160 days to elections, economy torn between trepidation, hope, gloom – Rewane

With less than 160 days to the general election, Nigerians and indeed, the economic indicators are torn between a sense of trepidation, hope and gloom. Some are expecting freedom and prosperity and some nonchallant, rewane Bismarck, Chief Operating Officer of Financial Derivatives Company (FDC) said.
In its lastest edition for September, he said, “not many of them are expecting that 2023 February will be Uhuru (i.e. freedom & prosperity), but may be a new beginning. Depending on how fast the Nigerian economy recovers from its current state, the election will be a referendum on the economy or a vote of anger”..
Like most other African countries, Nigeria is not alone in facing a myriad of problems like spiralling inflation (19.7 per cent), currency weakness (710/$), oil theft, and high unemployment.
“There is a ray of hope for the economy, if only some policy steps are taken immediately. One of which is protecting the oil pipelines (Nigeria loses approx. $1.3bn per month). A combination of orthodox drone technology and the non-conventional tactics (Tom Polo project) could help protect approximately 400,000bpd of crude oil”, said Rewane.
He said, the macroeconomic, fiscal and forex benefits to Nigeria are all naira supportive and external reserves accretive., but laments that the naira has depreciated again to N710/$ in the parallel market.
The good news is that with the slow and steady adjustment of the official I&E rate (N431/$), the naira is likely to stop hemorrhaging very soon and begin to appreciate towards N670/$ – N680/$ in October.
“Since the exchange rate pass-through to domestic prices is a major culprit behind spiralling inflation. We expect a noticeable moderation of Nigerian inflation in Q4 2022 (17.5 per cent)” said Rewane in the FDC publication.
FDC is projecting that Gross Domestic Product (GDP) growth in the third quarter will be positive even though lower than the second quarter, which was 3.54 per cent. With these imponderables and election uncertainty discounted, the economy may be on a slow mend path before Christmas.
Currently, Nigeria’s average inflation rate (5 years) is 14.38 per cent, relative to global average of 3.78 per cent and Sub-Saharan Africa average of 9.65 per cent.
Nigeria: 8th highest inflation in SSA and 25th highest in the world. Two of the SSA countries are oil producers (Nigeria & Angola.
Inflation in SSA mainly driven by higher energy & food prices. Diesel price is 209.5 per cent higher at N780/litre year-on-year (y-o-y), aviation fuel up 268.42 per cent to N700/litre
Parallel market rate touched a peak of N715/$.
Worse still is the fact that Ways & means advances is approximately 40 per cent (N18 trillion) of money supply.

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