When experts brainstormed at FirstBank ‘s Economic Outlook 2022 Webinar



First Bank of Nigeria Limited recently hosted  Nigeria’s Economic outlook webinar for 2022. AMAKA IFEAKANDU who monitored the event  virtually, looks at the variables  expected to shape the nation’s economy and boost  the economic growth of the country in 2022.

First Bank of Nigeria Limited, Nigeria’s premier and leading financial services provider recently  hosted Nigeria’s economic outlook webinar to set the tone for the domestic and global economic activities that would shape the nation’s economy in the 2022 financial year.

Specifically, the programme focused  on inflation, currency devaluation, external reserves, Gross Domestic Products (GDP) growth,  foreign exchange and other economic fundamentals   impacting the household and businesses in the country.

Objectives

The programme tagged “A  Rearview Look at 2021 lessons learnt – Outlook 2022″held virtually to provide opportunity for participants to learn and be knowledgeably empowered to make the right decisions in their various socio-economic activities which would give direction on the micro and macroeconomic activities.

 Other GDP projections  

Before the announcement of the programme, the Central Bank of Nigeria in its 2022 economic outlook presented by its governor, Godwin Emefiele, projected the nation’s GDP  growth by 3.2 per cent.

The apex bank noted that the country’s growth forecast would be upgraded by  3.1 per cent in 2022 on the back of several interventions taking place in the country.

On the contrary,  the World Bank predicted that Nigeria’s economy would grow at a 2.5 per cent rate in 2022 and 2.8 per cent in 2023, largely due to the expected increase in oil prices and the country’s growing services sector in 2022 and beyond.

Experts posit

Financial experts who spoke at the event said for the country to sustain growth in 2022, there must be reforms in the critical sector of the economy.

They  admitted that investment in real estate, ICT, financial services sector, construction Industry, agriculture and manufacturing among others, would  contribute to economic growth.

They also expressed the need to tackle the issue of insecurity in the country to ensure  sustainability of the growth recorded within the year.

In his presentation, Chief Executive Officer Financial Derivatives Company Ltd Bismarck Rewane said inflation rate would  remain structurally high at a full-year average of 13.3 percent in 2022 ahead of the 2023 polls.

Rewane stated that the performance of the economy in 2022 would be determined by the successful implementation of this year’s budget and newly approved 5-year development plan.

Describing 2022 budget as an offspring of the 5-year  plan, he said the plan aimed to achieve an average real GDP  growth of five percent over the planned period and it is expected to succeed the Economic Recovery and Growth Plan (ERGP) which expired in 2020.

Rewane said  the funding strategies for the new plan centeres   on broadening the tax base, enhancing the capacity of the private sector by creating investment opportunities and deliberate policy engagements and incentives.

He said with signing of budget of N17.13 trillion for 2022 which has 26.05 per cent increase above 2021 budget of N13.59 trillion, the aggregate revenue was projected at N10.7 trillion.

This, according to him, implies Nigeria would  have a fiscal deficit of N6.4 trillion, 3.4 per cent of the GDP to be  financed by drawdown on previously approved loans and  new privatisation proceeds.

He said: “We can expect to see sustained cost-push factors, including a planned fuel subsidy removal, new electricity tariffs and additional taxes; alongside legacy issues, such as increased debt service burden and exchange rate convergent.

Other things expected to witness within the year include key amendments to finance Act to support revenue mobilisation such as VAT, excise duty digital and increased supply in the forex market by CBN.”   

The financial experts listed sectors of opportunities  in 2022 to include Information Communication Technology, construction Industry, financial services industry, manufacture and agricultural sector.

He said ICT sector is likely to grow by 9.72 per cent  in 2022, telephone penetration will rise sharply, there would be surge in Fintech and mobile payments, Increased level of activities to be supported by 5G operations and the sector would consolidate during the year.

Rewane said  the” telecom infrastructure would also  expand with cable acquisition and top players -MTN Nigeria and Airtel Africa- will report profit surge of 72 per cent in 2022 with an average Per Earning ratio of 10.64x, as MTN Nigeria and Airtel Africa has return of 13.8 per cent  and 24.2 per cent respectively in one year.”

Further to this, he said construction Industry would  grow by 3.07 per cent in 2022 as state governments would  also be spending massively as election approaches and roads will be concessioned and tolled.

Similarly, he projected that construction “industry giant, Julius Berger is well positioned to benefit from government activities. The activities in the industry will extend to the cement and building materials companies,” adding that “all quoted cement companies are well  positioned to take advantage of the opportunities while top players in the sector will report profit surge of 64 per cent.”

