Otunuga: Rising Gold Prices May Support Nigeria’s Economy

Lukman Otunuga

.Says Biden’s presidency offers hope for country

Peter Uzoho

As the federal government grapples with the challenge of finding solutions to Nigeria’s current economic woes, the Senior Research Analyst at FXTM Global, Mr. Lukman Otunuga, has said the nation’s economy may receive some support from the rise in the price of gold.
Otunuga equally stated that the administration of the US President-elect, Mr. Joe Biden, could bring some hope for Nigeria and the African continent.

Presenting Nigeria’s macroeconomic outlook for 2020 and beyond during a virtual meeting with journalists, yesterday, Otunuga who spoke from the United Kingdom, based his points on some positive developments in the gold subsector of the nation’s economy.

According to him, “Nigeria refined its own reserve gold bar and paid N268 million for the 12.5kg bar to start a central bank stock.”
He said the development in the gold subsector was encouraging diversification of the national economy.

He further said that the newly-regulated gold mining subsector was expected to create about 250,000 new jobs in the country.

The FXTM analyst also stated that Nigeria may record an estimated $1.8 billion economic loss from the 12 days ENDSARS protest in the country.
On the victory of Biden and its implication for Nigeria, Otunuga, said the US president-elect presidency could bring an improved, even stronger bilateral relations between the US and African continent.

According to him, Biden’s administration has the prospect of a more predictable policy towards Nigeria, adding that improving trade relations between both sides was beneficial for Nigeria.
He said as part of such positives for Nigeria, the dollar could weaken on fiscal package thereby supporting the naira.

He noted that Nigeria’s macroeconomic outlook for 2021 would still be influenced by trends in the oil market, saying the rebound of oil price was hinged on the hope of finding the vaccine for COVID-19.
He maintained that improving US-China trade relations may uplift global sentiment, adding however, that the impact of lower interest rates in Nigeria could stimulate consumption in 2021.

While projecting that Nigeria’s economic growth could expand to 1.7 per cent in 2021, Otunuga stressed that economic diversification and infrastructure development were key for the transformation of the country.

“Nigeria remains on an ongoing quest to diversify from oil reliance. Eradicating poverty depends on domestic production. However, poor infrastructure hampering progress,” Otunuga said.

He also reacted to the concerns arising from the declaration by the Director General of the Budget Office of the Federation, Ben Akabueze, that 428 agencies of the federal government may not be able to pay November salaries owing to the announcement of the N30, 000 minimum wage.

Proffering solution, the FXTM senior research analyst advised that to avoid additional hardship to the affected employees, the Central Bank of Nigeria (CBN) should find a way to assist government by making some funds available so that the workers could be paid.