Nigeria Social Economic Outlook for 2017

Sweat Your Asset Governance Series ©January 2017

1

Nigeria's

Social-

Economic

Outlook


Content

2

Key 2016 Social-Economic KPIs 13

Global Oil Outlook for 2017 14

Nigeria 2017 National Budget Overview 16

Nigeria 2017 Recurrent Expenditure Budget 20

Nigeria 2017 Capital Budget Breakdown 23

Nigeria 2017 Budget Policy Thrusts 42

Nigeria 2017 Budget Assumptions- Matters Arising 49

Build Up to Nigeria’s 2017 Social Economic Profile

3


The Systematic Build Up to Nigeria’s 2017

Social Economic Profile and Narrative

The Prologue

3


Nigeria’s Current Economic Misfortune is not

an accident of Destiny but a well earned

harvest of Endemic Leadership Failure

• Nigeria’s Economic development had been in decline since

2010 and Current Economic woes been faced by the nation

is inevitably the culmination of progressive reckless and

irresponsible management of Nigeria's economy, the failure

to save and plan for the rainy day using the windfall from

Crude oil sales during the oil boom season.

• The next set of slides present the undisputable facts that

validated the position that Nigeria’s current economic woes

was an inevitable outcome of a journey our economic

managers took years back.

4


Snapshot of Nigeria’s Import-Export Profile 2010-2015

5

Foreign Trade: Oil and Non-Oil (N' Billion)

Imports (CIF) Total

Exports & Re-Exports (FOB)

Year Oil Non-Oil Oil Non-Oil Total

2010

1,757.1

6,406.8

8,164.0

11,300.5

711.0

12,011.5

2011

3,043.6

7,952.3

10,995.9

14,323.2

913.5

15,236.7

2012

3,064.3

6,702.3

9,766.6

14,260.0

879.3

15,139.3

2013

2,429.4

7,010.0

9,439.4

14,131.8

1,130.2

15,262.0

2014 1

2,215.0

8,323.7

10,538.8

12,007.0

953.5

12,960.5

2015 2

1,725.2

9,350.8

11,076.1

8,184.5

660.7

8,845.2

Nigeria’s Imports in 2014 and 2015 outranked the total exports in each of the respective years

and the trade deficits build up from both years contributed to the pressure on the exchange rate

of the Naira to the Dollar in the last 3 years

Source: CBN Statistical Bulletin 2015

Cost, Insurance and Freight (CIF) Free On Board (FOB)


*Nigeria’s Burgeoning Unemployment Market: 2010-2015

6

2010

5.1%

2011

6.0%

2012

9.5%

2013

9.1%

2014

7.8%

Q3 2015

9.9%

0.9% over 2010 4.4% over 2010 4.0% over 2010 2.7% over 2010 4.8% over 2010

*Source : Nigeria Bureau of Statistics


Corruption Perceptions Index: 2010-2015

Corruption Perceptions Index is Transparency International’s publication on the perceived levels

of public sector corruption in 175 countries/territories around the world

2010

134 /178

Score of

2.4/10

2011

143/182:

Score of

2.4 /10

2012

139 /174

Score of

27 /100

2013

144 /175

Score of

25 /100

2014

136 /175

Score of

27 /100

2015

136 /167

Score of

26/100

7

The lower score suggest high levels of corruption and Nigeria

seemed to have secured a permanent position in the inglorious hall

of fame of the most corrupt nations on the globe


Ease of Doing Business in Nigeria:

2010-2015

Ease of Doing Business is a World Bank/IFC publication Comparing Business Regulations for

Domestic Firms in 189 Economies. It evaluates the regulations that enhance business activity

and those that constrain it. Doing Business presents quantitative indicators on business

regulations and the protection of property rights that can be compared across 189

economies—from Afghanistan to Zimbabwe

8

It is disappointing to know that it was more difficult doing

Business in Nigeria in 2014-2015 than it was in 2010

2010 144 /189

2011 137 /183

2012 133 /183

2013 147/189

2014 170 /189

2015 169 /189

2016 170 /190


$8.9bn

in 2011

$7bn in

2012

$5.6bn

in 2013 $4.9bn

in 2014.

