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Business

Experts differ on sectors that will drive Nigeria’s growth in 2021

Experts have given their views on the sectors that would drive the growth of the Nigerian economy in 2021 post-AfCFTA.

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Nairametrics has reviewed the opinion of experts as regards the sectors that would drive the growth of the Nigerian economy in 2021.

The year 2021 is fully stacked with plans and agreements for the full activation of the economic potential of the Nigerian economy, as the country heads into the new year with the heavy winds of recession.

READ: Nigeria’s $1.5 billion loan request is still in the works – World Bank

In an effort to ward off the economic vulnerability prevalent in the year 2020, the Nigerian government, the private sector players and individuals have strategized for the challenge ahead, while preparing for the opportunities expected in the year 2021.

READ: Nigeria’s oil sector contracts by 13.89%, as covid-19 plunges economy into recession

What you should know

  • In a bid to reduce headwinds in the new year, and create an enabling atmosphere where business, industries, services and commerce would thrive, the Nigerian Government has embarked on key regulatory reforms, as captured in the provisions of the 2020 Finance Bill which proposes the amendment of 13 different laws with over seventy sections.
  • However, 54 out of the 55 countries in the African Union (AU) have embarked on a multilateral arrangement to facilitate the growth of trade in the continent, by unlocking a market of 1.2 billion Africans with a combined GDP of $3 trillion through the AfCFTA (African Continental Free Trade Agreement).
  • The AfCFTA is expected to create the largest market in Africa, and increase intra-African trade up to 52.3% by 2022. Experts have given their views on the sectors that would drive the growth of the Nigerian economy in 2021 post-AfCFTA, as all AU countries position to share in the welfare gains, which are estimated at around 2.64% of continental GDP – roughly $65 billion in 2018 terms.
  • The synergy from trade by all countries under the AfCFTA, the largest trade bloc in the global economy since the 1995 WTO establishment, is expected to boost Africa’s cumulative GDP to $29trillion by 2050, as estimated by the United Nations Economic Commission for Africa.

READ: eTranzact International Plc forecasts PBT of N53.19 million in Q1 2021

What the experts are saying

In a bid to provide an unbiased view and form a rational expectation of what is to happen in 2021, Nairametrics reviewed the opinions of experts on sectors that will drive Nigeria’s growth in 2021, at the Nairametrics Regulatory Economic Outlook for 2021.

READ: FG suspends issuance of Free Trade Zone licenses

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According to Mrs. Ijeoma Uju, Partner, Corporate & Commercial at Templars, she believes the Service Sector will be one of the leading sectors to drive the Nigerian Economy towards the path of sustainable growth and development in 2021.

She agrees that the Agriculture sector still has the potentials to drive the Nigerian economy towards growth in 2021. However, for the manufacturing and industrial sector to perform during the year in view, the government has a key role to play in terms of infrastructure.

READ: Africa’s economic growth to drop by 4.1% in 2020, rebound by 5% in 2021 – UN

  • “I believe the service, agriculture, industrial and manufacturing sector will do well post AfCFTA in 2021, but there is a caveat on the manufacturing and industrial sector, because Government needs to do more in terms of infrastructure support. In this regard, I will lean both ways because if you look at the ECOWAS treaty, Nigeria in terms of total trading volume, does 76%. So, if you juxtapose that against an agreement with 56 countries, I think we will do quite well, as we are really doing so well within the ECOWAS territory where there are just 15 countries. So, I believe all these sectors will do well.”

READ: Africa’s economic growth to drop by 4.1% in 2020, rebound by 5% in 2021 – UN

Dr. Israel Osidipe agreed with Ijeoma’s submissions and stressed the need for government’s support in the provision of key infrastructures. He disclosed that multilateral and bilateral trade agreements are made on the premise of getting goods and products to trade channels.

He reiterated the importance of Service in this stance as it is also equally as important as tangible goods, but revealed that the objective of the AfCFTA remains absolute in terms of driving trade through industrialization.

READ: Recession; proactive measures not cyclical factors can resuscitate economy

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In this regard, he affirmed that the country needs to produce for Service and Agriculture sector to benefit, as the optimum productivity of the manufacturing and industrial sector will ensure other sectors reap optimal gains in 2021.

Hence in this stance, the Government needs to play a major role in driving the manufacturing and industrial sector, because their outputs are going to be beneficial to the African Continent.

READ: Ratification of AfCFTA will shape Nigeria’s international trade dynamics in 2021 – SB Morgen Report

  • “Government needs to really support because when you are talking about international trade or any multilateral trade agreement, there must be goods that you need to trade. I’m not saying service is not essential and if you look at the main objective of AfCFTA itself, you will see that the intention is to drive trade through industrialization. So, if we don’t produce, what are we going to trade, and then we go on to emphasize service, growth won’t be optimal, and inclusive. All of them will drive growth in 2021, but there is a need for Government support, in terms of infrastructure to facilitate manufacturing, otherwise we would only create free meal for other member countries.”

Mr. Nnamdi Nwizu, Co-Managing Partner, Commercio Partners, revealed that the service and agricultural sector both have major parts to play in driving growth in the economy, while Manufacturing and Industrial sectors are expected to underperform in 2021.

Mr. Adetola Onayemi, Head, Trade Remedies, NOTN, said the services sector will drive growth in 2021, as companies in this space are expected to overperform. He, however, maintained a cautious view on the performance of the industrial and manufacturing sector in 2021, as the sector has a strong appeal, given the growth potentials in it.

He reiterated that AfCFTA will help create market and opportunities in a bid to reconstruct what trade has always looked like on the continent in the last few years.

