January 11, 2022

Sigma Pensions projects improvement in external balance in 2022

Nigeria’s pension assets grow by over 3%

By Babajide Komolafe

Sigma Pensions Limited has projected that Nigeria’s external sector balance and the oil sector would rebound in 2022.

In its report titled: “Nigeria 2022 Outlook: Consolidating on recovery but persisting large imbalances present headwinds”, the company stated: “We expect the oil sector to exit recession in 2022 as Nigeria’s crude production rebounds from the 1.6mbpd low base in 2021 towards a range of 1.8mbpd  to 1.85 mbpd and as most OPEC+ curbs are removed by May 2022. Given our price and production expectations, we expect Nigeria’s external balance to improve as oil export receipts normalize to trend levels amid persisting import demand suppression on account of the CBN’s currency policy.”

On the macroeconomic performance, the report stated: “We expect Nigeria’s economic growth to stabilize around 3.4 per cent in 2022, reflecting improvements across Telecoms, trade, manufacturing, and oil.”

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It further added that a large fiscal borrowing plan and higher political risk premiums are  expected ahead of the 2023 general elections. It added: “In 2022, the large fiscal borrowing requirements amid less liquid financial system conditions relative to the last two years suggests ample scope for heightened market expectations about higher interest rates.

“Furthermore, likely stronger dollar demand will convince the CBN of the need to tighten monetary conditions as with the trend across global central banks to manage FX reserve depletion. Against this backdrop, we think the current bearish trends in the fixed income will likely persist over 2022”