Standard Chartered Bank’s Chief Economist for Africa and Middle East, Ms. Razia Khan, has projected a three per cent economic growth for Nigeria in 2020.
Khan, also projected that for the first time the Sub Saharan Africa (SSA) would witness accelerated growth even as the global growth was predicted to decelerate. She also said that SSA growth would be powered by Nigeria and South Africa’s economies.
She said this during her presentation of Nigeria’s 2020 economic outlook, held in Lagos, yesterday.
Khan’s projected economic growth for Nigeria was slightly above the 2.9 percent growth rate President Mohammadu Buhari proposed in the 2020 budget.
According to her, “2020 is a year we might see SSA economies growing faster in the face of slowing global economy. Growth in the SSA will be driven by the two largest economies in Africa, namely Nigeria and South Africa.”
She predicted that oil price stability and increased crude oil production would power Nigeria’s economic growth 2020.
“We have positive view on Nigeria’s growth because of developments in the fiscal and monetary sectors that will drive more expansion in the Nigerian economy. We have not lowered our Nigeria’s GDP and oil price projection.”
One of the monetary policy stance of the Central Bank of Nigeria (CBN) that would bolster the economy in 2020, according to Khan, was the push for increased private sector lending, which has since unlocked N2 trillion in to the economy.
She also noted that the return of Nigeria’s budget cycle to January-December and early implementation of the fiscal policy tool would enhance the execution of capital projects.
“The difference in 2020 is that Nigeria has reverted to normal budget cycle as early implementation of capital projects will add stimulus to the economy.”
Other developments she identified that would encourage economic growth in 2020 were the enactments of Petroleum Sharing Contract Act of 2019 and the Finance Act 2019 that increased the Value Added Tax by 50 per cent, from five to 7.5 per cent.
However, Khan warned that the ability to ensure compliance to the above legislations would be where the challenge lies for the federal government, adding that previous VAT collection did not meet government’s projected revenue earning from it.
The Standard Chartered Bank’s chief economist also warned Nigeria to do away with the its age-long sharing of oil revenue every month during FAAC, and focus on diversifying the economy so as to earn more revenue from other sources.
She also noted that Nigeria’s problem was not high debt burden, but low revenue mobilisation.
She also projected that a prolonged case of the coronavirus would affect demand for oil and might add pressure on Nigeria’s foreign exchange market.
She, however, noted that the expectation of better GDP performance in 2020 would also depend on return of positive momentum capable of building confidence and attracting private sector investments to make Nigeria economy grow by offering them higher rate on return.