Matters arising: Nigeria's 2022 economic outlook

The past two years have seen dramatic changes in the global economy occasioned by the challenges of COVID-19 pandemic.

Indeed, the pandemic had devastating consequences on many corporate organisations, hence the need to evolve new survival strategies for profit optimisation.

2022, being a pre-election year, made it even more imperative for the egg heads in various organisations to think out of the box, to set the tone for economic activities for the year.

A handy tool for many corporates was to organise conferences/webinars, bringing experts together to brainstorm on the best way to come out of the challenges of COVID-19 and to set the tone for the year.

The conferences/webinars provided participants with a repository of information to make the right decisions in 2022.

One of the pacesetters was First Bank of Nigeria Ltd., which convened the Nigerian Economic Outlook webinar in January to reflect national and global economic trends that shaped 2021, whilst forecasting the economic outlook for 2022.

The webinar themed: "Rearview look at 2021, lessons learnt – Outlook 2022," with over 2,000 participants across the globe was strategically positioned at a time when investors were making decisions and forecasts for the year.

The Chief Executive Officer, Financial Derivatives Company Ltd., Mr Bismarck Rewane, keynote speaker at the webinar, stressed the need for successful implementation of the 2022 budget, broadening of the tax base and creating investment opportunities for the country to witness a decent outing in 2022.

Rewane, who spoke on "2022 Nigerian Economic Outlook," said the elimination of subsidies and lower exchange rate would free up funds for the three tiers of government.

He noted that pre-election spending would increase money supply in 2022.

Rewane scored Nigeria's performance at 40 per cent in 2021, but said the economy did not perform better in 2021 due to the failure of the nation's Economic Recovery and Growth Plan (ERGP).

He said although Nigeria spent a lot last year, there was no much impact on its economy, adding that the money spent came from borrowings as well as taxes.

"There was a projected revenue of N7.99 trillion but we ended 2021 with N3.06 trillion and that is because our revenue is still largely oil dependent.

"We must remember that the elections are coming and so the onus is on the Federal Government to do something fast as regards our debt.

"Our total debt is currently 6.23 billion dollars, domestic debt is up by 1.62 billion dollars; this means our borrowings have continually gone up and yet we have not seen the much desired impact in our economy," Rewane said.

He listed the factors that defined the country's performance in 2021 as inflation, oil price, oil production, external reserves, average Gross Domestic Product growth and the Naira.

Rewane noted that the first half of the year would focus on economic reforms while politics would take the centre stage of the second half of the year.

He stressed that pre-election spending would be positive for aggregate demand and would as well boost corporate performance.

On the exchange rate outlook he said, the CBN would likely step up efforts towards exchange rate convergence.

He also noted that political jitters would heighten foreign demand pressures in the fourth quarter of the year.

On the risk matrix in 2022, he listed policy reversal and delayed reforms, heightened social unrest spurred by high unemployment and poverty levels and financial sector crisis, among others as things to watch out for.

"Pre-election spending should drive up cash in circulation and the Central Bank of Nigeria (CBN) is likely to increase foreign exchange supply to manufacturers while economic performance will be largely determined by the successful implementation of the 2022 budget.

"Inflationary pressures will intensify for two to three months before abating if it coincides with the increase in foreign exchange supply.

"We also expect the CBN to deplete reserves to maintain exchange rate stability and this is what I have said time and time again that the apex bank needs to step up efforts toward exchange rate convergence," he said.

The founder of RTC Advisory Services Ltd., Mr Opeyemi Agbaje, speaking at the webinar, said inflation would potentially remain a concern to Nigerian consumers in 2022.

"Inflation will probably continue to be a concern for the consumer, shrinking his wallet and decreasing the cost of consumption for the consumer.

"GDP growth is gradually inching up, we may finally be above the rate of population growth in terms of growth.

"Trade is beginning to pick up, real estate is beginning to reach positive territory, communications and information has been strong, agriculture remains problematic and I think there is finally evidence that insecurity and disruptions of the agricultural value chain are affecting food production and prices," Agbaje said.

He noted that consumers were concerned about food supply and its prices in 2021, stressing that it would be sustained in the current year.

To the Chief Executive Officer, FirstBank, Dr Adesola Adeduntan, the webinar provided an opportunity to assess the performance of the Nigerian economy across key indices in 2021 and benefit from expert opinions on the expectations and forecast for 2022.

Adeduntan said it provided excellent insights on the key factors that would shape both the global and local economic landscape in 2022.

He noted that in 2021 global outputs rebounded and recovery was strong following improved vaccination efforts, as well as support from the monetary and fiscal authorities.

According to him, the fourth wave of COVID-19 omicron variant created some level of caution, impacting the activities of the fourth quarter of 2021 and leading to the push for booster jabs and reinstatement of COVID protocols.

To him, specific key lessons can be gleaned from the economic and related activities of 2021.

These lessons and other expected occurrences in 2022, he noted, were vital ingredients in the planning processes of the bank's customers and stakeholders.

"As a bank, we have a legacy of supporting the growth of businesses as the engine for economic growth and development in Nigeria and across Sub-Sahara Africa.

"In line with our renewed vision 'to be Africa's bank of first choice,' FirstBank will take the lead in driving the development of the different sectors and industries within the economies where we operate to support overall economic growth and sustainability.

"As a bank that is woven into the fabric of society, this webinar is further reinforcing our support and collaboration with stakeholders as we demonstrate our commitment and willingness to be the partner of first choice to our customers," he said.

Adeduntan had no doubt that participants at the webinar gained valuable insights into the global and local economic direction.

Indeed, he was emphatic that the participants understood how to strategically position their businesses and personal endeavours to harness the opportunities that would arise all through the year.