigeria’s Economic Recovery and Growth Plan.

Decisive factors outlined in the report included efforts to broaden the country’s tax base and to diversify its economy.

Nigeria’s revenue base heavily relies on oil-related activities, which exposes the nation’s fiscal balance to energy price shocks and volatility risks.

Nigeria is Africa’s largest oil exporter and while commodity exports remain a major growth driver in many African countries, their importance is slowly declining as domestic demand plays an expanding role in sustaining growth. Some of the continent’s fastest growing economies are concentrated in non-resource-rich countries like Côte d’Ivoire, Senegal, Kenya and Ethiopia, which are expected to grow between seven per cent and eight per cent in the next few years.

The report pointed out that the manufacturing industry was probably one of the most overlooked sectors in Africa, despite the continent’s potential to become the world’s next low-cost manufacturing hub and a leading global player in resource-intensive manufacturing.

“Competitive labor costs, abundance of raw materials, convenient transit locations for export and large markets for local consumption position many African countries well to replace Asian competitors as attractive locations to produce goods and draw manufacturing foreign direct investment.

In the short term, further progress toward the liberalisation of the Nigerian currency’s exchange rate will have a decisive impact on the inflow of such investment,” it added.

The Head of Central and Eastern Europe, Middle East and Africa, France and Belgium International at UBS Wealth Management, Ali Janoudi, said: “We see tremendous potential for Nigeria’s economy, which is Africa’s largest, but in order to achieve its potential, current reform programs must be implemented and in some instances, accelerated. The current climate of higher energy prices and relative domestic stability indicate now is the right time to act.”

On his part, the Head of Emerging Market Asset Allocation at UBS Wealth Management’s CIO, Michael Bolliger, said: “In the near term, oil will remain an important source of income for Nigeria. However, the impressive growth rates of non-resource-rich countries in Africa clearly indicate that development beyond oil is the way forward.”

The report stated further that Africa’s glass half-empty, half-full perception of the opportunities on offer hinges on whether one believes the region’s significant potential for development can be realised.

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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An Average of 48% Global Consumers to Significantly Cut 2020 Holiday Spending

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Data presented by Buy Shares indicates that an average of 48% of global consumers plans to significantly reduce their 2020 compared to 2019. The research sampled consumer feedback from 13 countries.

Pandemic triggers reduced spending 

The data also highlights that an average of 13.46% of global consumers plans to spend more on 2020 holidays than last year. Consumers from Indonesia at 71% plan to shrink their budget in 2020 while 16% will spend more.

About 69% of Mexican consumers will spend less, while 12% plan for more spending. In Brazil, about 65% of consumers will cut their budget while 11% plan to spend more than last year. At 63%, South African consumers will cut back on holiday spending while 12% plan to increase their budgets from last year.

In Spain, 55% of consumers will reduce their spending while 7% plan an increase from a year ago. Italian consumers spending less will be at 54%, with 6% planning to increase their budget.

In India, about 47% of people will cut back on the holiday budget, while 36% plan to increase spending. French consumers at 44% have intentions of reducing holiday spending while 6% will raise the spending from a year ago. 43% of UK consumers will spend less, while 9% have plans to spend more.

In the United States, 42% of consumers will spend less, while 17% will increase the budget. For Germany, about 29% of consumers will spend less than 7% planing to pay more. It is only in China where more people plan to spend more at 29% than 25% planning to spend less at 25%.

Elsewhere, 21% of Japanese consumers plan to spend less, while 7% will pay more. The research highlighted some of the reasons behind the massive slash in this year’s holiday spending. According to the research report:

“The less spending comes as most consumers lost their jobs and faced pay cuts as employers struggled to remain afloat in the course of the health crisis. Some consumers have been saving more to pay debts, while those on stimulus paychecks cannot sustain daily needs and holiday spending.”

The research also notes that most Americans at 30% look forward to the Christmas holiday while 23% anticipate Amazon Prime Day. Only 7% of Americans look forward to Fathers Day.

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President Buhari to Inaugurate Waltersmith 5,000bpd Modular Refinery Today

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oil refinery

President Muhammadu Buhari will inaugurate the 5,000 barrels per day modular refinery built by Waltersmith Group in Imo State.

According to Waltersmith Group, the President will lead a team of other top government officials, oil regulators and stakeholders to Imo State today for the inauguration, the Group stated in a statement released on Monday.

It said the modular refinery has a storage capacity of 60,000 barrels and is expected to deliver over 271 million litres per annum of refined petroleum products, including kerosene, diesel, naphtha and heavy fuel oils, to the domestic market.

Mr. Abdulrazaq Isa, the Chairman, Waltersmith Group, said the first of 50,000 bpd modular refinery to be inaugurated today would process 5,000bpd of crude oil.

We are looking at 50,000bpd refining capacity that will come with the planned additional two modules; 25,000bpd and 20,000bpd refining capacity respectively which will then add PMS, aviation fuel and LPG to the product slates,” he added.

The statement added that Waltersmith obtained the ‘Licence to Establish’ the refinery from the Department of Petroleum Resources in June 2015 and got the ‘Authority to Construct’ in March 2017.

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Central Bank of Guinea Selects Refinitiv Trading solutions to Enhance Transparency and Digitize Guinea’s Financial Markets

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GUINEA – Central Bank of Guinea has adopted Refinitiv Trading solutions to effectively manage currency flows, primary market liquidity provision, and facilitate regional and international trade and investment.

With the scarcity of liquidity across Sub Saharan African markets, it is crucial for African countries to protect their FX reserves and tab on new liquidity pools. Leveraging technology and deploying efficient FX and trading infrastructure systems enhances transparency, accuracy and credibility to the marketplace and facilitates economic growth. The Refinitiv FX Trading platform will offer the local market in Guinea access to deeper offshore liquidity, efficient execution, and automated trade reporting tools.

Refinitiv Auctions will enhance the efficiency of Guinea’s forex auction capabilities and provides a real-time view of bid submissions which will simplify the allocation process. Last year, Refinitiv Auctions reached a key milestone having helped facilitate over $1trillion for its central bank and large corporate customers in Africa, Middle East, Asia and Europe.

Dr. Louncény NABE, Governor of the Central Bank of Guinea, said: “We are delighted to announce the deployment of Refinitiv Auctions in Guinea. The step comes in line with the Central Bank’s vision to run a transparent and compliant auctions infrastructure. The deployment will help us improve the efficiency of our FX auction process and enhance the financial sector’s confidence in Guinea.”

Nadim Najjar, Managing Director, Middle East and Africa, Refinitiv, said: “We are proud to be part of The Central Bank of Guinea’s digital transformation vision. Following the COVID-19 outbreak, Central Banks in Africa are facing increasing risks in managing their currency flows and protecting FX reserves. To do this effectively, central banks need to be able to run a transparent and compliant process across multiple asset classes including FX and money markets.”

Refinitiv Auctions has seen rapid growth and adoption in 2019, with a 27% year on year increase in customers, and is now used by central banks in Europe, the Middle East, Africa and Asia. Refinitiv is able to address central banks’ needs around data residency and infrastructure costs by offering its solution on either a hosted or deployed basis.

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