Over the last two years, policy makers in emerging and frontier markets have had to deal with a cross current of headwinds arising from internal and external sector imbalances occasioned by several factors including, the crash in commodity prices, normalization of monetary policy by the Fed, faltering global growth (led by China) and the heightening risk outlook posed by Brexit, volatility in global financial markets and illiquidity in domestic capital markets.
For Nigeria, the fall in global oil prices as well as militancy induced output disruptions have fundamentally crippled the fiscal earning capacity of government and also undermined external sector and financial system stability. Depressed government revenues have significantly weighed on the viability of Sub-Nationals in particular, with some 27 Sates unable to meet their employee wage obligations, prompting the Federal Government to provide bail out packages in order to ensure social security.
In addition, lower foreign exchange receipts have weakened the country’s external reserves and ultimately deflated the CBN’s politically inspired defence of the local currency. Consequently, most macroeconomic indicators have deteriorated as the economy grapples with a recession amid galloping inflation and rising unemployment.
In response, the fiscal authority rolled out an expansionary 2016 budget of N6.1tn, with the aim of reflating the economy. Similarly, the Apex Bank has had to take tough policy decisions to restore confidence and make the economy attractive for foreign capital flows. The introduction of a flexible foreign exchange policy which resulted into approximately 37.0% depreciation of the naira at the interbank as well as the hike in MPR to 14.0% were some of the steps that have been taken. The CBN also introduced hedging products including Forwards and Futures as a way to further deepen the FX market.
It is against this backdrop that Afrinvest is releasing its 11th Banking Sector Report titled; “Searching for Investor Confidence”. In this edition, we chronicle developments within the global and domestic economy in relation to monetary and fiscal policy responses to shocks while also contextualizing the impact of policy decisions on domestic macroeconomic variables. Afrinvest Research is of the view that although some appropriate steps have been taken in recent months, the market is yet to respond positively evidencing the lack of investor confidence without which neither the market nor the economy can be rebooted.
As part of the launch event, we plan to have a panel of distinguished economists and bankers proffer their views on what needs to be done in the face of these challenges in order for Nigeria to regain investor confidence and put its economy back on the path of growth and prosperity.
Below is a list of some of the panelists that will be participating in this discussion: –
- Dr. Doyin Salami – Senior Fellow, LBS and MPC member
- Prof. Kingsley Moghalu – Prof. and Former Deputy Governor, CBN
- Dr. Ayo Teriba – CEO Economic Associates
- Mr. Herbert Wigwe – GMD/CEO Access Bank Plc.
- Prof. Pat Utomi – Founding Senior Faculty, LBS
- Mr. Sulaiman Abubakar – ED/CFO, Sterling Bank Plc
- Mrs. Ibukun Awosika – Chairman, FBN Limited and CEO The Chair Center Limited
- Bismarck Rewane – MD/CEO Financial Derivatives Company Limited