$3.4bn

in 2015

Foreign Direct Investments (FDIs)

into Nigeria Between 2011-2015

Cumulative 62% reduction in FDIs into Nigeria From 2011-2015

9


Naira To Dollar Exchange Rate Impact 2012-2016 (N)

10

BDC- Bureau

de Change

IFEM Inter-bank

Foreign Exchange

Market

2011

2012

2013

2014

2015

2010

2016

162.3

157.3

158.8

180.4

196.9

152.6

305.2

163.4

159.3

167.1

188.5

258.3

154.6

455.3

Year


Nigeria’s Plummeting Excess Crude

Account

11

$9.43 billion in

December

2007

$11.5 billion in

December

2012

$3.2 billion in

December

2013

$2.5 billion in

December

2014

$2.3billion

December

2015


Nigeria’s Economic Performance -2010 till Date

12

GDP Growth (at $503bn 2013 Re-based Figures)

2014

4%

IMF

2010-2013

Average

5%

2015

5.5%

IMF

2016

-2.24%

IMF

Nigeria’s External Reserve (CBN Statistical Bulletin)

Average annual OPEC crude oil price per barrel

$105.7

in 2013

$96.29

in 2014. $49.49

in 2015 $40.68

in 2016

$ 107.5

In 2011 $109.5

in 2012

$77.4

in 2010

2012

$43.83Bn

2013

$42.85Bn

2015

$ 28.29

2016

$25.84

2011

$32.64Bn

2014

$34.24Bn

2010

$32.34Bn

Nigeria’s External Reserve and GDP growth were directly correlated to International Crude Oil Prices.


Nigeria’s Key 2016 Social Economic KPI’s

High

Unemployment

Rate (13.9% As

At Q3 2016)

Higher

Inflation Rate

(18.5% As At

November

2016)

Pressure On

Foreign

Reserves

($25.84b

Billion As At

30th

December

2016

Contraction In

Economic

Growth

Leading To

Recession/

Stagflation

(-2.24% in

Q3)

Weak And

Highly

Depreciated

National

Currency

(N305 To

1US$ but

close to N500

in the parallel

market)

13


Global and National Oil Outlook

for 2017

14


*EIA warning: “The values of futures and options contracts

indicate significant uncertainty in the price outlook.

Global Oil Forecasts for 2017- Brent

15

World Bank

$55/b

Goldman

Sachs

Q2 2017

$57.5/b

U.S. Energy

Information

Administrat

ion (EIA)

$52/b

Merrill

Lynch

$61/b

Average

$56.4/b


Nigeria 2017 National Budget

Overview

16


OIL PRICE ($)

OIL OUTPUT

EXCHANGE RATE

INFLATION

GDP GROWTH

FISCAL DEFICIT -

GDP

2016 Budget Dec 2016 Actual 2017 Budget

$38

2.2M/BPD

N197

4.3%

2.14%

9.81%

$52.3

1.9M/BPD

N305

-2.24 %

2.14%

18.5%

$42.5

2.2M/BPD

N305

2.5%

2.18%

15.74%

N

1$-N

2016-2017 Budget Benchmarked Assumptions

17


Statutory

Transfers

419bn

Debts

1.66tn

Oil

1.99tn

Non-Oil

1.37tn

In (Revenue N7.298tn)

Others

1.58tn

2.36tn

Deficit Capex

2.24tn

Out (Expenditure N7.298tn)

2.98tn

Recurrent

Nigeria 2017 Budget High Level Breakdown

18


N1.067tn

External

Source

N1.254tn

Domestic

How Nigeria Plans to Fund 2017 N2.32tn Budget Deficit

19

Government Domestic Borrowing will outstrip External Source Borrowing. While that is good news

for Nigerian Financial Institutions, it may be bad news for MSME lending as local Financial

