Foundation for economic growth already in place -Expert

Financial analyst with FXTM, Lookman Otunuga, has said the foundations for Nigeria to experience growth in 2019 are already in place.

Otunuga made the assertion in a media roundtable with select journalists in Lagos at the weekend to look at things to expert in the second quarter of the year.

He said: “Inflation has been on the steady decrease and exchange rate has been relatively stable for some time.

“We will like to see a greater push on the government’s Economic Growth and Recovery Plan (ERGP).”

He said one of the things that could catalyse these growths would be the support for micro, small and medium enterprises.

Speaking on the criticism of the growth rate of the economy, Otunuga said: “It is easy to be negative about Nigeria, but if you look at the bigger picture, it is not only Nigeria that is going through a headwind, other major economies around the world, including the United States and China are not left out.”

He argued that as global growth continues to suffer, Nigeria, like many emerging markets will take their heat.

He said external risk will always impact the Nigerian economy because it is not alone.

“Even though the exchange rate has been stabilised, the story of the Nigerian economy is deeply reliant on oil, and so there will be the need to sustain effort on the diversification of the economy with greater investment in agriculture,’’ he said.

Decision on CBN Governor will impact FDI

Otunuga, also said the decision to change or retain the governor of the Central Bank of Nigeria will impact foreign direct investment (FDI).

He said: “Keeping Emefiele would signal continuity, and remove elements of uncertainty while changing the governor will bring in some uncertainty.

“Since 1999, no CBN governor has actually spent more than one term as the governor, so there are two ways to look at this; if we do have a situation where the CBN governor stays, this may suggest continuity, given what is already happening.

“This continuity removes elements of uncertainty because that is one thing that impacts FDI (foreign direct investment). But if a new governor comes into power, this does create some elements of uncertainty because we don’t know what he is going to do. Nobody knows what is going to happen. Will the new governor be one to allow the naira to float? Will the new governor be the one to make a bold decision to cut interest rates quicker than expected?”

Otunuga argued that There are many questions out there, and there is a sense of uncertainty.

Brexit as a two-edged sword for Nigeria and Africa

Also discussing the impact of the protracted Brexit negotiation by the British prime minister, Theresa May, Otunuga said: “Brexit is a double-edged sword because there are so many dimensions you can look at it; the way Theresa May was possibly seeing Brexit was that once the UK breaks away, they will have their own power to reform their own trade relations.

“The question, however, remains how the UK economy will react to Brexit, and even if Brexit will happen at all. As you can see, Theresa May’s deal was actually rejected and those rejections will actually potentially open the path to possible general elections.

“Through the general elections, possibly a second referendum, and if a second referendum becomes a reality, and UK votes for Brexit once again, Brexit may not even happen.

“That is one thing to keep in mind. Another thing to keep in mind is if the UK votes to extend Brexit, even though this will positively impact the pound, there is a risk that the UK is trapped in a Brexit limbo; this is negative.

“If the UK is trapped in a Brexit limbo, all the plans Theresa May has set for Africa may not happen until the UK breaks out of the Brexit limbo.

“So we don’t really know what is going to happen, right now if Article 50 is extended and we have a situation where Brexit is extended till the end of 2019, all the plans Theresa May set for Africa may not even come into fruition till 2020, 2021.

“But if the UK is able to break out of the EU and survives and recovers, that will be good for Africa, especially if the UK is able to bounce back,” he said.

On MTN’s Listing ..

Speaking on the listing on the floor of the Nigerian Stock Exchange (NSE) by Africa’s leading telecommunication giant, MTN, Otunuga was optimistic it will boost the national’s capital market and the economy as a whole.

He said the listing is positive to Nigeria and a sign of positivity in the nation’s capital market.

Otunuga said, the listing will boost the market in the short term and the long term potential will be reliant on how the market itself responds to the listing.

MTN Nigeria Chief Executive Officer, Mr. Ferdi Moolman, during an interaction with top financial editors in Lagos, said the telecoms giant, after several postponements, is ready to list on the local bourse before May this year.

He said the listing is going to be in two tranches as the company will first list by introduction while the initial public offer (IPO) will come later.

MTN’s move to list is being reiterated shortly after the company announced its results for the year ended December 2018, with a recorded N453.1 billion Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in 2018.

Moolman said the company has been putting things in place to ensure that its listing process would be hassle-free.

“We have been putting things in place to ensure that our listing is very successful. That is one of the reasons for the delay of our coming to the market. But from the look of things, I believe that we will register our presence before May this year,” he said.

The decision to sell shares was part of negotiations relating to a $5.2 billion fine for unregistered SIM cards.

The company’s agreement to list its IPO on the Nigerian Stock Exchange was part of the settlement of reducing the N1.04 trillion fine imposed by local regulators in 2015 for failure to register some subscribers’ Subscriber Identification Module (SIM) cards infraction to N330 billion.