Afrinvest (West Africa) Limited has urged the federal government to take urgent measures towards reforming key sectors of the Nigerian economy in order to sustain the growth momentum and avert imminent downturn.
The Group Managing Director of Afrinvest, Mr. Ike Chioke, gave the advice in Lagos Tuesday, while presenting the highlights of the investment bank’s 2018 Annual Nigerian Banking Sector Report, with the theme: “An Economic Agenda for A New Government.”
Chioke said the report billed for launch in Abuja on October 22, 2018, presents a viable economic roadmap for Nigeria in 2019, and will have some key economic managers such as the Minister of Finance, Zainab Ahmed, and Minister of Industry, Trade and Investment, amongst others, in attendance at the occasion.
He stated that there is an opportunity to reset the dynamics of the economy and build new growth levers that would propel Nigeria on the path of progress in 2019.
According to him, while there are some positive signs of growth in the economy, certain key vulnerabilities have been identified as drawbacks to the nation’s growth potential.
He added: “There is need for fiscal, monetary, and structural reforms to sustain growth and avert a sharp downturn. The next oil shock is inevitable given volatile commodity prices. We are not saving for rainy day.”
He further said the federal government should ensure the passage of the Petroleum Industry Bill (PIB) and fully liberalise the downstream sector of the petroleum industry to attract more investors.
“Engender transparency and sanctity of contracts; Increase budgetary funding to match 26 per cent of budget based on UNESCO recommendation over a period; develop a coherent and comprehensive strategy with states to improve elementary education; prioritise regional interventions for weak regions; sign the African Continental Free Trade Area Agreement after due consultations with stakeholders; accelerate business environment reforms and provide incentives; amongst others.”
Chioke, however, pointed out that the banking sector performance in 2017 recorded growth in growth earnings for the fifth consecutive year, noting that there was a big earning in the level of growth from 2014 to 2015, driven by the contraption in oil prices.
He added: “But ever since 2015 we’ve seen that with the increasing oil prices, the banking sector which serves as a natural conduit for the economy has continued to bounce up from a growth earnings perspective, reaching a total of N4.6trillion all together industry earning for the year 2017.
“Profitability expansion has continued for the second consecutive year following the decline in 2015 with total industry profit now at N842billion and profit after tax is just approaching N700 billion. So again, it’s a very good result for the banks.
“You would think that for the rest of the economy – I know that many manufacturers and many service companies are still struggling coming out of recession but banks don’t seem to have concerns.”
He said: “It is on this premise that we have articulated a multi-sectoral economic agenda which, we believe, can provide the needed direction for an incoming government post-2019 election, and ensure inclusive and sustainable development.
“The report presents an analysis of current economic challenges and proposes structural reforms as the key to building a strong and sustainable foundation. It offers critical insights into how we can attain annual double-digit growth by substantial, sustained efforts across seven critical areas of development including human capital development, power, oil and gas, trade, transport & infrastructure, security and good governance.
The International Monetary Fund (IMF) recently warned Nigeria and other oil exporting nations in dire need of structural reforms not to be tempted to delay the exercise due to the current higher oil prices. Also, the IMF predicted recently that inflation rate in Nigeria would rise to 13.5 per cent in 2019. The fund had also reiterated the need for Nigeria to enhance its non-oil revenue mobilisation.