Research Analyst at FXTM, Lukman Otunuga, has stressed the need for governments at all levels in Nigeria to focus on infrastructural development.
Otunuga, in a report titled: “Is Nigeria poised for an economic rebound?” pointed out that while major roads in the country are in poor condition; the power sector remains a cause for concern, health and education also needed to be revamped.
According to the analyst, rectifying these issues has the ability to not only create jobs but also support economic growth and boost investor confidence.
He said: “Focusing on the fiscal side, this still remains a gray are with the nationâ€™s long-running infrastructure problems compounding to its woes. With the overall projected fiscal deficit tagged at N2.36 trillion one can only hope that the approved budget offers a helping hand to the nation.
“As we head deeper into the third quarter of 2017, market players may closely observe hard domestic data at home to gauge the nationâ€™s health and verify if an economic recovery really is on the cards for 2017.
“Nigeriaâ€™s mission to diversify away from oil reliance while recovering from an economic deceleration remains an ongoing quest and it will be interesting to see how far the nation has progressed by year end.”
According Otunuga, the current speed of Nigeriaâ€™s recovery could be described as slow and steady, with the macro-fundamentals gradually stabilising.
Inflation in Nigeria cooled for the fifth consecutive month in June at 16.1 per cent, illustrating further signs of price stability while manufacturing and non-manufacturing activities have both moved in a positive trajectory. Also, the naira has continued to display resilience against the US dollar this year, with prices currently trading around N363 on the black market.
Although the repeated intervention by the Central Bank of Nigeria has supported the nairaâ€™s recovery and stability and confidence over Nigeriaâ€™s economic recovery continues to play a leading role.
“Although I remain optimistic over Nigeria resurging from an economic meltdown and eventually breaking away from its dependence on oil as an engine for growth, there are still external risks which could present headwinds on the road to recovery.
“The greatest threat to Nigeriaâ€™s current recovery in the medium to longer term is depressed oil prices. Falling oil has the ability to directly impact the nationâ€™s government revenues, external reserves, and stability of the nationâ€™s foreign exchange market,” he said.