Players will prioritize lending to Government than MSMEs


Potential Opportunities for the Public and

Corporate Nigeria

Nigeria 2017 Recurrent Expenditure

Budget

20


Breakdown of Nigeria’s N2.98Tn 2017 Recurrent Expenditure

Personnel

Cost

N1.86tn

(63%)

Overhead

N229.81bn

(7%)

Pensions

N281.61bn

(9%)

Service

Wide votes

N116.50bn

(5%)

Amnesty

Program

N65bn

(2%)

N50bn

(2%)

Refund to

Special

Accounts

Special

Intervention

Funds

N350bn

(12%)

21


The 4 Largest Recurrent Expenditure Budget-N1.487Tn (which is 49.9%

of Total Recurrent Budget and 70% of the combined provisions for

Personnel and Overhead)

Interior Ministry

N482.37 billion

Defence Ministry

N325.87 billion N398.01 billion

Education Ministry

N252.86 billion

Health Ministry

22



Corporate Nigeria

Nigeria 2017 Capital Budget

Breakdown

23


Capital Budget as a ratio of Total Budget 2015-2017

16%

30% 30.7%

2015 2016 2017

24


N2.24tn

Power,

Works &

Housing

N529B

Transport

N262B

Special

Intervention

Programme

N150B

Defence

N140B

UBE

CommissionN

N92B

Water

Resources

N85B

Industry,

Trade and

Investment

N81B

Interior

N63B

Niger Delta

Commission

N61B

Health

N51B

Education

N50B

FCT N37B Niger Delta Ministry

N33B

Nigeria 2017 13 Biggest Capital Budget Allocation

25


MDAs Capital Allocations by Pillar

56% 20% 12% 7% 4% 1%

Infrastructure Governance &

Security

Economic

Reforms &

Growth

Social

Development

State & Regional

Development Environment

26


Key Initiatives In Nigeria’s 2017 Budget With The Potential To

Reflate The Non—Oil Export And Economic Productive Sectors

In Nigeria

N100 billion

provisioned for

a new Social

Housing

Programme

towards a N1

trillion fund

N50 billion for

Special

Economic Zone

Projects to be

set up in each of

the geo-political

zones to drive

manufacturing/

exports

N20 billion voted

for the revival of

Export-

Expansion Grant

(EEG) in the

form of tax credit

Recapitalization

of Bank of

Industry (BOI)

and Bank of

Agriculture (BOA)

N15 billion

provisioned to

support both

institutions to

support (MSMEs)

Some Marginal Economic And Institutional Boost For Non –Oil

Exports, Entrepreneurship Development And Social Housing Sectors

N70 Billion

27



Corporate Nigeria in

Power, Works and Housing Projects


28


• To address contractors’ liabilities the Federal Government intends to issue over N2 trillion worth of bonds to clear outstanding contractors’ liabilities.

• These bonds would have a 10-year maturity and the amortisation is expected to begin in 2018.

• With regard to existing liabilities on bonds which were issued to contractors by past administration, the sum of N177.46 billion in the 2017 budget been set aside

Key Initiatives In Nigeria’s 2017 Budget Presenting Potential

Opportunities To Corporate Nigeria

Good News for Major Construction companies and the

construction and build sector

29


Key Capital Projects In Nigeria’s 2017 Budget Presenting

Potential Opportunities To Corporate Nigeria

1. Power-N39B

2. Housing-N41B

3. Works-N25B

• N20bn Rural

Electrification

projects in Federal

Universities

• 7bn as counterpart

funding for the

construction of

3,050mw Mambilla

hydropower project

• 12bn for the

completion of power

evacuation facility for

400mw Kashimbila

hydropower plant

N41bn federal

government National

Housing Programme

nationwide.