For the financial services sector, he said it is likely to grow by 8.32 per cent  in the current year and there will be rationalization and drift within the industry, stressing that there would be Increased partnership and collaborations with fintechs in promoting financial inclusion and aggressive digital innovation and lending solutions.

He said First Bank’s shares have returned 62.16 per cent in one year and industry average per earning ratio of 5.00x.

Rewane also said t in 2022, manufacturing sector is likely to grow by 4.70 per cent and Improved Forex  liquidity and increased product innovation will boost sector growth as players would benefit from volume and value growth.

According to him, major players in the industry -Nestle Nigeria and Unilever, would  report profit growth of 20 per cent in 2022. 

For  agricultural sector, he said, “it  is expected to grow by 1.6 per cent in the current year, adding that  an efficient rail system will ease logistics constraints and boost productivity.”

Quoted companies under the industry like Okomu oil and Presco are well positioned to benefit and Profit expected to grow by 27 per cent  in 2022, the expert further stated.

On projection for the first, second, third and fourth quarter of the financial year, he said   this “will grow by 3.2 per cent, 2.7 per cent, 3.7 per cent and 3.9 per cent respectively.”

Describing  first three months of the year as typically a slow quarter, he said proposed PSM subsidy removal in February would further erode  purchasing power due to high retail petrol price. 

He said although  planting season resulting in reduced aggregate output in the second quarter, increased in infrastructure spending would boost productivity. 

On the third quarter performance, he said “there will be higher agriculture output due to the harvest and pre election spending  to boost consumer demand while the fourth quarter will witness robust demand because of festive season and sustained election spending.” 

In all, Rewane said:  “Declining inflation will be positive for consumer purchasing power while monetary tightening in advanced economies could trigger capital outflows as Oil prices will remain relatively stable. Real GDP growth will be sublime, Competition between traditional banks and fin-techs will intensify, forcing banks to reduce or eliminate transaction costs, while Banks with constant innovation and regional diversification to remain resilient.”

Inflation as a challenge                          

In his own analysis, Chief Executive Officer (CEO)  RTC Advisory Services Limited, Mr Opeyemi Agbaje,   said in the 2022 financial year, inflation would   be a problem to consumers as it would shrink their wallets.

Agbaje doubted the possibility of achieving growth in 2022 with increase in inflation. In his view, the issue of petrol subsidy may be dealt with finally in the year 2022 but there may be problem of volatility in the system.

While noting that GDP growth is gradually inching up, the expert said some sectors of the economy like real estate, ICT were growing, but insecurity in the country is affecting food production, even as  consumers should be more concerned about food production. 

“Trying to control everything when the fundamentals are wrong is the problem, how ready are we to deal with reforms in critical sectors, when are we going to address the problem of insecurity which has become major concern of everybody, if we can put all fundamentals right, make our policy environment stable, with lower inflation rate, we can achieve growth,” Agbaje submitted.

Nigeria stands to grow

Also speaking, Executive Director, First Bank of Nigeria Limited Treasury and International Banking, Ini Ebong said  Nigeria has a lot of things that would  contribute to the growth and development of the economy,  but it needed to have another look in its policies.                      

To achieve expected growth in the country, he said “we need to invest in  critical sector of the economy, we need to diversify nation’s economy in order to increase forex exchange inflows as depending on oil will no longer help the economy.”

Adeduntan’s  remark 

In his opening remark, Managing Director of First Bank Nigeria Limited, Dr Adesola Adeduntan said   the webinar provided the bank the opportunity to assess the performance of the Nigerian economy, across key indices, in 2021 and benefit from experts’ opinions on the expectations and forecast for 2022.

Additionally, he said, it would provide excellent insights into  the key factors set to shape both the global and local economic landscape in 2022.

“As a bank, we have a legacy of supporting the growth of businesses as the engine for economic growth and development in Nigeria and across Sub-Sahara Africa. In line with our renewed vision “to be Africa’s bank of first choice”, FirstBank will take the lead in driving the development of the different sectors and industries within the economies where we operate to support overall economic growth and sustainability,” he said. 

Speaking further, the FBN boss said: “As a bank that is woven into the fabric of society, this webinar is further reinforcing our support and collaboration with stakeholders as we demonstrate our commitment and willingness to be the partner of first choice to our customers, playing a dominant financial role in unlocking the opportunities that enable businesses grow and thrive in 2022 and beyond.”