Finance experts and key stakeholders from the private sector after a critical appraisal of the Nigerian economy on Monday in Lagos urged the Federal Government to take decisive step towards upgrading infrastructure and boosting policy making processes to sustain the economy.
The occasion was an international investors’ conference organised by Zenith Bank plc. One of the lead speakers at the event, Bode Agusto of Agusto & Co., explained that going forward, Nigeria’s external sector would remain satisfactory but the need to narrow fiscal deficit may lead to some currency depreciation.
“Inflation will remain in the region of 12 percent and the ‘Aaa’ rate will be about 100 basis points above this number. Do not rule out negative real interest rates if the government seeks to finance her deficits at below market rates,” he said. Agusto was of the view that “the Nigerian economy would grow by about 5 percent in 2010, oil and gas, agriculture and telecoms will drive this growth but this will be dampened by the crisis in the banking sector and weaknesses in trading and manufacturing.”
Speaking at the forum, the director-general of the Nigerian Stock Exchange (NSE) Ndi Okereke-Onyiuke, attributed the economic downturn to the lingering problem of power generation in the country which had almost crippled the manufacturing sector.
Okereke-Onyiuke, who disclosed that the NSE spends an average of N25 million monthly on diesel to power its generating equipment, urged for collaboration between government and the private sector in order to move the economy forward.
Speaking in the same vein, managing director of Promasidor Company, Keith Richards, said: “It is increasingly difficult to manufacture competitively in Nigeria,” adding that, the most sustainable economic growth could only be achieved through a consumer driven market. He noted that notable fast moving consumer-product companies were still getting credits from the banks, whereas other smaller companies had been struggling to access bank credits.
The managing director of Financial Derivatives Limited, Bismarck Rewane, listed key risks to economic growth in 2010 and beyond to include: political and people risk, policy risk, monetary policy risk and international risk. According to him, the process of the 2011 elections remained important than the outcome even as he advocated that the government should strive to strike a balance between political and financial stability.
“We need to realise that the process of the 2011 elections is critical than the outcome which in my own view is not important. We also have a monetary policy crisis; our spending, taxes and subsidy remained anemic. Moreover our economy will continue to be affected by contamination from events in the international markets,” he added. He said with adequate provision of power, a consumer led economic recovery must be encouraged rather than the fiscal dominance presently being orchestrated in the business arena.
He said plans by the Central Bank of Nigeria (CBN) to have the country’s reserve to be denominated in the Chinese currency would further deepen the country’s woes economically.
Kunle Alake, executive director, Dangote Industries, observed that a single digit interest rate would be ideal for the manufacturing sector to perform optimally in view of the fact that they had to provide their own infrastructure.
Earlier in his welcome address, group managing director of Zenith Bank, Jim Ovia, said the conference was intended at encouraging both local and international investments in the Nigerian economy.
He noted that the economy was going through a difficult process after the global meltdown, adding that a rebound was inevitable due to strong fundamentals by companies operating in the country