CEOs Predict Bright Economic Prospects in New Year
Goddy Egene, Chinedu Eze and Nume Ekeghe
Despite the upcoming general elections in the country, some chief executive officers (CEOs) have predicted that the Nigerian economy will perform better in 2019 than last year.
They stated this in separate interviews with THISDAY.
The Managing Director/CEO of First Bank of Nigeria Limited and Subsidiaries, Dr. Adesola Adeduntan, said, “I am optimistic about 2019 despite the fact that there is an expectation of a slowdown in the first half of the year on the back of elections.”
Adeduntan recalled that since the Nigerian economy came out of recession in 2017, its level of recovery has remained fragile.
“As we move into 2019, the expectations are that things may be a bit slow on the back of the elections and given the fact that naturally, key players especially on the fiscal side of the economy would be focusing on re-elections.
“But post that, the projections that I have seen are all quite positive and they all speak to the fact that the expected growth should be higher than what we recorded in the course of 2018.”
Also, the Chief Executive Officer, Eczellon Capital, Mr. Diekola Onaolapo, pointed out that the 2019 elections are expected to impact the general economic and business environment in the first half of 2019.
Typically, investors hold out until post elections, when a new government (with formed cabinet would have taken office). We expect business to follow this pattern, he said.
Onaolapo added, “The business environment may be slow and challenging in the first half of the year, but the economy will still grow, albeit still at a slow pace overall for the year. The new government will need to be proactive and initiate policies and actions that will quick the slow pace of the economy and position the country for growth.
“Stabilisation is expected to return to the economy 100 days after the winning government is sworn into power as it is expected to have appointed its Cabinet and the market will have an understanding of the economic agenda of key members of his cabinet.
“As Nigeria is still an oil-driven economy, despite the moves made by the government to diversify the economy, activities in the global oil-market will determine the economic direction of Nigeria in the coming year. Recently, there is perceived to be a glut in the global oil market which has led to a decline in oil prices and informed the decision of OPEC and non-OPEC members to cut the supply of oil by 1.2 million barrels per day.
“However, this decision has not had any significant impact on oil prices which has fallen by more than 20 percent in 2018.
“The decline can be largely attributed to the rising oil rigs in the US which has increased the supply of oil and weakened its price in addition to geopolitical tensions.”
Fears of an oversupply of the product in 2019, had led to JPMorgan reducing its price forecast this year, from $83.50 per barrel, to $73 on average.
To this end, Onaolapo noted that with Nigeria’s 2019 budget benchmark oil price set at $60 per barrel, should prices go below this forecast by JP Morgan, it would negatively impact the execution of the federal government’s budget plans in addition to other multiplier effects which a reduced oil price would have on the nation’s forex rate, external reserves and, by extension, inflation.
He also said interest rate normalisation in the United States would lead to increased cost of funds in to corporates with a negative impact on the growth of the real sector and affecting its expansion plans.
“We expect large corporates to seek new capital, for refinancing and stabilisation in the new year,” he said.
In the aviation industry, the Managing Director of the Nigerian Airspace Management Agency (NAMA), Captain Fola Akinkuotu, also anticipated growth in the sector in 2019, saying the nation’s economy has marked positive turnaround.
According to him, more domestic airlines would join the market and there would be more inbound international and domestic passengers, so there would be more air traffic in 2019 compared to 2018.
He expressed optimism that the planned airport concession, establishment of Maintenance, Repair and Overhaul (MRO) facility would be realised in 2019 as the processes have been in the works in the last three years.
According to NAMA boss, local MRO would ensure that Nigerian airlines conduct major maintenance checks locally. This he said would save the country millions of dollars of capital flight; it would create jobs and also lead to human capital development, as the facility would lead to skilled manpower development for engineers that would man the maintenance facility.
Akinkuotu also expressed hope that the planned concession of major airports would be realised in 2019 and this would lead to more employment, the upgrade of airport terminal facilities and more investment in the sector.
In the Nigerian Airspace Management Agency, he said that the agency would complete work on navigational aids with particular attention to Aeronautical Information Service (AIS) which would become fully automated.
This would help to improve safety in the airspace and quick dissemination of information. He also said that NAMA would improve its services in 2019 because of the massive human capital development it embarked on in the last two years.
In addition, Akinkuotu said the agency would also upgrade its surveillance by improving its radar and communication system.