… say govt’s body language not in favour of free, fair polls
- ‘Economic activities’ll slow down in Q1’
As the 2019 general elections draw near, economic experts and financial analysts are worried about uncertainties in the Nigerian economy and rising geopolitical tension.
These, in addition to higher oil import bills, are some of the factors that remain strong as fiscal stimulus in the first quarter of the year.
The analysts, who spoke in separate interviews with our correspondent, explained that in the first half of 2019, government spending would be linked to politics and, mostly, sectors directly related to the general elections.
The Managing Director/Chief Executive Officer of APT Securities and Funds Limited, Mr. Kasimu Garba Kurfi, said, “As the current worrisome operating environment that characterises our financial markets deepens, we appeal to the political class to moderate their activities and utterances by acting in such a manner as will engender investors’ confidence in the Nigerian economy and by implication our capital market. This becomes compelling as we approach general elections this year.”
In his projections, he said, “Emerging activities of commodity exchange are expected to create more investment opportunities in the market as this is consistent with the government’s plan to upgrade investment in agriculture, which is the base of commodity products.”
However, the National Chairman, Progressive Shareholders Association, Mr. Boniface Okezie, said, “Government’s body language does not portray that we are going to have free and fair election in 2019. I don’t anticipate any positive economic growth due to government policy summersault.
“I don’t know what is really going on with the Independent National Electoral Commission and even the All Progressives Congress. They have started campaign as if nothing is at stake, and as if they are having their way back without telling people what they have done to convince them. I think this is not palatable.”
“Until we have a free and fair election, have a good government in Nigeria, and people who have all it takes to direct the nation, we can never move forward as a nation. Even the developed countries have under coordinated economy,” he said.
Okezie said the President must have an idea of a workable economy.
“It is not by fighting corruption alone. Fighting corruption and economy must go along the same line. One cannot be left unattended to. Fighting corruption is not what Nigeria needs at this time. We need to fight for the economy by bringing it back on track,” he said, adding, “The people must have access to short-term or free loans to start up their businesses, which is part of job creation. Until we see that, we can never say that we have a viable economy. We have not seen anything on ground that assures Nigerians that the economy is going to be healthy.”
The Managing Director, Capital Bancorp Plc, Mr. Higo Aigboje, said, “The general wisdom is that the first quarter will be very slow. Economic activities will slow down and people will not invest even in the capital market. They won’t take any risk until after the election.”
Aigboje explained that as soon as the second quarter begins, things would start picking up.
“Between the second and third quarters, any government that comes in would have formed a new cabinet, then fourth quarter should be much better; because by then, there would have been some changes,” he added.
He also pointed out that the capital market should start picking up after elections, noting that foreign investors would start coming back to the market at that
time.
“Our market is bleeding. Foreign portfolio investors and their indigenous counterparts have embarked on massive sell down of shares and other financial instruments with the attendant effect of gross erosion of values despite stellar performances of many listed securities. For instance, the Nigerian Stock Exchange’s All Share Index has been sliding since the beginning of the year,” he said.
Reacting, analysts at Vetiva Capital projected that the slow growth of banks’ lending to the economy witnessed in 2018 would persist in the first half of the year due to election uncertainties.
“We expect the conservative approach to credit growth to persist in 2019. Particularly, amid the upcoming election season, we believe lenders will remain majorly on the sidelines through the first half of the year as the political scene takes centre stage and also given the possibility of policy reversals in the economy, should there be a change in leadership,” they
stated.
The Managing Director/Chief Executive Officer, Cowry Asset Management Limited, Johnson Chukwu, said a peaceful outcome of the election would impact positively on banks’ businesses.
“Should election be successful and all the political parties and contestants accept the result, then we should see a stable economic environment, and quicker recovery of the economy. But should the result be contested, then it will create some level of political uncertainty, then we should see a reversal of economic recovery and economic stability,” Chukwu said, as he stressed that a change in economic policy closely related to the outcome of the election was the likelihood of a change in government’s economic policy post-May 29, 2019.
According to Chukwu, “The policies of the new government will also have direct impact on the banking industry. If the current policies persist, the economy will witness slow growth, but should there be a new economic policy by whoever wins the election at the national level, then it should trigger stronger economic growth that will trickle down into customers’ demand for more banking services.”
He noted that the capital market might not rebound as quickly as possible.
“I don’t think the capital market will pick up because we have not seen any sign that it will bounce back. It is a reflection of the economy. Insecurity also drives the investors that are supposed to stay in the market. Even the manufacturing sectors are affected,” he said.
The Director-General, Lagos Chambers of Commerce and Industry, Mr. Muda Yusuf, said with the limited progress made in the ongoing effort to diversify government revenue sources, the performance of the oil and gas sector would remain a critical factor that would shape the outlook for the economy in
2019.
“Given the challenging economic conditions, key policy reforms would be imperative to support and sustain macroeconomic stability. These include, among others, a foreign exchange management framework that reflects the market fundamentals, the acceleration of the economic diversification agenda, normalisation of Lagos ports environment, the oil and gas sector reform, especially the petroleum industry bill; reduction in the cost of governance at all levels; improvements in the domestic revenue (particularly independent revenue) to reduce volatility of government revenues, among others,” Yusuf explained.
