Agriculture, Information and Communication Technology, and Trade have been the major contributors to the Nigerian economy in the last three years while Oil and Gas which is the main focus of successive administration has been on a steady decline in the last three years.
In the year 2023, Agriculture contributed 29% to the GDP, Information and Communication Technology 16% and Trade15%.
The CEO, CFG Advisory Lagos, Tilewa Adebajo highlighted this at the Finance Correspondent Association of Nigeria’s Monthly Forum in Lagos tittled “Nigeria’s Fiscal Environment in an Era of Monetary Tightening”
The Expert said along the path to stagflation to growth, Nigerians in 2024 should be prepared for an 18 month economic recovery period which will be accompanied by a high interest rate regime to tame inflation, continued scarcity of FX in the Nigerian Foreign Exchange Market and succour from the parallel market.
“During this period, it’s important to constantly hedge to preserve value by moving excess liquidity and profits into assets that retain value”
Adebajo said the unchecked fiscal expenditure and unauthorized ways and means financing, which is now over thirty times the limit at 30 trillion naira remained a key risk to Nigeria’s economic recovery out of stagflation to sustained growth in 2024.
Speaking on Foreign Direct Investment,FDI, investment climate according to him determines the ease and cost of doing business in any country as it determines the justification for an investor’s capital allocation within countries.
“ Nigeria has strong potential, provided the government provides the requisite enabling environment and regulatory framework. FDI represented 10.43% of total capital inflows in Nigeria in 2021. In Q 2021, FDI amounted to 358.23million US dollars compared to 250.04 million US dollars in Q 2020 increasing by 0.43% year on year.”
He noted that over the years, equity investment have represented over 99% of Nigeria’s FDI inflows with the same trend following in 2021 with equity investment accounting for 99.1% of overall FDI inflows.
“Increased economic activities due to the ease of COVID-19 measures and steady recovery in businesses and industries contributed to the rise in FDI recorded in 2021 while FDI in 2023 was below one billion US dollars. The Banking Sector received the largest share of investment with 1.461 millions US dollars inflows, representing c22% of the total inflows in 2021. Inflows in the production sector of 934 million US dollars, accounted for c.14% of the total inflows.
Adebajo expressed concern on the announcement of non-availability of NLNG Train 8 saying the 6.5 billion naira Train 7 is 30% complete and existing trains 1-6 currently operating below 50% capacity due to non available of Gas.
He explained that reviving Nigerian economy in stagflation with low GDP growth, high levels of debt, and fiscal deficits is indeed a complex and challenging task, adding that Nigeria, like many other countries facing similar issues, can pursue a combination of short-term and Long-term strategies to reform its economy towards sustainable growth.