First Bank of Nigeria Limited, on Thursday, organized a webinar to address Nigeria Economic Outlook for 2022 which was themed “Rearview look at 2021, lessons learnt – Outlook 2022”. The webinar had over 2000 participants across the globe.
The bank introduced the initiative to set the tone for the year through the provision of an opportunity for participants to learn directly from economic experts to stay informed and knowledgeably empowered to make the right decisions in their socio-economic activities in 2022 which will be impacted by the
micro and macro-economic activities of the country.
The event was strategically positioned at a time when investors, local and foreign, are making investment decisions and forecasts for the year.
Hence, this event has provided insights into what should be expected and the outcome of the government’s utilization of macroeconomic tools.
Amongst the economic experts present at the webinar was Mr. Opeyemi Agbaje, the founder of RTC Advisory Services Limited believed that inflation will potentially remain a concern to Nigerian consumers.
In his words, “Inflation will probably continue to be a concern for the consumer, shrinking his wallet and decreasing the cost of consumption for the consumer.”
Speaking on the 2021 review and 2022 outlook, he stated that, “GDP growth is gradually inching up, by Bismarck’s projections, 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”.
In his opinion, in 2021, consumers were concerned about food supply and its prices, these concerns are expected to be sustained in 2022.
Mr. Bismark Rewane, the keynote speaker at the event stated that the first half of the year, H1 2022, will focus on Economics while the second half, H2 2022, will be Politics centred.
Furthermore, he mentioned several outcomes that could arise as a result of two scenarios that the government could adopt during the year, the Legacy and Steady-State scenarios.
According to Mr. Rewane, for either of these scenarios, the outcomes would be “CBN will deplete reserves; MPC will raise interest rates; CRR will be lowered so banks can lend more, we’ll go back to orthodox lender of last resort; OMO will be used for liquidity management, not more than 180-day maturity and there will be a single yield curve.”
According to Rewane, “There will be a surge in Fintech and mobile payments. While the increased level of activities will be supported by 5G operations, the sector will consolidate within the year. Right now, cash in circulation is N4 trillion and money supply is N45 trillion, so cash in circulation is only 10%. The bulk of it is electronic payments, e-commerce.”
He continued, stating that, “the stocks market will rally and the FDI (Foreign Direct Investments) inflows will increase”.
In addition to this, he explained that we should expect GDP to be 3.9% higher than population rate.
Also, inflation would increase before reducing, external reserves will reduce and exchange rate differential will drop and begin to converge, hence, the Naira will strengthen.
In addition to this, he said, GDP should be expected to be 3.9% higher than the projected rate and we could see inflation on an upward ride before reducing. Also stating that external reserves will reduce during the year and we will see the Naira strengthening as exchange rate differential drops and converges
Also, Mr Rewane sees Nigeria’s gross external reserves declining towards $39 billion as the CBN increases foreign exchange supply and allowed naira convergence.
He added that government would increase borrowing to meet deficit financing needs and may result in sovereign debt default.
Also speaking at the event, the Group Head, Marketing & Corporate Communications of FirstBank, Ms. Folake Ani-Mumuney said,
“Being woven into fabric of the society for over 127 years means that we provide value, support and innovation-driven solutions for our stakeholders regardless of the challenges of the pandemic. Our commitment to nation-building is anchored partly on our thought leadership role designed to relentlessly drive growth and scale for all through engagements that showcase versatile subject matter experts endowed with expertise, knowledge and valuable insights.
The webinar provides a platform for cross fertilization of ideas and opportunities to learn and grow. Nigeria is a country rich in human and natural resources and these have helped in the reforms and resilience reflected in the economy in 2021.”