Having faced one of its most trying times, there is a rising optimism in the Nigerian business environment that the fortunes of the country would turn for the better in 2017.
Analysts and business operators say with the various reforms in the country, the economy is expected to pick up from its current state of recession.
In separate interviews with LEADERSHIP, the Nigerian business community said policies initiated by the federal government, a plan to further increase capital spending next year as well as the foreign exchange policy and various intervention initiatives, are expected to begin to yield fruits in 2017.
The president/chief executive officer of Dangote Group, Mr Aliko Dangote, recently predicted that Nigeria will be out of its present economic recession in 2017, noting that the huge private sector of the country is one of the positive points for the economy.
“I personally believe we will be out of recession at about the first quarter of next year. Nigeria has what it takes, and the private sector is huge in Nigeria. The government should not focus on any business; what the government should focus on is tax collection.
“Today in Nigeria, we have 60 per cent more arable land than China, yet most of what we consume we are importing. We must drastically change and diversify the economy; if not, we will be in trouble. We are the only African country that is not self-sufficient; we need to focus and move into agriculture,” he said.
Likewise, the president, Lagos Chamber of Commerce and Industry (LCCI), Dr Nike Akande, predicted that Nigeria would surmount its economic woes and come out of the recession stronger in 2017, noting that Nigeria, as the giant of Africa, would not stay too long before bouncing back to its former pride of place in the world.
While noting the decline in oil price, the weakening of the country’s currency and the associated challenges this scenario portends, she said “I strongly believe that we will bounce back from recession stronger in 2017. The economic recession was caused by our over-dependence on oil but now, we have taken the bull by its horns.
“So many campaigns are going on and restructuring on diversification; with all these put in place, we are sure to come back to reckoning among the Commonwealth of Nations. The year 2017 is just a month away but by the end of it, things will be better, I am very optimistic.”
Managing director of InvestData Ltd, Mr Ambrose Omordion, told LEADERSHIP yesterday that the country was facing its worst economic crisis, caused by low oil prices that have eroded both government reserves and spending, and shortage of the greenback in the system.
“The good news is that Nigeria hopes to conclude the sale of $1billion Eurobond by the end of the first quarter of 2017 and will seek to make its foreign exchange market more flexible.
“Also encouraging is the news that the federal government is planning a budget of more than N7 trillion next year to boost spending and help pull the economy out of its worst crisis.”
Omordion noted that if all these are put in place, they will boost spending and make greater impact on the economy.
On his part, an analyst at FXTM, Lukman Otunuga, noted that there was an increasing focus on agriculture, while infrastructure and investments in other non-oil sectors could provide positive results in the future.
He said: “While things most times turn for the worst before improving, Nigeria has repeatedly displayed instances of resilience against the storm and will come out stronger with this structural transition, if successful, potentially exceeding all expectations.”
In his own assessment, the managing director of Highcap Securities Ltd, Mr David Adnori, said that “by 2017, the Nigerian economy would have completed its inflationary adjustment. And if crude oil price and production increase, the certainty of coming out of recession in 2017 will be high.”
There is also an increased hope for startups in the country as investments above $100 million is expected to flow into the country over the next five years.
Maya Horgan-Famudu, a Nigerian and founder of Ingressive Ltd, which organised a technology tour for Silicon Valley companies in Lagos, last month, said the local technology start-ups ecosystem is going to experience a boom in 2017 as more USA companies are looking to Nigerian tech start-ups to invest in because of the market size and opportunities available in the country.
“If you want to back technology in Africa, you look to Nigeria because the first billion dollar companies made by Africans, built by Africans, have happened in Nigeria. They have come from Nigerians because they have the most entrepreneurial ecosystems. With over 182 million people, one of the fastest growing GDPs and there is a lot happening in Nigeria,” she said.
Horgan-Famudu said the Silicon Valley investors are looking to diversify their tech investments on lower tech valuations with equal returns while serving as great mentors and bring in their capital to Nigeria top tech start-ups.
“We would like to see investments of up to a $100 million over the next five years. We are looking at education, healthcare and financial technology start-ups” she added.
Jill Moss, technical advisor, agency engagement at the United States Agency for International Development (USAID) noted that “there is huge demand from tech companies to learn and fund a large scale growth of African businesses. Come 2017, we are working to bring 500 big Silicon Valley ICT companies to Nigeria.
“We are specifically targeting companies raising millions of dollars to invest. We want Nigerian tech start-ups that have traction but Silicon Valley companies can still influence the forward trajectories of the business. They are looking for fast growing startups that are still lower valuations” She said.
To the managing director, Bank of Industry (BOI), Mr Waheed Olagunju, the right investment portfolio and diversification would get Nigeria out of recession in a short time.
