The Chief Executive Officer of Kainos Edge Consulting, Mr Doyin Salami has said that considering the economic situation and happenings in the global environment, the current year will be tighter than 2018.
He said “With the newly increased minimum wage and government’s need for revenue, tax rates will be increased including the value added tax which will cause a rise in inflation.”
“Furthermore, government position in 2019 will be tighter by 15 percent as against 2018, due to the 5 percent decline in the federal government budget, in addition to the inflation, this will result in some contraction in government spending and if the budget is implemented, it implies that the year will be tight”
Salami who was the keynote speaker at the KPMG CFO seminar, said that having cleared the air of uncertainties in the country’s political space, there will be need to negotiate the transitions that will occur, adding that despite the results of the elections, there will be new personnel who may or may not introduce new policies especially the position of the central bank governor. He said although the economy is in a fragile condition and will grow at a slow rate, it might possibly record a 2.5 percent growth this year.
Speaking on oil dependence of the country, he said that “whatever happens to oil will affect Nigeria considering Nigeria’s dependence on oil as its major revenue source”.
“According to OPEC’s policies, Nigeria is expected to produce 1.6 million barrel per day, while the proposed 2019 budget is predicated on producing 2 million barrels per day “
He disclosed that Nigeria presently imports fuel at the rate of N205 per liter and sells it at N145 therefore, if the OPEC policies remain unchanged, oil price will be at $ 64 per barrel which is $4 higher than the 2019 budget
on the corporate organizations, he said most companies will have to manage its resources due to less demand for their products therefore in the process of cutting cost, downsizing will occur which will increase the rate of unemployment.
Salami explained that Nigeria is capital deficient and whatever development it needs, is centered on effective infrastructure which is lacking and will require $ 10 billion annually for years before it can be solved.
Also speaking, Vice President of Finance at Unilever Nigeria, Adesola Sotande-Peters said that for the manufacturing sector, the end to end supply chain is a critical issue especially for the Fast Moving Consumer Goods (FMGC) in the industry, as the sector is highly dependent on the foreign exchange coupled with the consumer’s sensitivity to product prices which has increased as their purchasing power is dwindling.
She advocated that there is need to increase the local sourcing of raw materials as well as establish more warehouses in a bid to reduce dependence on the foreign exchange and also reduce the cost of goods production. She said there is the possibility of increasing credit for distributors which might require the need for strategic partnerships.
