Seven projections on Buhari’s second term economic agenda
By Nsikan Ikpe
Should the courts allow him to run a second term in office, here are seven things that could happen in Buhari’s economic agenda in the period.
- Oil prices will continue to be a critical factor in the national economic management arena. The commodity will remain the nation’s net revenue earner during the period and efforts will be made to increase revenue receipts from both crude oil sales and gas exports.
- Petroleum subsidies will be taken off and the coming on stream of the Dangote Refinery will help address some of the existing supply side challenges.
- The Nigerian Stock Exchange will continue to grope for fresh breath. Jumia’s NYSE listing fundamentally exposes NSE’s weaknesses. The market needs more comfort to grow. In the past one year for example, almost no IPO new flotation has been done in the Nigerian bourse. Alongside this, has been the steady depletion in stock market values and a tough economic environment overall.
- The talk on the streets would remain dismal. As the actress Omotola Jalade Ekeinde recently remarked, indeed, who has money in this economy today? Which business models are working?
- For an economy the size of Nigeria’s with a net worth of about $395billion presently, retail almost never fails. To thrive in this space however, it is increasingly coming across that those who would succeed here would invariably also be those that are best positioned to explore and exploit the critical variables of economies of scale and access to cheaper credit.
- To raise cash, firms would increasingly look elsewhere. With IPO windows almost shut out and bank lending rates continuing to be relatively unfriendly, more and more firms would be encouraged to explore options like commercial papers and other direct borrowing modes. This however would come along with sluggish profit prospects and impact on the ability of firms to pay out dividends to shareholders.
- Overall, while the international market is still relatively bullish about Nigeria on account of its fairly impressive rate of return, the continued categorization of the Nigerian environment as a high risk prospect continues to be a dampener on longer-term investments. The challenge then is to maximally play up the population and huge market potential of the nation, with perhaps a strong focus on the retail trade sector which is still arguably the real market spinner in Nigeria. Evidence: Aliko Dangote is the nation’s richest man and the Shoprite Group continues to grow in the country. So yes, consumer spending has been largely depleted but it is still high enough to turn over profits for retailers if the math is right.