Business leaders expect next decade to bring Nigeria growth or stagnation
Nigerian business leaders and top corporate executives say the speed of reforms in the next 10 years will determine if Africa’s biggest economy ends 2030 with a quarter of the world’s poorest or emerge among the world’s top 20 economies.
Projections at the recently concluded BusinessDay Economic Outlook Conference, “Nigeria’s Prosperity Ahead 2030: Population, Data, Productivity” showed that if Nigeria’s growth rate continued to languish at 2 percent per annum, it would remain a $400 billion economy by 2030.
In another scenario, should the economy grow at a 5 percent, the country would have a GDP of $500 billion by 2030, however, this would still not be enough to drive inclusive growth.
Nigeria could boost its economy to $800 billion at a growth rate of 7 percent, while it could have a $1 trillion economy and emerge among world’s top 20 economies if it grew at a 10 percent growth rate. This is also the growth rate (10 percent) targeted by Rwanda, Africa’s fastest-growing economy.
Business leaders in the room told BusinessDay that a 7 and 10 percent growth rate that is independent of a sharp upward swing in oil prices, can attract the needed investment which can change the dynamics of the country in the new decade.
Business heads and Chief executive officers also said for Nigeria to achieve inclusive growth that would usher it into a new decade of prosperity, it must focus on generating reliable data that would facilitate informed decision making both in the public and private sectors.
The need for this stems from the fact that most data available, are largely estimated, and fails to capture the informal sector which accounts for about 60 percent of economic activities.
The experts also stressed the need for Nigeria to use technology to drive economic growth; through business and informal sector.
“The efficiency that technology brings, even though it’s also a disruption are things that can automatically improve productivity and also just be using data, business and government can take decisions that are precise and that is relevant for productivity,” Ebehijie Momoh, senior vice president, Mastercard West Africa.
Mastercard estimates that a one percent increase in usage of electronic payment on an average would lead to a $104bn increase in GDP.
“If the informal sector is as large as the numbers are saying, we then need to look at how we can use technology to drive productivity in that space,” Patrick Nwakogo, country director/ CEO, Dale Carnegie Nigeria said.
Giving a keynote address at the BusinessDay’s economic outlook, Andrew S Nevin, Chief economist at PWC said going into the next decade, Nigeria would need to bring more people from the informal economy to the formal economy.
Banking system liquidity worth N834bn to be sterilized by CBN
The banking system will in the short term see a whopping N834bn sterilized by the Central Bank of Nigeria (CBN).
“Depending on how the CBN aims to implement the CRR increase in the short term, we expect the policy to alter the demand witnessed over the previous weeks as an additional cN834.0bn worth of liquidity is likely to be sterilized from the financial system,” said analysts at Afrinvest Securities Limited.
Inflation management prompted the apex bank’s monetary policy committee to raise CRR by 500 basis points to 27.5% in its first meeting of the year last Friday.
Nigeria’s rice farmers call for closed land border extension
Rice farmers in Nigeria want the government to continue with its on-going land border closure policy to drive more investment into the country’s agriculture sector.
This comes ahead of the Jan-31 end date for the first phase of a joint operation by concerned agencies to enforce the closed border policy. President Muhammadu Buhari is expected to review progress and determine whether the border should be re-opened.
“Lots of rice farmers are increasing their production areas because there is a huge market for paddy since the border closure,” said Aminu Goronyo, national president, Rice Framers Association of Nigeria. “This is because millers are patronizing rice farmers now and off-taking all that they can produce immediately.”
Union Bank Nigeria to Divest UK subsidiary
Union Bank of Nigeria plc yesterday announced that it has entered a share sale and purchase agreement to divest its 100 percent equity stake in Union Bank UK plc.
The sale is aligned with Union Bank’s strategy to geographically streamline its business operations to focus on growth opportunities in Nigeria.
“Following a competitive bid process, MBU BidCo Limited, an acquisition vehicle wholly owned by MBUCapital Limited, was selected as the preferred bidder,” the bank said in a note to NSE.
The completion of the sale is subject to relevant regulatory approvals in Nigeria and the United Kingdom.
Julius Berger shares surge as Q4 profit hits N10.3bn on improved government spending
Shares of construction giant, Julius Berger, surged 9.93 percent to N22.15 after the company announced it recorded N10.3 billion as profit for the full-year ended 31st December 2019 on the back of an improved public sector spending.
Shares of the company have gained 10.55 percent since the beginning of trading this year, while it gained in three days of trading. Its prices have remained largely unchanged for the rest of the trading days.
After a recession-induced loss in 2016 when the company reported a loss of N2.39bn, Julius Berger has since found the path of profitability, thanks to capital expenditure spending from the government. In 2017, the company recorded a bottom-line of N2.51bn, while in 2018, it ballooned to N6.1bn.
In 2019 result, revenue increased to N264.55bn from N194.61bn. Breakdown of the revenue segments shows that civil works segment recorded N150.79bn from N110.15bn in 2018, building works segment recorded N89.94bn from N65.70bn in 2018, and facility management services recorded N23.81bn from N17.39bn in 2018.