• N20bn nationwide

intervention fund for

roads.

• Over 65 roads &

bridges construction

and rehabilitation

projects across the 6

geo-political zones of

the country.

• 5bn for the

rehabilitation/

reconstruction and

expansion of Lagos –

Shagamu – Ibadan

dual carriageway

sections I & II in

Lagos and Oyo

states

Power Housing Works

30




Education, Transportation and Health Projects


31


• There is a plan to inject a substantial investment into the transportation sector specifically in the Railways sub sector to open up the transportation network between Lagos-Kano, Calabar-Lagos, Kano- Kaduna, Ajaokuta-Itakpe-Warri, Kaduna-Idu.

• Also massive investment layout is planned for the development of inland river port and supply of cargo handling equipment in Niger State

• Major investments also to be expended into the health sector via tertiary institutions and in procurement of vaccines and drugs.



Still Good News for Construction, Transportation and

the pharmaceutical sectors

32


Key Capital Projects in Nigeria’s 2017 Budget presenting

Potential opportunities to Corporate Nigeria

1. Education-N5B

2. Transportation-N72B

3. Health -N183B

• N5 billion for the

provision of security

infrastructure in 104

colleges (Perimeter

fencing, Solar Street

light, solar powered

motorised borehole &

CCTV).

• 14bn for various

railway projects

(Lagos-Kano,

Calabar-Lagos,

Kano- Kaduna,

Ajaokuta-Itakpe-

Warri, Kaduna-Idu) /

• 03bn for the

construction of

terminal building at

Enugu airport.

• 08bn for airside

rehabilitation of

Abuja airport.

• 47bn for the

construction of an

inland river port and

supply of cargo

handling equipment

at Baro, Niger State.

• 72 billion for joint

venture investments

in tertiary institutions

with Nigeria

Sovereign

Investment Authority.

• 65 billion for

procurement of

vaccines and

devices.

• 46 billion for Global

Fund and GAVI

counterpart funding.

Education Transportation Health

33




Water Resources, Agriculture & Rural Development

and Mines and Development


34


• Impressive investments planned to be injected into water resources and

agricultural & rural development. Specific investment is planned to be made

into developing the wheat value chain and help improve local capacity to

meet the wheat demand and reduce dependence on importation.

Key Initiatives in Nigeria’s 2017 Budget presenting Potential

opportunities to Corporate Nigeria

Some Good News for Agricultural and rural

development

35



Potential opportunities to Corporate Nigeria

1. Water Resources-

N89B

2. Agric and Rural

Development-N79B

3. Mines and Steel

Development –

N2.58B

• 86 billion for water

supply schemes

nationwide.

• 3 billion for

construction and

rehabilitation of

dams nationwide.

• 5bn for Rural

Roads and Water

Sanitation

programme

• 61bn for

Promotion and

Development Of

Wheat Value

Chain

• 13bn for

Guaranteed

Minimum Price

payment.

• N 2.58 billion for

detail mineral

resources

evaluation,

equipping national

geo-science

laboratories and

other projects.

Water

Resources

Agric & Rural

Devpt

Mines & Steel

Devpt

36




Communications, Niger Delta

and Social Intervention Programmes


37


• Perhaps the most significant Government social investment in the 2017

budget is the N500bn investment into social protection programs.

• Also some considerable investment is targeted to be made into developing

the Niger Delta which is in addition to the budget provision for the

Presidential Amnesty Programme for the Niger Delta.



Good News for Social Protection, Welfare and Niger

Delta Development

38



massive opportunities to Corporate Nigeria

1. Communications-

N89B

2. Niger Delta-N79B

3. Special Intervention

Programmes –

N2.58B

• N1 billion for

extension of

government service

portal and

deployment of

additional National

Spectrum

Management

System.

• 55 billion for

dualization of East-

West Road

{Sections 1 to 5

covering Warri –

Kiama – Ahaoda –

Port Harcourt –

Eket – Oron –

Calabar}.

