Experts at a recent webinar highlighted some opportunities for businesses and individuals in Nigeria as the world attempts to get to grips with the COVID-19 pandemic that is ravaging economies globally.
The webinar, themed ‘Staying ahead of economic shocks’ was facilitated by DAS Hub Africa and moderated by Chinwe Egwim, Senior Economist at FBNQuest Merchant Bank and author of Amazon best seller, Understanding Economic “Jargon”.
Sharing their wealth of knowledge on how to stay ahead of economic shocks were Ify Isiekwe, Country Economist, Department for International Development (DFID); Bunmi Asaolu, Deputy Director and Head of Equities, FBNQuest, Ayomide Mejabi, Chief Economist sub-saharan Africa at JP Morgan; Foluso Gbadamosi, Director, Business Process and Technology, Prime Atlantic Group, Lameen Abdul Malik, CEO of Honest Management and Ivana Osagie, Founder of Professional Women Roundtable.
Asaolu of FBNQuest spoke on how assets, global and local, have been negatively impacted by the panic selling triggered by the pandemic. “The panic made a mess of everything, even gold that is considered a safe haven asset sold off initially before seeing a recovery,” Asaolu said. “But I think the worst of the virus scare is behind us,” he said, before recommending Eurobonds, dollar-denominated funds, stocks of market leading companies in banking, telecommunication, cement etc. and fixed income assets as good investment opportunities in the market.
Ify Isiekwe, DFID’s Country Economist, said the pandemic and its attendant impact on global oil prices had exposed Nigeria’s failure to diversify its economy. “We need to diversify,” Isiekwe said. Nigeria relies on oil exports for more than half of its annual budget and 80 percent of foreign exchange earnings. Although oil prices have doubled to $40 per barrel in the last one month, as OPEC+ producers head towards a consensus on extending output curbs, prices remain below the Nigerian government’s initial estimate of $57 per barrel for 2020.
Beyond the oil price channel, Isiekwe said the two other ways the pandemic could affect Nigeria are in the form of a decline in private investment and lower government spending.
“The COVID-19 outbreak could further disrupt the income flow circulation within the Nigerian economy if authorities cannot contain the virus,” Isiekwe said.
He however listed areas that held opportunities despite the adversity to include technology, digital financial services, healthcare and digital education. He also advised businesses and individuals to stay liquid at this time. “I’m not sure these are the times to have heavy financial commitments except necessary”.
“As we get a clearer trajectory of the global health crisis and financial markets, you may consider index funds, growth stocks, short-term bonds and if you are significantly liquid, you can buy property,” Isiekwe added.
Ayomide Mejabi, JP Morgan’s sub-Saharan Africa Chief Economist started off his presentation by analysing the expected impact of the pandemic on Nigeria’s Gross Domestic Product (GDP). Mejabi expects a GDP contraction this year in line with consensus estimates. The International Monetary Fund (IMF) forecasts the Nigerian economy to contract by 3.4 percent, the biggest contraction since 1987, as the double whammy of low oil prices and the pandemic rocks Africa’s largest economy.
Mejabi’s view is that the economic downturn will test the government’s capacity to implement bold reforms in the foreign exchange market, power sector and downstream petroleum sector. “The government has already announced plans to converge the multiple exchange rates in the fx market, abandon wasteful petrol subsidies and adopt market reflective electricity tariff, these reforms will be key for Nigeria post-covid19,” Mejabi said.
The challenges thrown up by the pandemic for both the Nigerian government and businesses are helping technology firms gain even more prominence while accelerating new technology trends.
Foluso Gbadamosi, the Director for Business Process and Technology at Prime Atlantic Group, was keen to share opportunities in digital platforms. “Seven of the ten largest companies in the world by market capitalisation are digital platform businesses and they also make up four of the top 5 trillion dollar companies in the world,” Gbadamosi said. “The winning business idea today and in the future must be one that leverages technology,” Gbadamosi added.
Lameen Abdul Malik, CEO of Honest Management, spoke about the opportunities in Agriculture. He urged businesses to tap into the billion-dollar agricultural value chain. He highlighted opportunities in both the domestic and export food market. “Africa spends $35 billion importing food and by 2025 that figure will more than triple to $110 billion, this creates an opportunity in food production and supplies,” Malik said.
Ivana Osagie, founder of Professional Women Roundtable, educated attendees on the importance of honing their skills in order to increase their value and stay relevant amid these unprecedented times.
Osagie gave an extensive guide on how employees should use this period to add value to their respective organisations and how jobseekers should focus on strengthening their skills as well as leveraging platforms that would assist with boosting visibility. She explained that relevant positioning is important for the upcoming economic upswing post-covid19.