By Eugene Onyeji FirstBank of Nigeria hosted a ‘Nigerian Economic Outlook Webinar’ on Thursday aimed at reflecting on national and global economic trends that shaped 2021 and predicting the economic outlook of 2022.
The virtual event themed ‘A rearview look at 2021, lessons learnt – Outlook 2022,’ was held on Thursday to set the tone for the year by providing an opportunity for participants to learn directly from economic experts.
According to the Bank, “With Nigeria’s economy projected to grow by 2.7 per cent in 2022 as predicted by the International Monetary Fund (IMF), based on an expected recovery in crude oil prices and production, Nigeria will see economic activities normalising.
“Key economic activities to watch out for in 2022 include the global market trends, removal of subsidies, and floatation of the naira. However, recoveries in the oil sector and maximisation of the e-Naira could help keep the parallel market in check.”
The keynote speaker at the event and Managing Director/Chief Executive Officer of Financial Derivatives Company Limited, Bismarck Rewane, said the nation’s economic outlook for 2022 is largely positive.
Rewane, in his presentation, said the Economic Sustainability Plan was a success given the rebound in GDP growth.
He, however, noted that the Economic Recovery and Growth Plan (ERGP) was not a success.
He said Gross Domestic Product (GDP) growth would remain fragile, pointing out that the key expected drivers of growth would be sustained recovery of global oil price.
Rewane revealed what would be peculiar to Nigeria in 2022 as follows;
· Politics of 2022 will be different from 2021 as a result of 2 elections (Ekiti & Osun)
· Oil price expected to average $70-85pb
· Oil production quota expected to rise further as OPEC+ continues to expand output,
· Output will remain limited by sabotage: 1.4 – 1.6mbpd
· CBN likely to increase forex supply to manufacturers
· Pre-election spending to drive up cash in circulation and increase the money supply
Rewane also said that economic performance in 2022 will be largely determined by the successful implementation of the 2022 budget and the newly approved 5-year development plan
He listed the key policy expectations in 2022 as follows
· Fuel subsidy removal
· Implementation of cost-reflective tariffs
· Key amendments to the Finance Act to support revenue mobilization (VAT, excise duty, digital tax)
· Shift to a convergent floating exchange rate
· Increased supply in the forex market by the CBN
He said the elimination of subsidies and the lower exchange rate will free up funds for all tiers of government.
Fiscal deficits will decline and supplementary budgets are likely.
Lower deficit financing requirements will put downward pressure on T/Bill rates.
Inflationary pressures will intensify for 2-3 months before abating if it coincides with the increase in forex supply.
Cost reflective tariffs to incentivize investment in the power sector.
Reforms to boost investor confidence & trigger investment flows.
He said: “We expect that the average oil price in 2022 will exceed the budgeted benchmark of $62 per barrel, offering some fiscal headroom.
“This would be powered by higher energy demand driven by the recovery of economic activities globally.
“This trajectory is expected to impact on our foreign reserves and strengthen the capacity of the Central Bank of Nigeria (CBN) to support the foreign exchange market.”
Rewane offered some hope on the ravaging negative impact of the global COVID-19 pandemic, saying the threat of that scourge on businesses is gradually being moderated by the ongoing vaccination drive.
“The capacity of many countries to manage the pandemic has progressively improved with each pandemic experience. Therefore, the shocks of a subsequent variant of the pandemic on the global and domestic economies are likely to be less severe than previous ones,” he said.
He, however, warned that Policy reversal and delayed reforms could make the economic projections go wrong.
Other factors he said includes; If Nigeria falls into a debt crisis, leading to a credit rating downgrade, heightened social unrest spurred by high unemployment and poverty levels, oil prices below $50pb, leading to further deterioration of external imbalances.
The event was moderated by Ademorayo Apara, Senior MSE Brand Strategy Budget Planning & Special Projects, First Bank of Nigeria Ltd., while other speakers include Opeyemi Agbaje, Chief Executive Officer (CEO) of RTC Advisory Services Limited, Olaitan Martins, Group Executive, Transaction Banking and Augustine Uddin, the Chief Economist, FirstBank.
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First Bank of Nigeria Limited (FirstBank) is the premier Bank in West Africa and the leading financial inclusion services provider in Nigeria for over 127 years.
With over 750 business locations and over 130,620 Banking Agents spread across 99% of the 774 Local Government Areas in Nigeria, FirstBank provides a comprehensive range of retail and corporate financial services to serve its over 30 million customers.
The Bank has an international presence through its subsidiaries, FBNBank (UK) Limited in London and Paris, FBNBank in the Republic of Congo, Ghana, The Gambia, Guinea, Sierra Leone and Senegal, as well as a Representative Office in Beijing.
The Bank has been handy at promoting digital payment in the country and has issued over 10million cards, the first bank to achieve such a milestone in the country.
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Since its establishment in 1894, FirstBank has consistently built relationships with customers focusing on the fundamentals of good corporate governance, strong liquidity, optimised risk management and leadership.
Over the years, the Bank has led the financing of private investment in infrastructure development in the Nigerian economy by playing key roles in the Federal Government’s privatisation and commercialisation schemes.
With its global reach, FirstBank provides prospective investors wishing to explore the vast business opportunities that are available in Nigeria, an internationally competitive world-class brand and a credible financial partner.
FirstBank has been named “Most Valuable Bank Brand in Nigeria” six times in a row (2011 – 2016) by the globally renowned “The Banker Magazine” of the Financial Times Group; “Best Retail Bank in Nigeria” for seven consecutive years (2011 – 2017) by the Asian Banker International Excellence in Retail Financial Services Awards and “Best Bank in Nigeria” by Global Finance for 15 years.