  • “AfCFTA is the most audacious agreement as a continent to trade amongst ourselves and to create prosperity and access for every person on the continent. What that looks like and what the future generation would say about it would depend on every African player, from the services person that would go out of their way to do services and to those that would use the opportunities to build infrastructures, set up logistics channels and down to manufacturers.”

The Nairametrics Economic Outlook was moderated by Nairametrics’ Founder, Ugochukwu “Ugodre” Obi-Chukwu. Other panelists at the webinar include; Taiwo Oyedele, Fiscal Policy Partner, PwC; Olufemi Babem, Partner KPMG; Adegun Adedamola, Energy Consultant; Yemisi Awonuga, Partner, Energy & Projects, Templars; and Aruoture Oddiri, Business TV Anchor and Radio Broadcaster.

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Omokolade Ajayi is a graduate of Economics, and a certificate holder of the CFA Institute’s Investment Foundation Program. He is a business analyst, and equity market researcher, with wealth of experience as a retail investor.

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Business

CBN’s Emefiele vows to reject the continuous importation of maize in Nigeria

The CBN has said that it will oppose all attempts to continue the importation of maize into the country.

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Banks' stakeholders express 4 main concerns bothering the sector right now, CBN, MARKET UPDATE: CBN’s historic agriculture lending; Is it yielding the desired results? 

The Central Bank of Nigeria (CBN) has said that it will oppose all attempts to continue the importation of maize into the country.

This is geared towards encouraging local production as the apex bank believes that maize farmers in Nigeria have what it takes to close the maize demand gap of over 4.5 million metric tonnes in the country.

This was made known by the CBN Governor, Godwin Emefiele while speaking in Katsina on Thursday during the unveiling of the first maize pyramid and inauguration of the 2021 maize wet season farming under the CBN-Maize Association of Nigeria Anchor Borrowers’ Programme.

READ: Nigeria must eat what we produce, agriculture is the way out – Buhari

Emefiele said, “With over 50,000 bags of maize available on this ground, and others aggregated across the country, maize farmers are sending a resounding message that we can grow enough maize to meet the country’s demand.’

He explained that the maize unveiled at the ceremony would be sold to reputable feed processors adding that this would in turn impact positively on current poultry feed prices, as over 60% of maize produced in the country were used for producing poultry feed.

Emefiele said that the apex bank was ready to provide support to the youths that are willing to engage in agriculture and encouraged them to embrace agriculture.

READ: Nigeria secures $1.2 billion loan from Brazil for agriculture modernization

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Speaking at the event, the Katsina State Governor, Bello Masari, said the state had suffered a setback in agriculture as over 60,000 hectares of farmlands were uncultivated due to insurgency, which hindered farmers from gaining access to their means of livelihood.

On his part, President Muhammadu Buhari, who was represented by the Kebbi State Governor, Atiku Bagudu, while unveiling the pyramids, reassured the farmers, processors and other value chain participants, of the support of government towards ensuring that they perform optimally.

What you should know

It can be recalled that in July 2020, the CBN included maize importation to its list of 41 items banned from assessing forex at the official market as it directed all banks/authorised dealers to immediately discontinue the processing of Forms M for maize/corn importation into the country.

The apex bank in its circular said that this measure is aimed at increasing local production of the commodity, stimulating a rapid economic recovery, safeguarding rural livelihoods and increasing jobs.

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Business

FG releases N29.1 billion advance for deployment of Covid-19 vaccines

The FG has announced the release of N29.1 billion to the NPHCDA as an advance for the operational cost of deployment of the Covid-19 vaccines.

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Power: Mambilla Power Project not prioritised by Ministry of Power for 2021 Budget - Finance Minister

The Federal Government has announced the release of N29.1 billion to the National Primary Health Development Agency (NPHCDA) as an advance for the operational cost of deployment of the Covid-19 vaccines.

This is as the government has expressed its commitment to procuring 29.588 million doses of the Johnson & Johnson vaccine through the AVAT initiative, coordinated by AFREXIMBank,

This disclosure was made by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed while speaking at ‘Collaborative Africa Budget Reform Initiative (CABRI) General Assembly webinar on Friday.

What the Minister of Finance, Budget and National Planning is saying

Ahmed in her statement said, “Therefore, the supplementary budget for COVID-19 vaccines will cover the cost of additional vaccines over and above those provided by COVAX, as well as the full cost of operations and logistics for delivering the vaccines around the country.

“Already, the sum of N29.1bn has been released from the Routine Immunization budgetary provision (Service Wide Vote) to the National Primary Healthcare Development Agency (NPHCDA) as an advance for the operational cost of deployment of the COVID-19 vaccines. The N29.1bn represents about 52 percent of the amount required over 2021-22”, she said.

Mrs Ahmed stated at the 18th General Assembly of CABRI that the World Bank has indicated willingness to provide needed facilities in support of the country’s Covid-19 vaccination plan.

Considering key elements of Nigeria’s vaccine financing strategy, she said that the government is working on a supplementary budget to provide for the cost of vaccine procurement and delivery

She said, “The Federal Ministry of Health plans to vaccinate 70 per cent of eligible (18 years and above) Nigerians over the 2021 and 2022 fiscal years.”

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She noted that the nation has received commitments from COVAX for Covid-19 vaccines that could cover 43.1 million of the eligible population, as donations from some development partners.

On the impact of the Covid-19 pandemic and the oil price crash on the Nigerian economy, she noted that prior to the pandemic, implementation of the Economic Recovery and Growth Plan 2017-20, prudent resource management and fiscal policy implementation had resulted in 11 consecutive quarters of GDP growth, with GDP growth rising from 1.91% in 2018 to 2.27% in 2019.

Mrs Ahmed also noted that “the government had begun the process of moving our economy away from its primary dependence on oil for revenues and foreign exchange, and we’re making steady gains in addressing infrastructure and human capital challenges.”

 

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