Nigeria, Africa’s largest economy, has been advised on the need to have the right mix of land and labour to engender growth as its economy wobbles into 2021 which is just a few days away from today.
It is a piece of good news for Nigerians that their economy will perform better in 2021 which, according to Bismarck Rewane, CEO, Financial Derivative Company, will begin to happen from the third quarter of the incoming year.
Rewane, who spoke at a breakfast meeting in Lagos recently, noted that the year would start off difficult and challenged with tough policy decisions to be made in Q1, including further liberalization of the foreign exchange market and flexible exchange rates.
He, however, predicted improvement in some macro-economic indices like inflation, which could climb to 16 percent in January, but would decelerate in Q3 towards 11 percent. He added that Treasury Bill interest rates would begin climbing in Q1 and could increase towards 5 percent—6 percent by Q2 & Q3, but stock market rally would fizzle as interest rates spiked.
Though experts agree with Rewane, to a considerable extent, they nonetheless hinge the country’s economic growth on right policies, regulations and enforcement in the growth areas of the economy which include real estate.
“As a foreign investor, what I look out for before I make any investment decision are good policies, regulation and enforcement. Each of these is as good as another, but from my experience in Africa, there could be good policies and regulations without proper enforcement,” Mustapha Njie, CEO, Taf Africa Homes, confirmed to BusinessDay.
The experts identified real estate as a basic element of economic growth because it incorporates land and labour which are major factors of production. Elena Panariti, CEO & Founder, Thought for Action, explained that “a country that has successfully traded its land and labour is said to be a developed economy.”
Panariti, a former World Bank Economist, spoke at a real estate forum in Lagos. She harped on the need for economic reform and ease of doing business in the country, noting that, in this instance, it had to be understood that for any reform to succeed, there should be an element of trust by those the reform addresses.
“Though Nigeria has both land and labour in right quantity, and it is the largest economy in Africa, its economic growth is slow at 2 percent. Its population growth is higher than the economic growth which is a mismatch,” she said, advising that “Nigeria is too big to fail and its citizens must not allow it to fail.”
Over the years, Nigeria has had poor records in the global ease of doing business ranking. It has been variously been ranked 171, 62, 140 and 187 out of 189 economies in ease of dealing with construction permit, protecting minority investors, enforcing contracts and getting electricity respectively, making it the 170th economy out of 189 in the overall ranking indices.
But it is expected that with the on-going reform efforts by Presidential Enabling Business Environment Council (PEBEC), the country’s business environment has improved significantly.
As a result of the on-going reforms, dealing with construction permits and registering property have become a lot easier and cheaper in places like Lagos and Kano where, before now, the cost was outrageous and punitive, while the process was cumbersome and tortuous.
Kaduna, Enugu and Ogun are also states where access to title documents and approvals has improved, according to PEBEC officials. At the federal level, the Finance Act, which has positive implication for real estate sector, especially in the area of double taxation, has been of help.
