2023 polls could place Nigeria’s Economy in stagnation – Experts warn

 

A retrospective look at Nigeria’s business sector in 2022 shows a mix of too ugly and not too good, as experts say with the forthcoming election and change of government billed for 2023, the sector would likely stagnate.

A rewind of 2022 and how the Nation’s business sector fared pictures a period marred by inflation, high unemployment rate, poverty, insecurity, unfavourable foreign exchange regime, Naira depreciation against other currencies, high energy cost, slow Gross Domestic Product growth, fuel scarcity, flooding, oil theft conundrum, high-interest rates, soaring public debt, and the Naira redesign policy with its attendance implications.

Inflation jumped from 15.60 per cent in January 2022 to 21.47 per cent in November. The figure represents an increase of 5.59 per cent in a one-calendar year. In comparison with November 2021, the figure was higher at 6.07 per cent variation. The implication was far-reaching for many Nigerians as food prices soared in the period under review. Little wonder, 133 million, representing 65 percent of Nigerians, were reported by the National Bureau of Statistics, NBS, to be multidimensionally poor. The World Bank also corroborated the state of deprivation of Nigerians when it disclosed that five million had been pushed into poverty in 2022 amid a slump in purchasing power by a whopping 35 per cent.

The economic miseries experienced by Nigerians in 2022 got worse, with a 33 per cent unemployment rate, according to the NBS’s September data. The insecurity in the North East, West, South East and indeed every part of Nigeria created a fearful business environment leading to loss of jobs, business shutdown and poor patronage.

Still, the CBN’s foreign exchange management regime, flooding, fuel scarcity, high energy cost, high-interest rates, and Naira Depreciation further exacerbated the suffering of most Nigerians due to the harsh economy.

Foreign exchange has remained a full-blown crisis in Nigeria, with the gap between what is obtainable in the official foreign market and the parallel market (Black market). For instance, in January, Naira against one dollar stood at N415/1$ at the official rate, while the black market rate was N567/1$. Today the situation is worse; the official rate stands at 448.8/1$ while the black rate is N737/1$. The problem is still affecting businesses and Nigerians whose transactions are forex-dependent.

However, while Nigerians groan over the many economic challenges in 2022, 10 companies made of seven banks, two cement companies, and one telecoms firm declared a combined profit of N1.38 trillion in the nine months, up 8.81 per cent from N1.27trn in the corresponding period of 2021 according to Nigerian Exchange Limited (NGX).

Also, the country’s Minister of finance, budget and planning, Zainab Ahmed said the Nigerian government had implemented the Economic Sustainability Plan, the National Economic Development Plan (2021-2025) and others to navigate the storm.

But in an interview with DAILY POST on Monday, a financial inclusion/wealth management expert, Mr Idakolo Gbolade said if the government continues in this current trajectory, the nation’s economic woes will not recede, especially with the forthcoming election and change of government.

He says, “Some of the major setbacks in the economy in 2022 were inability of the government to quickly tame the theft of crude oil that led to major loss of revenue and loss of our position as the number one crude producer for a large part of the year; continued insecurity in the country affected investors’ confidence; CBN policies did little to tame the consistent rise in inflation; due to lack of political will, corruption increased among government officials and private sector players in the year; despite claims that the Nigerian government was subsidizing petroleum products, the pump price continued to increase during the year.

“Looking at 2023, not much will change because it is an election year, and the outgoing government will pay little attention to the economy, while the incoming government will need time to settle down.

“If the CBN continues in its policy trajectory in 2023, we might not see inflation receding or poverty reducing.

“The political loggerheads as a result of the Naira redesign might affect the successful implementation of the policy and its outcome.

“With the discovery of oil in the north and signing of more offshore exploration deals by the government, we could witness an increase in crude production that will bring about an increase in revenue into government covers as well.

“The emergence of Dangote refinery and completion of Turn around Maintenance of the government refineries could see a reduction in the price of petroleum products and eventually lead to self-sufficiency in crude refining in Nigeria.

“The continued determination and success achieved so far in taming insecurity could restore investors’ confidence during the year.”

“Overall, Nigeria needs a drastic change in policies to bring about the needed change in the economy that will usher in growth in all sectors in 2023”, he stated.

Also, an Accounting and Financial Development don at Lead City University, Ibadan, Prof Godwin Oyedokun disclosed that many businesses struggled to survive in the period under review.

However, he is optimistic that better days lie ahead for Nigeria’s Economy.

He says, “Of course, in any year, many people will be negatively or positively affected. The issue of the economy tops the agenda of discussion every day. The business sector in 2022 struggled with the economy’s fundamentals; some companies struggled to do well.

“In the year under review, many Small and medium Enterprises folded up due to high energy costs. Power affected many companies, even Deposit Money Banks, DMOs, had to cut down on operative time.

“It is effortless for the economy to put the expenditure on final consumers to cover operational costs.

“Foreign exchange scarcity also affected the sector. The issue of inflation also contributed to the country’s performance in 2022.

“In times like this, we can only leverage the fact that the Nation must continue despite the challenges.

“On tax, increased tax is good for the economy. With the Finance Act 2022, the tax is expected to increase, especially education tax, from 2.5 per cent to 3 per cent, so for me, it will further reduce the disposable income for all concerned.

“Each year comes with challenges; we hope this brings a favourable outcome for Nigerians”.

Oyedokun added that Nigerians would weather the storm.