|
Getting your Trinity Audio player ready...
|
Analysts and economists foresee slow capital inflows into Nigeria, pressure on the foreign exchange market and reduction in capacity utilisation at factories as the general election beckons.
They advise government of the day to avoid allowing politics to trump economics and policy making as investors watch how the risks will be managed.
“Elections have the impact of slowing inflows into Nigeria,” Doyin Salami, associate professor at Lagos Business School and former member of the Central Bank of Nigeria Monetary Policy Committee, said in Lagos on Wednesday.
“This happens anywhere in the world as elections approach. From June to October, I expect to see a slow-down. If the investors are not so sure, there may be outward flows,” Salami said at the Nigerian-American Chamber of Commerce breakfast meeting tagged ‘Nigeria After Recession: 2018 Q1 Review and Economic Outlook for 2018’.
Capital inflows into Nigeria amounted to $12.2 billion in 2017, 138.7 per cent jump from the 2016 figure ($7.10 billion), according to the National Bureau of Statistics (NBS).
Total capital imported in the fourth quarter of 2017 was $5.38 billion, representing an annual growth of 247.5 percent, and quarterly growth of 29.9 percent.
The growth in capital Importation in 2017 was mainly driven by an increase in portfolio investment.
The CBN has made a series of intervention in the FX market to boost liquidity, trade and stability, with the latest being $210 million on Tuesday.
According to Salami, there are four major drivers of the Nigerian economy, including international trade, policy, Diaspora transfers and capital flows, adding that efforts must be made to make capital easily accessible.
He noted that the top 100 borrowers across the banks are responsible for 45 percent of the total borrowings, stating that more private capital is needed in the infrastructure space as Nigeria is capital deficient.
“The stand-out opportunity is in human capital. This is the biggest opportunity now as we have massive shortage of skills co-existing with high unemployment,” Salami added.
Nigeria’s manufacturing capacity utilisation in increased to 55.03 percent in the first half of 2017 from 44.3 percent recorded in the corresponding period of 2016.
Manufacturers see the elections hurting the implementation of some government policies, which will eventually impact negatively on capacity utilisation and margins.
“There should be a mechanism and evaluation to enable us monitor the policies,” Frank Udemba Jacobs, president, Manufacturers Association of Nigeria (MAN), represented by Olusegun Osidipe, said.
Jacobs said the manufacturing sector in Nigeria is not competitive owing to high energy spend, poor infrastructure and regulation.
“It is hard to believe the numbers coming out of the manufacturing sector,” said Peter Folikwe, managing director of Berger Paints.
“FIRS AND LIRS are very aggressive now. It is becoming more difficult and no matter your efforts, policies are there to cripple it,” Folikwe said.
According to Femi Alabi of EY, a global accounting consulting firm, there is long-term funding that is now channelled to education and health.
“We see equity investment in education. But the biggest factors are election and government policy. There is a tendency to forget the economy and fully focus on the upcoming election,” he said, projecting a slight slow-down from September.
ODINAKA ANUDU