• N8 billion

counterpart fund

contribution for

East-West road

• N500 billion for

FGN Special

Intervention

Programme

(including Home

Grown School

Feeding

Programme,

Government

Economic

Empowerment

Programme, N-

Power Job

Creation

Programme,

Conditional Cash

Transfers and

Social Housing

Fund).

.

Communications Niger Delta Special

Intervention Prog.

39




Regional Interventions

and SDGs


40


Key Capital Projects In Nigeria’s 2017 Budget Presenting

Potential Opportunities To Corporate Nigeria

1. Regional

Interventions-N110B

2. SDGs-N20B

• N65 billion for

reintegration of

transformed ex-militants

under the Presidential

Amnesty Programme.

• N45 billion North East

intervention fund.

N20 billion for SDGs

conditional grants and social

safety nets

Regional Interventions SDGs

41


Key National Policy Shifts with impact on

2017 Budget

Nigeria 2017 Budget Policy Thrusts

42


Nigeria Government to Stop funding of joint cash call with

International Oil Company Partners

• Cash calls is the counterpart operational funding which the Federal

Government, represented by the Nigerian National Petroleum Corporation,

NNPC, pays annually as its 60 percent equity shareholding in various oil and

gas fields operated by international oil companies and indigenous oil firms

• Nigeria owed call arrears of $6.8 billion over five years.

• current cash call arrears in the oil sector over the last five years up until

December 2015, is about $6.8 billion unpaid in the 2016 period.

• Nigeria also accumulated unpaid cash call arrears of over $2.5 billion for

2016.

• This policy is expected to ease the pressure on Government’s Treasury and

improved non government and direct foreign investment into the Upstream

Oil and Gas sector

43


Nigeria Government Slashes Import Duties On 115 Items

• The Federal Government, in a bid to promote development in critical sectors of

the economy , has approved a reduction in the import duties of 115 items in

various sectors of the economy.

• the policy was in line with the provisions of the Economic Community of West

African States ’ Common External Tariff .

• The ECOWAS CET , which will cover the 2017 to 2019 fiscal periods , is

composed of three categories made up of an Import Adjustment Tax list of 173

tariff lines , a national list consisting of 91 items and an import prohibition list ,

which is applicable to certain goods originating from non -ECOWAS member

states .

• The President Mr. Buhari has approved the 2016 fiscal policy measures made

up of the supplementary protection measures for implementation together with

the ECOWAS CET 2015 - 2019 with effect from 17 th of October, 2016 .

• Consequently , all transactions prior to the effective date of this circular shall be

subjected to the tariff rates applicable before the coming into effect of this 2016

fiscal policy measures

44

Sweat Your Asset Governance Series ©January 2017 45

Reduction in Import Tariff from 10%-5%

1. Milk And Cream

2. Tea

3. Fats Of Sheep Or Goat

4. Malt Extract

5. Tomatoes Prepared Or

Preserved By Vinegar

6. Under Natured Ethyl

Alcohol For Medical ,

Pharmaceutical Or

Scientific Purpose

7. Petroleum Oils And Oils

Obtained From Bitumen

Minerals Other Than

Crude

8. Hypochlorites

9. Synthetic Organic

Colouring Matter

10.Grease For Treatment

Of Textile Materials

11.Prepared Glues And

Adhesives

12.Activated Carbon

13.Picking Preparations

For Metal Surfaces

14.Organic Composite

Solvents And Thinners

15.Mixes Alkylbenzenes

16.Industrial

Monocarboxylic Fatty

Acids.

