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Analysts Proffer Measures to Enhance Economic Growth

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  • Analysts Proffer Measures to Enhance Economic Growth

Following a World Bank report that revealed economic growth in Nigeria has not been impressive since 1995, some economic analysts have advised the federal government to enhance investment in infrastructure and also develop policies that would encourage foreign direct investments (FDIs).

The World Bank had in the latest edition of its Africa’s Pulse stated that Nigeria’s economic growth has remained below population growth in the fourth consecutive year, adding that although regional growth was expected to rebound to 2.8 per cent in 2019, it has remained below three per cent since 2015.

However, reacting to the position of the multilateral institution, an analyst at Ecobank, Mr. Kunle Ezun, stressed the need for increased government spending.

He said: “This report wouldn’t come to me as a surprise looking at the economy in the last few years. We had slipped into recession and by 2017, we recovered slightly to grow at 0.8 per cent Gross Domestic Product (GDP) and by 2018, we grew by 1.93 per cent.

“So if you put that side by side with the size of the economy, and the population growth, you can completely say growth is slow and may not be adequate to support the economy.

“The economy on its own has a population growth of two per cent annually and if you have a growth of less than two per cent, then you would begin to see the gap and the threats to the economy.

“So if the World Bank has said is a slow-growing economy, it is accurate because the data are in line with that argument. This would continue to widen the gap between the rich and the poor and this gap might be the fertile ground for social unrest and for insecurity.”

Speaking on measures to boost economic growth, he said: “There is need for government to rejig the economy. This can start from the 2019 budget. I think the amount in the 2019 budget is low for our economy.

“The government needs to see how much of funds you can push into the system to stimulate the output and growth.”

Ezun added: “The federal government is a big spender in a growing economy like ours. So the government could spend like 60 per cent while the private sector would do about 30 per cent or more.

“So if they can fast track the approval of the minimum wage and all other reforms that would improve liquidity in the system and empower the citizenry to spend more, then we would be on the right path.

“That is because the citizenry is empowered to spend more, it stimulates local production and creates demand and when those two work together, you begin to see an improvement in the economy.”

On his part, an economist and Senior Lecturer at the Lagos Business School, Dr Bongo Adi, called for a different approach to monetary policy in the country.

He said: “We have to look at the implications of tight monetary policy which includes the tightening of liquidity, which reduces credit to the private sector.

“So if you back 10 years from 2008, aggregate monetary policy has been tight and when you look at our growth, you see that Nigeria has underperformed compared with sub-Saharan and middle-income countries in Africa and our growth rate has declined significantly.

“The slow growth is simply because of the way monetary policies have been managed.”

Speaking on measures the government should adopt to enhance growth, Adi said: “The truth is that we need to use monetary policy instruments to grow the economy and for that to happen, we should be approaching single-digit rates to enhance growth.”

To the Managing Director, Afrinvest Securities Limited, Mr Ayodeji Ebo, a major catalyst for growth is creating policies to secure foreign investments.

He explained: “What needs to be done is that there needs to be a more political will to implement a lot of the policies that are already available on investments. For this economy to grow, we need more partnership with private investments.

“Why people are not investing is because of the way by which the government can easily resign a transaction where investors would have put in a lot of money. so if we can rejig our policies to attract and ensure that once a contract is signed, no new government can come to override that first contract, then we can begin to attract more investments into critical areas that would jumpstart the economy.

“I think the federal government should come up with deliberate policies that would attract foreign direct investment, reduce the burden on the government and if we are able to that, I feel that this economy can grow at the rate of six to seven per cent if those policies are put in place.”

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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Gold Hit 26.8% ROI YTD, the Highest Increase in Value Among Top Assets

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Gold Delivers 26.8% Return on Investment Year-t-Date

As the world’s earliest form of currency, gold has long been considered a reliable store of value. Unlike banknotes, stock, or other assets, the precious metal managed to preserve the investors’ wealth throughout the years, especially in times of turmoil in the financial markets.

According to data presented by AksjeBloggen, gold hit a 26.8% YTD return on investment, the highest increase in value among top assets.

Gold Return Rate 8.5% Higher than in 2019

Investors tend to focus on gold in times of market volatility, considering it to be a ‘safe haven’ in crises like the coronavirus. In 2019, the value of gold increased by 18.3%, revealed the Blackrock data. The precious metal continued the impressive performance in 2020 with a 26.8% YTD return, 8.5% more than in 2019.