“What we need to do in the time of this recession is to diversify our economy and stop paying lip service to it.
“We will need to look at the Mexico model and stop the over-reliance on crude oil as the mainstay of revenue for the country. We need other sectors as well. We need to encourage more investments because increased investment is one of the ways we can get out of recession.
“When you invest, it increases production and the Gross Domestic Product (GDP) increases. We can only grow our economy by providing wide range of investment portfolios and also encourage manufacturing, which is a key to any economic development,’’ he said.
On his part, Seun Faluyi, managing director, Offshore Dimensions Limited, remarked that the performance of the oil and gas sector in 2017 will be determined by a couple of factors, including the ongoing reforms being carried out by the minister of state for Petroleum resources, Dr Ibe Kachikwu, as well as the price of crude oil.
He lamented that the industry is still awaiting the passage of the petroleum industry bill (PIB) almost two years after the inauguration of the 8th National Assembly.
While applauding the government for embarking on reforms, he also expressed the view that translating the fiscal policies into laws will remain a hurdle for the executive, which is likely going to constitute delays in the implementation of whatever action plan is expected to be a follow-up to the policies.
“We cannot talk about a better 2017 when we have refused to remove the obstacles that constitute hindrances in the industry,” he said.
“Some of the laws guiding operations in the industry are obscure and there is the need to address them in order to advance the industry.”
He asserted that he would rather adopt a wait-and-see attitude and noted that with the recent agreement by OPEC members to cut output, Nigeria will still need to ensure a safe environment to allow it meet its production quota to enjoy the fruits of the crude oil cartel’s deal.
Government’s policies, programmes and actions will to a large extent determine where the industry heads to in 2017, he declared.
Chairman, International Centre for Energy, Engr. Bunmi, said he expected the oil and gas industry to be more stable in 2017.
He noted that with the level of discussions going on locally and at the global level, most of the challenges that characterised 2016 would be overcome in 2017.
While commending the federal government for initiating a short and medium term roadmap for advancing the industry, he expressed the belief that the private sector will have to be motivated with incentives to buy into such policies.
“Government must create the enabling environment to attract investment into the sector. The oil and gas is in need of huge investment to enable it play the pivotal role it is supposed to play in the diversification of the nation’s economy. We need gas to power our industry, generate electricity, for domestic use etc.; however, investors will not come into the sector except the conditions are conducive,” he said.
Meanwhile, Dr Kachikwu has expressed optimism about OPEC’s decision to cut crude production, stating that the deal would obviously enhance the prospects of the oil and gas industry with the price of the commodity already surging after the announcement.
A statement from the minister’s office, signed by the director of press, Ministry of Petroleum Resources, by Mr Idang Alibi, noted that Nigeria’s exemption from the output cut would affect the country positively.
He said that a stable increase in oil price, which is one of the rewards of the deal, would most likely contribute positively to the stimulation of the economies of member countries, including Nigeria.
On his part, the head, Agricultural Productivity, Enhancement, National Programme for Food Security and chairman, National Fertiliser Technical Committee, Prof Victor Chude, concurred with those who believe that 2017 would be good for businesses. He pointed at Nigeria’s huge market for agricultural inputs and the present government’s emphasis on increasing agricultural productivity.
Speaking in an exclusive telephone interview with LEADERSHIP, Chude said: “Nigeria is a huge market for agricultural inputs, more so that the current government is emphasising increasing agricultural productivity.
“The prospects are positive for investors and businessmen. Take fertiliser for example, fertiliser prospects are 3.5 million metric tonnes but, currently, what is being imported and produced locally is between 600/800 metric tonnes. So there is a shortfall.”
He also posited that the issue of seeds is another big area as the seeds currently produced are below the requirement.
The fertiliser expert stated that other value chains in the agricultural sector reveal lots of investment opportunities.
Chude emphasised that the prospect for investors and businesses in the nation’s agricultural sector is very high, but urged that local investors be encouraged to favourably compete with their foreign counterparts.
“There is the prospect of Nigeria commencing rice exports between 2017 and 2018, there is a growing demand for investment in rice production. Rice needs lots of investment in 2017-2018. So prospect is very high and positive for investors,” he said.
The professor, however, urged government to continue to encourage both foreign and local investors, and to help make forex available to indigenous investors to make them compete favourably with their foreign counterparts
Also speaking, country manager, AFEX Commodities Exchange Ltd, Ayodeji Balogun, opined that investors coming in for long term investments stand to benefit immensely as the naira is currently undervalued.
“If investors are coming in for the long term, it is the best time ever, because they will get good value for their investments, as the naira is undervalued. So when you bring in foreign exchange, you will get very good value for your money
“But if you are coming in for the short term, you may lose until the naira redoubles and bounces back,” he said.