Nairametrics, a leading Nigerian financial resource company held its second-quarter 2020 economic outlook on Saturday, May 16th, 2020, albeit virtually due to the Coronavirus pandemic. The webinar, which centered on the topic “The New Normal – Economic Outlook: Your Money or your Life”, was attended by 729 unique participants with more than thousand participants registered for the event.

During the webinar, a set of vibrant panelists dissected the various impacts of the pandemic on different sectors of Nigerian economy. They also offered possible solutions to these problems.

The panelists included Dr Ola Orekunrin Brown, the Founder of Flying Doctors Healthcare Investment Company, Mr Uade Ahimie, a renowned Business Advisor, Mr Wale Okunrinboye, an Investment Analyst, Mr Cheta Nwanze, the lead partner at SBM Intelligence, and Mr Feyi Fawehinmi, a UK-based Nigerian Accountant and Policy Analyst. Ugodre Obi-Chukwu (Founder of Nairametrics), moderated the event.

As earlier noted, the presentations and subsequent panel discussions during the webinar focused on unearthing the different issues across several sectors of the economy, as well as what is to be expected post COVID-19.

Overview of the Nigerian economy amid COVID-19

Wale Okunrinboye, who heads the Investment Research arm of Sigma Pensions, kicked off the webinar with his presentation. The detailed presentation gave an overview of the current state of affairs in the Nigerian economy. According to him, the drastic decline in global oil prices had thrust Nigeria in a difficult financial position, even as the country’s external reserves continue to deplete. This had also resulted in the devaluation of naira’s official rate from NGN305/$ to NGN360/$.

He noted that although the revised budget assumes a 40% dip in revenue projections to NGN5.1trillion (3% of GDP), it amounts to 1% decline in revenues from 2019 levels (3.6% of GDP). Deficit financing remains unclear in the meantime, even though possibilities abound that the Federal Government may have to borrow heavily to plug the budget hole over 2020.

He concluded his presentation by noting that recession is indeed imminent for Nigeria. This is no thanks to the volatile oil economy –Nigeria’s primary source of revenue– and the fact that many Nigerian businesses have been at the receiving end of the negative effects of the pandemic, particularly those in the entertainment, tourism, and international trade spaces.

Recall that the International Monetary Fund (IMF) forecasts steep recession and slow recovery, with Nigeria expected to contract by about -3.5%. Pressures on FX will also weaken the Naira.

The best and worst-case scenarios for the Nigerian economy

Also speaking during the webinar was Cheta Nwanze, the Lead Partner at SBM Intelligence. He began his presentation by examining the series of unfortunate developments that have been working against the Nigerian economy since the outbreak of the Coronavirus, including the decline in oil prices, Nigeria’s absolute lack of preparedness to handle the outbreak, the adverse effects of the weeks-long lockdown across the country, and even Nigeria’s rising inflation.

As Nwanze explained, Nigeria’s rising inflation has caused interest rates and capital importation to go down. He also pointed out some of the implications of Nigeria’s depleting foreign reserves and the exchange rate crisis, chief among which being the fact that Nigeria’s federal allocations are increasingly becoming smaller.

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“Looking at the chart, what immediately jumps out is that on the average, FAAC allocations are getting smaller. There’s a session that we had a higher share in March of 2020. But what people need to bear in mind is that these figures you are looking at are naira figures.

“And there was a devaluation in between February and March. So, because of that devaluation, the March figures appear to be higher. But if you convert everything to USD at the prevailing rates of such sharing, you will find that the money is actually consistently getting smaller.

“This again has implications in terms of social unrest, security, and the larger economy. States don’t have as much money. It means that some states will just go straight up and owe staff. Some states will downsize, and the bottom line is that the unemployment market is going to get much larger.”

Nwanze further examined the sectors of the economy that have been most affected by the situation including the oil and financial services sectors, as well as those that have least been affected such as the healthcare/pharmaceutical and telecoms sectors.

He concluded his presentation by looking at the best-case and worst-case scenarios. The best-case scenario which, which has the lowest probability according to him, would be if the world finds a vaccine within the next three to six months. This would allow Nigerians to fully resume back to work as well as encourage oil prices to rebound. On the other hand, the worst-case scenario would be if the world does not find a vaccine in the next 15 months. If this were to be the case, infection rates would most likely spike and the government might have to adopt more drastic lockdown measures in a bid to contain the virus, he said.

Solving Nigeria’s electricity and agriculture problems

UK-based Nigerian Accountant and Policy Analyst, Feyi Fawehinmi, stated during the webinar that Nigeria’s lingering power problems can never be resolved without a wholistic solution. According to him, such a solution will only be possible when the big and small consumers are brought together in a single power pool.

“The challenge in Nigeria is getting big and small electricity consumers into a single pool. We have to locate those who can pay and then subsidise for those who cannot pay; that is why we are a society.

“If we will notice any remarkable difference in the power sector, we need to have big people in the pool. When they pay their bills, it can be used to improve power generation and also subsidise costs for the poor ones,” Fawehinmi said.

He also argued that farming should be a choice, rather than the last resort of a wide segment of the population as a way out of poverty. According to him, it has become imperative to change this. He said:

“Farming and agriculture in Nigeria is almost an incubator for poverty in Nigeria. Some people are born in situations where they have no choice but to farm.

“We need to find a way to take more people out of agriculture into other sectors of the economy so that they can only return to agriculture knowing that they have other choices. This is the only way we will make any headway in agriculture.”

Where to invest now that COVID-19 has ruined almost everything

Expectedly, Dr. Ola Orekunrin Brown of Flying Doctors, approached her discussion from the healthcare standpoint by emphasising that the virus does not move unless people move; hence, the need to maintain social distancing.

Dr. Brown also spoke about how COVID-19 has forced many countries around into making a hard decision between economic freedom and the health of citizens. As you may well know, many countries chose to safeguard the health of their citizens. Unfortunately, this choice was accompanied with negative economic implications. As Dr Ola explained, the drop in consumption will negatively affect Nigeria´s GDP.

She urged the Nigerian government to focus on spending heavily on healthcare and education post covid-19 while individuals and businesses will need to embrace the new normal.

She also offered insights into some of the industries that are expected to succeed given the changing times. Some of them include – online events, e-learning, telecommunications, agriculture, E-commerce, and healthcare.



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