Winners, losers in 2019 and expectations for 2020

From store owners who suffered losses running into several millions of naira after being targeted by Nigerian mobs retaliating against xenophobic attacks in South Africa to the victims of a billion-naira fire outbreak in Balogun market, many Nigerians will remember the year 2019 for the despair it brought them.

It’s been over a month since Kazeem Ijaduade’s fabric shop was burnt to the ground by a rampaging fire. He claims goods worth N5 million were lost to the fire. He and his family had barely trudged along through a bleak year marked by low sales, hopeful that the festive bounce would bring some relief. That hope is dead now and the year is ending on a worse note than it started.

He had no insurance cover and so recovering from such a loss would be slow and painful.

“Since the incident, the family has survived on my wife’s petty trading,” he said.

He has four children and his wife sells fruits at a nearby market.

James Hutu (not real name) is also yet to recover from the attack by an angry mob who broke into his store and carried away with luxury items worth billions of naira. The angry mob included middle-aged Nigerians who took part in a wave of brainless attacks where Nigerian stores were attacked in retaliation to the killings of Nigerians in South Africa.

In Novare Mall in Ajah, Nigerian stores which shared a building with South African retailer, Shoprite, were victims of violent attacks that left damaged property and stolen items in its wake.

“The scars (from that incident) will remain with me forever,” Hutu, whose store at the Novare Mall remains shut, said.

The year 2019 was also a bad one for some investors.

For stock investors, billions of naira was lost judging by the movement in market capitalisation. This group of investors can only speak of an underwhelming year that was made worse by a lack of economy-stimulating reforms and capped off by investor apathy.

A year ago, Nigerian equities returned as much as 42 percent on their way to becoming one of the best performers globally; that bounce completely faded in 2019.

The conclusion is simple. It was a bad year for investors who staked money in stocks hoping for a post-election rally widely anticipated to more than double stock valuations on the stock exchange.

The stock rout also meant many listed companies, set to end the year at a decade-low, also had a year to forget in 2019.

Consumer goods companies have suffered shrinking profits as consumer demand remains weak while the border closure has created a big headache for traders.

Perhaps only foreign bond investors can call 2019 a kind year thanks to heterodox monetary policies by the Central Bank of Nigeria that triggered a rally in bond prices and a decline in yields.

Some small business owners and individuals who were beneficiaries of bank credit, on the back of the CBN’s increase of the loan to deposit ratio of commercial banks to stimulate lending, may have positive takeaways from 2019 but the infrastructure deficit, from power shortages to bad road networks, would have muted their excitement of better access to credit.

The CBN’s heterodox policies have also spurred a financial repression that is hurting local investors from the pension funds to the deposit money banks.

With 2019 tagged an underwhelming year, 2020 may be no different.

Business leaders interviewed by BusinessDay fear next year could be even worse than this year.

The fragility of economic growth in 2019 which saw only 24 percent of the economy grow above 3 percent was a big factor in evaluating the year and predicting next year.

Not only are there worries for economic growth in 2020, there is a growing concern over exchange rate stability given the steady fall in fx reserve level of about $7-8 billion this year. Though the exchange rate has been stable for nearly two years, cracks are beginning to appear as the government seems to be reverting to its demand management strategy by adding new items – milk and dairy products – to a list of 41 items banned from accessing dollars from the official window.

Concerns over economic growth, which probably printed at 2.1 percent in 2019, are gradually becoming the norm and the calamitous collapse on foreign direct investment in 2019 paints a bleak outlook for robust growth and job creation.

There are also some external factors with negative implications for the economy in 2020.

Global economic growth is expected to slow down and oil futures contracts hint at an oil price of $57 per barrel next year from $61 in 2019. These developments, along with a likely increase in production cuts by OPEC, have negative implications for Nigeria in the form of lower oil revenues.

With higher taxes, from the hike in VAT to a possible introduction of a 9 percent communication levy, the Nigerian tax man must brace up for a tougher year that will be marked by a more aggressive tax drive by the government.

LOLADE AKINMURELE