17.For Tubes

18. Pipes

19.Hoses

20.Sheets

21.Foil

22.Tape

23.Polyethylene

24.Paper And Paper Board

25.Yarn

26.Synthetic Staple Fibres

27.Semi -Finished Products Of

Iron Or Non - Alloy Steel

28.Stranded Wire Ropes

29.Completely Knocked Down

Or Unassembled For The

Assembly Industry


Reduction in

Import Tariff from

20%-10%

1. Automatic Circuit

Breakers

2. Switches

3. Lamp - Holders

4. Electrical Apparatus For

Switching Or Protecting

Electrical Circuits

Products on Banned Importation List

1. Refined Vegetable Oil

2. Cocoa Butter

3. Spaghetti /Noodles

4. Fruit Juice In Retail

Packs

5. Bagged Cement

6. Soaps And Detergent

7. Mosquito Repellent

Coils

8. Corrugated Paper And

Paper Boards

9. Telephone Recharge

Cards And Vouchers

10. Carpets And Rugs

11.All Types Of Footwear

12.Bags And Suitcases

13.Used Motor Vehicles

Above 15 Years From

Year Of Manufacture

14.Live Or Dead Birds

15.Waters

16.Liquid Dietary

Supplements

17.Medicament Such As

Paracetamol Tablets

And Syrup , Chloroquine

Tablets And Syrup

Among Others.

https://www.customs.gov.ng/ProhibitionList/import.php

https://www.customs.gov.ng/ProhibitionList/import.php


CBN Monetary Policies

47

Monetary

Policy Rates

(MPR) at 14%

Cash Reserve

Ratio (CRR) at

22.5%

Liquidity

Ratio at 30%

Asymmetric

Window at

+200 and 500

basis points

around the

MPR


Market Operate As A

Single Market

Structure Through

The Inter-

bank/Autonomous

Window

Primary Dealers shall

operate with other

dealers in the Inter-

bank market, amongst

other obligations that

will be stipulated in the

Foreign Exchange

Primary Dealers

(FXPD) Guidelines

The CBN shall

introduce non-

deliverable overthe-

counter (OTC) Naira-

settled Futures, with

daily rates on the

CBN-approved FMDQ

Trading and Reporting

System

Exchange Rate would

be purely market-

driven using the

Thomson-Reuters

Order Matching

System as well as the

Conversational

Dealing Book

Forty-One (41) items

classified as “Not

Valid for Foreign

Exchange” as

detailed in a previous

CBN Circular shall

remain inadmissible

in the Nigerian FX

market

The OTC FX Futures

shall be in

nonstandardized

amounts & different

fixed tenors, which

may be sold on any

dates thereby ensuring

bespoke maturity

dates

CBN would

participate in the

Market through

periodic interventions

to either buy or sell

FX as the need

arises

CBN may also offer

long-tenored FX

Forwards of 6 to 12

months or any tenor

to Authorized Dealers

Proceeds of Foreign

Investment Inflows

and International

Money Transfers

shall be purchased

by Authorized

Dealers at the Daily

Inter-Bank Rate

Dealing Book

FX Primary Dealers

(FXPD) would be

registered by the

CBN to deal directly

with the Bank for

large trade sizes on a

two-way quotes basis

Sale of FX Forwards

by Authorized

Dealers to end-users

must be trade-

backed, with no

predetermined

spreads

Non-oil exporters are

now allowed

unfettered access to

their FX proceeds,

which shall be sold in

the Inter-bank market

Dealing Book

Highlights of CBN Exchange Rate Policy


Nigeria 2017 Budget : Matters Arising For All

Nigerians- Cautionary Note on the Key

Assumptions on which the 2017 budget is

Based.

49


Matters Arising from Nigeria’s 2017 Budget- Rise in Crude Oil

prices may lead to Rise in Local Pump Prices of Petrol in 2017

• Currently the template used by the NNPC Product Pricing Regulatory Authority (PPRA) in

determining the pump price of Premium Motor Spirit (PMS) was predicated on the Central

Bank of Nigeria (CBN) monetary policy that officially pegged the exchange rate of the Naira

to the Dollar at N245.

