Expert Predicts Growth In Nigerian Economy Despite Pressure

An Economist has expressed optimism that the Nigerian economy will break all odds despite the pressure, stating that  the economy is set to yield positive growth if 2019 economic policies are adequately executed.

Moody Investors Service had in 2019 predicted a negative outlook for Nigeria in 2020 due to increase pressure on the naira as a result of increasing debt and the fall in the country’s foreign reserve to $38 billion.

However,  professor of economics at Ahmadu Bello University Zaria (ABU), Peter Njiforti told THE WHISTLER that although current realities point to a negative outlook, government’s monetary policy  and others like the border closure would go a long way to salvage the impending doom.

“Generally, in 2020 with the closure of the land borders, domestic production will be high, prices will also stabilise, thereby encouraging farmers and manufacturers alike.”

 Budget Performance

Reacting on how the 2020 budget will perform, Njiforti expressed disappointment over how the budget of 2020 was passed without appraising the performance of the 2019 budget.

He further pointed out that the major concern is financing N2.18 trillion through borrowing as he said it will increase inflationary pressure.

“The budget of 2020 which is to the tune of N10.3 trillion( $26billion) financing the deficit of N2.18 trillion will be the issue as revenue have fallen short for some years and increased borrowing to fund the budget might  have far reaching implications on the economy, especially increasing the inflationary pressure on the economy.” He said.

CBN Policy Woe

Njiforti went on to praise the policies set for 2020 by the Central Bank of Nigeria (CBN), adding  however that the problem will be the manner of implementation.  He described  policies like the CBN Commercial Agricultural Credit Scheme (CACS) of 2009 and the Anchored Borrowers’ Programme initiated in 2015 as  “mere paper work.”

He argued that the Monetary Policy Rate (MPR) at 13.5% will cub the rising inflation, some which are reactionary.

According to him, “The 2019 MPR which was retained at 13.5% is ade”quate to reduce excess liquidity in the economy in other to minimise inflation which has been on the rising for 19months.”

He urged the CBN to redress the issue of deposit and lending rate as he said there is no synergy between the two.

“There is no synergy between deposit and Lending to Deposit Rate (LDR), as deposit rate is low as a result of the low interest which is at 9.48, while the LDR is about 65% and the CBN intends to increase it to 70%.

Investors are not encouraged to take their money to agencies that will facilitate it to get to the businesses that need credit, while deficit spenders are not encouraged to borrow due to the high cost of borrowing.”

Currency Pressure

Njiforte stated that the restriction on the purchase of the Nigeria Treasury Bills (NTB) will help reduce government borrowing internally, thereby reducing the pressure to devalue the naira.

“CBN Open Market Operation (OMO) restricting individuals and small local businesses from buying the Nigeria Treasury Bills (NTB) will help reduce government domestic debt, and increase foreign investment.

“Considering the percentage of external debt to internal debt, the internal debt has a higher percentage, though funds will in turn be left idle in the economy consequently and investors are not willing to invest in stock due to high risk. It will still go a long way in reducing the pressure to devalue the naira.”

Global indicators

On international indicators, Njiforte said Brexit will have minimal negative impact on the budget performance and the Nigerian economy as he maintained that Britain is not our major trading partner, adding that US Iran tension and the voluntary OPEC oil cut/day will play a lot in the economy as Nigeria relies majorly on oil.

“Brexit impact on the economy will be minimal as Britain is not the major trading partner of Nigeria.

“The Escalating war between Iran and the US especially as the result of the killing of Qasem Soleimani has shot the price of oil to $64 dollars and commodities like gold, which will help actualize the budget as it is set on the parameter of $ per barrel.”

“However, the US as the major supplier of oil has a way of regulating the price of oil by pumping more oil into the market to balance price or reducing supply.”

“Also, the recent oil cut by OPEC of 500,000 barrels per day on the 1.7million bpd which takes effect 2020 will affect the performance of the economy.”

Vision 2020

He said Nigeria is no were around vision 2020 as realities show that Nigeria is nowhere around the world 20 economies.

According to him, “Considering indices and present reality, it is unfortunate that we are yet to be there since the vision was initiated in 2008, however so far has failed to even evaluate how far it has gone to achieving the goal.

“Unemployment rate is very high at 29.21% in 2018 according to IndexMundi, unemployment, insecurity still high. Literacy level is low and we are struggling to even lead Africa as the major economy.”

He however expressed hope that it will be obtainable in years to come if the government put its policies right as he queried most government data.

“It can be attainable in years to come so long as we put our policies right as the figures on paper does translate to concrete actions.”

“Nigeria was criticized on how it can be the leading economy in Africa when some socio-economic indicators are pointing towards the negative.

“That is why we query some of the figures published by some agencies which do not reflect the realities on ground.” He said.