The growth and development of the Nigerian economy can only be sustained if the necessary reforms in the power, oil and gas and infrastructure sectors are undertaken with firmer commitment.
This was the view of the Group Managing Director, Afrinvest West Africa, Limited, Ike Chioke, during the launch of the 2018 review/2019 outlook of the Nigerian Economy and Financial markets in Lagos at the weekend.
Chioke said that the current economic situation of the country is on the edge, adding that the critical areas of the sectors is yet to see any impact on the economy as well as the masses even the year 2017 seemed to herald a resurgence of the Nigerian economy with exports recovering and investor confidence was restored in the FX market following the introduction of the I&E window.
He noted that strong economic growth has been elusive and calm is yet to return in troubled regions, while adding that with the widespread insecurities in the North, farming regions are being affected, thereby hindering growth in an already populated economy.
According to him, the country has come to a point where there needs to be a reset to set the country on the path of prosperity or the country faces a bleak future from which the path to recovery may extend through a generation.
“We believe market-driven reforms can drive strong economic growth and development and as highlighted in our 2018 Banking sector Report, the critical areas include the Oil & Gas Sector reform, Power sector reform, boosting competitiveness, transportation & infrastructure, human capital development, security, building democratic institutions and imbibing professionalism in governance.
There is need to re-jig our models so as to rain in cost to boost income because in the last few years, we have spent more before we even made investments, this tells you that something is really wrong with our economic models”, Chioke said.
On the outlook for equities, the GMD projected that equities is expected to remain unfavourable to investors until after the elections, which wraps up in March 2019, when the effect of the negative sentiment is expected to dissipate.
He further added that post-election stability, new listings, corporates’ earnings performance as well as sustained improvement in macroeconomic indicators will shape the direction of the market in 2019.
“Our scenarios are based on three cases, we have the base case where we can recover from the losses from last year and we are looking at 40-44 per cent market upside because you have a post election boom and then the rest will be running on a sort of what we consider to be bellwether stocks, consumer goods, banking which ride on population growth which Nigeria clearly has.
In our pessimistic case however, we will be down by 17 per cent and in our optimistic case, we are seeing that the market will really jump above a 100 per cent because the economic reforms will ginger the market”.am