Statistics show that last year, the S&P 500 index increased in value by 31% but was outperformed by Nasdaq, which grew by 35.2%. The MSCI Europe index rose by 26.1% in 2019. China A-shares followed with a 22.3% ROI.

However, the COVID-19 crisis had a massive impact on popular assets, causing a sharp fall in their values during the first half of 2020. The Blackrock data revealed the Nasdaq YTD return hit 23.9%, 11.3% below the 2019 performance. China A stocks reached 10% ROI YTD, much under the 22.3% return in 2019.

Statistics show the S&P 500 index had an 8.4% value increase in the nine months of 2020, almost four times less than in 2019. MSCI Emerging Market Index reached a 4.9% value increase in the same period, compared to 13% in 2019.

The Blackrock data show that crude oil, FTSE 100, and MSCI Europe index witnessed the most significant drop in the nine months of 2020, with their values falling by 34.6%, 22.4%, and 11.5%, respectively.

Global Demand for Investment Gold Surged by 100% YoY

Although many investors value gold as an important portfolio asset, the economic downturn caused by the COVID-19 pandemic led to a surge in global demand for the precious metal.

The World Gold Council data showed the global demand for investment gold increased significantly since the beginning of the year.

In the fourth quarter of 2019, it amounted to 279.2 metric tons. By the end of March, this figure jumped by more than 93% to 539.6 metric tons. The increasing trend continued in the second quarter of the year, with global demand for investment gold hitting 582.9 metric tons, an almost 100% jump year-over-year.

Statistics indicate the global demand for gold for investment purposes hit a record-breaking 1,152 metric tons in the first half of 2020, the highest figure so far.

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Oil Prices News: Oil Gains Following Drops in US Crude Inventories

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Oil Prices Gain Following Drops in US Crude Inventories and OPEC High Compliance Level

Global oil prices extended their 2 percent gains on Thursday after data showed U.S crude oil inventories declined last week.

The price of Brent crude oil, against which Nigerian oil is measured, gained 0.2 percent or 7 cents to $43.39 a barrel as at 12:10 pm Nigerian time. While the U.S. West Texas Intermediate (WTI) crude appreciated by 8 cent or 0.2 percent to $41.12 barrels.

Oil prices extended their three days gain after the American Petroleum Institute said the U.S crude inventories declined by 5.4 million barrels in the week ended October 9.

The report released after the market closed on Wednesday revealed that distillate stockpiles, which include diesel and heating oil, declined by 3.9 million barrels. Those stated drawdowns almost double analysts’ projections for the week.

Much of the fall is due to the effects of Hurricane Delta shuttering U.S. production in the Gulf of Mexico, and as such, will be a transitory effect,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.

“Therefore, I am not getting too excited that a turn of direction is upon markets, although both contracts are approaching important technical resistance regions.”

Also, the report that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, referred to as OPEC+ attained 102 percent compliance level with their oil production cuts agreements bolstered global oil outlook. Suggesting that demands for the commodity are likely not growing and could drag down prices in few weeks, especially when one factor in the reopening of Libya’s Sharara oil field, workers returning to operation in Norway and the Gulf of Mexico.

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Oil Prices Gain on Tuesday Despite Expected Surge in Global Oil Supplies

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Oil Prices Rise Despite Expected Surge in Global Oil Supplies

Oil prices gained on Tuesday despite Libya opening Sharara oil field for production, labour in Norway reaching an agreement with oil firms to return back to work and oil workers in the U.S returning to the Gulf of Mexico region after the Hurrican Delta.

Brent crude oil, against which Nigerian oil price is measured, gained 1.77 percent to $42.46 per barrel as at 11:15 am Nigerian time on Tuesday.

While the US West Texas Intermediate (WTI) crude oil gained 2 percent to close at $40.22 per barrel.

The improvement in prices was after oil prices plunged as much as 3 percent on Monday following a resolution reached by Libyan rebels and government to commence oil production at the nation’s largest oil field, Sharara Oil Field.

This coupled with labour agreement with oil firms in Norway was expected to boost global oil supplies and eventually weighed on prices and disrupt OPEC+ production cuts strategy.

However, prices surged after Nancy Pelosi said she would commence talks on $1.8 trillion stimulus package following President Trump’s return to the White House after he was rushed to hospital following a positive COVID-19 test.

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