• ‘Poor FX management could trigger yearly negative growth’
For Nigeria to achieve a faster economic growth rate in 2021, the Federal Government should adopt reforms that would ensure cost-reflective pricing in energy and other utilities.
Head, Augusto Consulting, Professor Jimi Ogbobine, said this at the just-concluded FirstGem yearly conference organised by First Bank Limited in Lagos. He said Nigeria will face the risk of weak post-recession growth characterised by a slower economic growth of around two per cent, which is weaker than the country’s population growth
Speaking on the theme, ‘the Art of Negotiation’, Ogbobine said the net foreign investment is likely to be negative this year owing to the Central Bank of Nigeria (CBN)’s poor handling of the exchange rate and continued pressure on the reserve.
He also pointed out that the exchange rate in 2021 would be marginally impacted by the twin effects of foreign exchange liquidity and CBN’s FX demand management approach.
According to him, all the macroeconomic variables would weaken consumer confidence and increase bargain hunting, especially in the fast-moving consumer goods (FMCG) sector of the economy.
Consequently, Ogbobine said the weak consumer confidence would ultimately lead to a systemic change in consumer spending.
Hence, he stressed the need for the country to boost diaspora remittance, encourage foreign exchange inflows and ease the current liquidity challenge in forex market.
He said: “We need to carry out reforms. Weak macro reforms could result in a tepid real GDP growth that is lower than population growth. The policy inaction to respond to these challenges will test the resilience of many Nigerians in 2021.”
Ogbobine urged Nigerian banks to restructure and provide opportunities for investible products to enable them to stay ahead of trends and grab emerging opportunities.
Former Treasurer of First Bank Limited, Funmi Oyetunji, said there are funds looking for investable business opportunities both in Nigeria and globally. She, however, pointed out that only businesses with an appropriate model could access such capital for sustainable growth.
The Chief Executive Officer of First Bank of Nigeria Limited, Dr. Adesola Adeduntan, said the COVID-19 crisis is currently having a devastating effect on the economy, stating that women are the most hit.
He said: “A recent World Bank report shows that 2021 will bring an increase in extreme poverty with a minimum of 71 million people expected to fall into extreme poverty.
“Women are losing their livelihoods as they are more exposed to hard-hit economic sectors. The United Nations also estimates that at least 47 million more women and girls will fall below poverty lines this year with a minimum of 247 million women in extreme poverty because of COVID-19 pandemic.”