President, FMDA, Mr. Akinsowon Dawodu
Following the development in the global economy as well as Nigeria’s connectivity to the global market, the Financial Market Dealers Association (FMDA) has advised policy makers in the country to focus on fiscal discipline in 2013.
President, FMDA, Mr. Akinsowon Dawodu, gave this advice in an interview with THISDAY. The association also stressed the need for the federal government to ensure that it initiates policies that would ensure infrastructural development.
Responding to questions on his forecast for the New Year, Dawodu said:
“Nigeria’s sensitivity and connectivity to global economic events and trends has increased in recent years and this theme will continue to shape future events and outcomes, even in the local financial markets.
“Given the economy’s long-standing dependence on oil, events around the ongoing debt crisis in the European Union and the fiscal cliff in the United States, to say nothing of the prospects of a pronounced slowdown in economic expansion in China and India, mean that trends in our financial markets will continue to be significantly shaped by events elsewhere.”
Dawodu, who is also the Country Treasurer and Head of Fixed Income Currencies and Commodities, CitiBank Nigeria Limited also urged the federal government to ensure that the privatisation of the power sector is completed this year.
According to him: “There is little room for complacency as Nigeria needs to continue focusing on fiscal discipline, development/infrastructural expenditure and economic reforms (privatisation of power, the Petroleum Industry Bills, Sovereign Wealth Fund, etc.) if we are to be well-placed to weather future global economic crises. The world economy is not out of the woods yet.”
In his review of 2012, he pointed out that the Central Bank of Nigeria (CBN) was able to stabilise the naira in most part of the year.
This, he attributed to strong portfolio flows into the equity and fixed income markets, sustained high oil prices and some measure of improved fiscal control specifically with regard to expenditure on fuel subsidy.
“Consequently, the naira was stable around N157 (inclusive of 1 per cent administrative charges) at the official CBN window while the Bureau De Change (BDC) rates closed the year at around N159-N160.
“Money market rates trended downwards after the July increase in the Cash Reserve Ratio from four per cent to eight per cent and closed the year in the low double digits. This is as low as can be expected given the fact that the Nigeria continues to have double digit inflation,” he explained.