Buhari receiving Certificate of Return from INEC
Following the conclusion of the closely contested 2019 elections and the re-emergence of Muhammadu Buhari as President of the Federal Republic of Nigeria, with a fresh 4-year mandate beginning on the 29th of May 2019, it is pertinent to reiterate critical issues previously highlighted in our 2018 Banking Sector Report titled “An Economic Agenda for A New Government.”
These issues were also emphasised in our Economic and Financial Market Outlook 2019 titled “On the Precipice!”
In our view, President Buhari’s victory presents him a new opportunity to choose between setting the country on the path to prosperity or sustaining poor policy choices with economic consequences of a bleaker growth prospects.
Nigeria’s fiscal vulnerabilities as well as her economic structural faults continue to worsen poverty levels (estimated at 91.3m people according to Brookings Institution), unemployment and economic growth, which require the government to take very decisively tough decisions. But, given the socialist leaning of the current government, would Nigerians have to wait till 2023?
Post-Presidential elections, we are still unshaken in our conviction that for economic growth to return to the pre-2014 oil price crash average of 7.6% (2000-2014), strategic reforms must take place in 7 key areas, if the economy and markets will show strong positive momentum over the next four years. We further highlight these critical areas below:
- Oil & Gas Sector Reform
- Power Sector Reform
- Boosting Competitiveness in Trade and Investment
- Transportation & Infrastructure Development
- Human Capital Development
- Security
- Boosting Agriculture Productivity
Overall, considering an aging agriculture and mostly rural labour force, high rural to urban migration and the predisposition of youths to modern services, commercial agriculture offers the best chance at restoring food security.
The cost of inaction cannot be overstated as we herald the start of new administration. The risk factors remain on the horizon and remain poised to break the bonds of this tenuous seal. The country remains vulnerable to oil price shocks as buffers remain weak.
While crude oil production levels are expected to increase, latent security risks in the Niger-delta region, amid volatile oil prices could pressure government finances. Crude oil receipts pressure would most definitely filter into FX liquidity risk, which would exert immense pressure on the economy.
The issues are rife and seemingly insurmountable, if political expediency remains the first criteria for decision making.