• With official exchange rate now pegged at N305 to a dollar (in contrast to the increasingly

ballooning rate at the parallel market) also coupled with a cost structure in the petroleum

products marketing and distribution supply chain (which consists of 71% for production and

freight, with 18% of the cost for depot charges and retailers margin and transportation less

than 10%) that leaves a minuscule window for further cost savings, the Nigerian Government

will struggle to keep the pump prices of Premium Motor Spirits (PMS) at the current price of

N145 per litre.

• Already the prices of Automotive Gas Oil (Diesel), Dual Purpose Kerosene (DPK) and even

Liquefied Petroleum Gas (cooking gas) have witnessed significant rise at the pumps.

50


Matters Arising from Nigeria’s 2017 Budget- Cost of Living

May Rifle Through the Roof in 2017

• But the 2017 Budget has no dedicated provision for oil products subsidies. With the

welcome and anticipated slight surge in the spot prices of crude oil in the international

markets and the unrelenting depreciation of the Naira against foreign benchmarked

currencies, the local pump prices of petroleum products may inevitably swing northwards in

2017.

• The impact of petroleum products price increase will ripple through the prices of local

commodities and the cost of living generally. In addition to anticipated increase in pump

prices of oil products, the high inflation rate, and the high devaluation of the Naira will mean

a higher cost of running businesses & also higher cost of living for Nigerians. All of these

may compound the harrowing impact of economic stagflation that Nigerians are going

through currently.

• All of these may inevitably lead to Nigeria witnessing a gale of protest and endless labour

strikes. Care must be taken that Nigeria does not witness its own brand of the Arab

Spring revolution as agitations against economic hardship can become politicised!

51


Matters Arising from Nigeria’s 2017 Budget- Government’s

Ability To Fund 2017 budget will be seriously challenged

• The 2017 budget assumptions around the benchmark rates for GDP growth,

inflation rate and exchange rate appear more aggressively optimistic rather

than realistic.

• Despite the relatively higher capital budget allocation in the 2017 national

budget over 2016, the ability of the Nigerian Government to effectively fund the

2017 budget is a critical success factor for its effective execution.

• As of September 30 2016, the Federal Government had spent about N3.577

trillion, or 58.7 per cent of the N6.06 trillion 2016 budget.

• In terms of performance, the budget funding level translated to 79%, in terms

of the pro-rated budget allocation for the three quarters up to September 30,

2016.

• If the funding challenge encountered by Nigeria in 2016 is anything to go by, It

is understandable why funds generation will be a very critical success factor in

the successful execution of the National 2017 budget for Nigeria.

52


Matters Arising From Nigeria’s 2017 Budget- The Monetary And

Fiscal Policies Have Underwhelming Economic Growth Impact

• The outlook for the value of the Naira against other foreign benchmark currencies

unfortunately does not offer any cheering news for Nigerians. With speculators and

financial strategist hinting at a Naira trading for N600-650 to a dollar, many businesses

have their planning assumption centred around rates as high as N1,000 to a dollar in

2017.

• The low optimism in the recovery and appreciation of the Naira against the dollar and

other foreign currencies is understandable having been premised on the unaddressed

trade deficit and imbalance Nigeria has with its external trade partners and also its

inability to compensate for the significant loss of revenue from oil products with non-oil

exports.

• A higher inflation rate than the closing rate at Dec 2016 may be experienced if all the

scenarios above are maintained. Also without radical reflation of the economy the

stagflation witnessed in 2016 may be sustained in 2017.

• Finally the current monetary policies of the CBN and the fiscal policies of the

Government as currently prescribed are grossly ineffective in facilitating the jumpstart

and expansionary recovery of the Nigerian economy. Nigeria requires radical

economic strategies and policies to achieve the recovery of Nigeria’s economy from

the current comatose state of stagflation and prevent it from sliding into depression.

53


Direct All Enquiries To

Dr. Olayiwola Oladapo

Managing Partner Sweat Your

Asset Derivative Limited

[email protected]

www.assets.org.ng

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