Analysts, Bank CEOs Foresee Bright Economic Prospects in 2018 | Nigeria Newspaper- Nigeria News| Naija News

1.1.18

Analysts, Bank CEOs Foresee Bright Economic Prospects in 2018

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Analysts, Bank CEOs Foresee Bright Economic Prospects in 2018
Following the country’s exit from the economic recession in 2017, the stability in the foreign exchange (forex) market, decelerating inflation, bouyant oil prices and stable production from the oil-rich Niger Delta, economic analysts and bank chief executives have predicted brighter economic prospects and a jump in bank lending in 2018.
The bank executives and economic analysts that spoke with THISDAY expressed optimism that the positive momentum observed in the economy last year, would continue this year, but cautioned that as politics picks up in the second half of the year, this could lead to economic uncertainty as investors sit on the fence.
After snapping five consecutive quarters of contration, the Nigerian economy grew by 0.72 per cent in the second quarter of 2017 and doubled its output to 1.4 per cent in the third quarter of the year.
The country’s external reserves also grew by $13.73 billion in 2017, from $26.09 billion as of January 3 to $38.731 by December 28.
The country’s growing reserves strengthen the capacity of the Central Bank of Nigeria (CBN) to intervene in the foreign exchange market and end the forex shortages in the economy.
The CBN, through the creation of the investors’ and exporters’ window and its aggressive interventions, further led to the streghthening of the naira on the parallel market and eventual convergence of the I&E rate with the rate on the streets.
With improved forex availability, the Manufacturing Purchasing Managers’ Index (PMI) rose to 55.9 index points by November 2017 – an expansion of 7.7 points from the 48.2 index points recorded last January.
The rate of inflation also maintained a downward trajectory last year due to the gradual recovery of the Nigerian economy, as it declined to 15.90 per cent in November, from a peak of 18.72 per cent recorded in January 2017.
On the basis of the economic performance last year, the manging director/CEO of First Bank of Nigeria Limited and Subsidiaries, Dr. Adesola Adeduntan said 2018 was expected to hold brighter prospects for the Nigerian economy.
He added: “We are all going into 2018 much more optimistic than we were at about this time last year. We have seen the federal government’s budget and majority of those of the state governments.
“We have seen the fiscal and the monetary policy stance of both the federal government and the Central Bank of Nigeria and we are all optimistic that 2018 would be a much better year than 2017.
“We do have an opportunity to significantly grow the economy that would enable a much bigger part of the population to benefit from the upside.”
The FirstBank boss, however, pointed out that with a population growth rate of about 2.8 percent, there was need to grow the economy at the rate of at least 6-7 per cent for growth to have a meaningful impact on the generality of citizens. 
“At FirstBank, the oldest and largest financial institution in Nigeria, we are poised to play our own role as always, we would be at the forefront of innovation and we would also be at the forefront of controlled lending to our various customers as part of the need to engender the growth of the entire economy. So, we are quite optimistic,” he said.
In his presentation on the 2018 economic outlook, the chief executive of Financial Derivatives Company Limited, Mr. Bismarck Rewane also anticipated that the unemployment rate would ease marginally this year, given the anticipated uptick in the private sector.
“It is a lagging economic indicator and its movement is a response to economic events or trends that have occurred. Hence the economic growth and pick up in business activities will be felt on the jobs data in 2018,” he explained.
Continuing, Rewane cautioned that the second half of 2018 would be politically driven. Thus, he predicted that  there would be increased government spending in the run up to the election.
This, he noted, would be favourable for growth.
“On the other hand, investors may adopt the wait-and-see approach due to political uncertainties. Moreover, Nigeria’s economy remains largely vulnerable to commodity shocks.
“Thus, lower oil prices, or a dip in domestic production due to militant activities will weigh on economic activities and could possibly reverse the current progress. Any delay in policy responses will also prove detrimental.
“Higher oil prices are positive for Nigeria’s fiscal and dollar revenue. But all things being equal, oil prices are expected to ease in the coming weeks, as  the number of active U.S. oil rigs inched up by one to 931 and the UK’s Forties pipeline is expected to resume operations in January.
“So, prices are expected to average at $61 per barrel in the first quarter of 2018, 1.13 per cent lower than the fourth quarter 2017 average, but 11.56 per cent higher than the first quarter 2017,” he added.
In his contribution, the CEO of Diamond Bank Plc, Mr. Uzoma Dozie said improved business confidence in 2018 would propel banks to lend more to operators in the micro, small and medium scale enterprise (MSME) space.
According to him, “I think banks are going to be more bullish in lending, especially to MSMEs because that is the engine  of growth of any economy, which is why we need to focus on it for us to enhance growth.
“So, that is where banks like Diamond Bank would focus more on in 2018. We would be working with other stakeholders to provide more lending to our customers.”
He noted that the legislation on the collateral registry as well as efforts by the government to enforce the National Identity Scheme would reduce the risk of lending.
“I believe we would see a lot more transactions through electronic channels and if that happens, we would see a lot of businesses in the e-Commerce space and we expect to see more initiatives to take more people into the formal banking system.
“We ended 2017 on a positive note in terms of indices. There is reasonable liquidity in the market, inflation is going down, forex liquidity has increased and the dollar has been stable for a while, which is very important for manufacturers.
“Now, what we need is to ensure that the trend we saw in the last two quarters continues. As confidence improves in the market, people would consume more and take more risks which creates more opportunities for lending from the banking perspective.
“Politics for me is the only unknown. But I am hoping that everything in the political space would go smoothly so that it won’t distort the economy.
“Oil prices are going to be stable and this would help the government in its quest for  economic diversification. Agriculture will also play a big role in that regard,” he added. 
For the CEO of Fidelity Bank Plc, Mr. Nnamdi Okonkwo, he noted that non-oil sector growth was also expected to be strong as private sector investments start coming on stream.
According to Okonkwo, the stability in the forex market boosted foreign investor confidence in 2017, just as he anticipated capital importation to continue to rise this year.
He also pointed out that the government’s policy to pay down domestic debt with less expensive foreign bonds would see a significant drop in yields in the money market.
“A resurgence in the stock market may also be imminent as several blue-chip stocks are still undervalued.
“The agriculture sector will get a massive boost from the federal government in 2018. This will be in its bid to keep to its promise on diversification of the economy away from almost total reliance on oil. On that note, we believe the sector will be stable and contribute more to economic growth.
“Also, with concrete stability in the forex market, we believe this will reflect in improved activities in the trade sector. In addition, the ease of doing business in Nigeria has improved, according to latest reports; therefore this should boost trade across borders,” the Fidelity Bank boss predicted.
Okonkwo also predicted that the oil and gas industry would see significant growth in 2018 as crude prices remain stable and peace is sustained in the Niger Delta region.
In addition, he predicted that private sector projects in the midstream segments would come on stream later in the year.
“ICT has been and will remain a major contributor to economic activities and growth. Declining subscription levels and consumer switching from voice to data will however continue to put pressure on industry revenues in the telecoms industry.
“On the real estate sector, growth would depend on investments from the private and public sectors as well as favorable policies. The real estate sector will record a flat or modest recovery after the decline recorded in 2017,” he added.

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