Technical report on Nigeria economy 2019 by Rewane Bismark


Highlights of Bismark Rewane’s @BizMorning Special Interview on Economy & Markets in 2019 & 2020 @channelstv @BJRewane @FDC_ltd

1. Christmas tree is bigger in 2019 than 2018. 2019 GDP growth: 2.2% vs 2018 GDP growth: 1.9% Comment: Not yet where we want to be but…. slowly but steady progress.

2. Meals at Christmas 2019 are more expensive…

In 2018, you spend N1,050 to get rice and chicken on a plate however in 2019, you spend N1,750. If you’re going for rice and turkey, it’ll be 52% more expensive. It was N1,250 last year but it’s now N1,900. A swallow plate which was N600 last year is now N900 (50% more expensive)

There price of beer was constant at N350. There was no change. Although they are having challenges now esp on the stock exchange but 2020 will be a better year for breweries. Tomatoes went up by 20% from N10,000 to N12,000. Pepper went up by 6% from N7,500 to N8,000.

Vegetable oil went up by 25% from N10,000 to N12,500. Palm oil was a little bit steady. It went up from N9,500 to N10,000. The demand for palm oil wasn’t as high. Of course, palm oil was affected by the border closure. The economy as a whole is getting better.

Inflation has gone up in the last 3 months. This is partially due to border closure and partially due to constriction. Inflation at the end of the year is projected at 12%. It may get to 13% in Jan/Feb 2020. However, this is better than  the rise of 2017.

In 2017, inflation was rising but there was weak growth (stagflation). Now, inflation is rising with growth in the economy. The balance of trade declined by 23% in 2019 which led to external reserves bleeding. External reserves declined from $43.12b in 2018 to $39b in 2019

The external reserves is still within the comfort zone hence there is no reason for panic. The exchange rate is still stable. It has remained N363 in the parallel market for the past one year. Life expectancy has increased from 54.1 years to 56.3 years.

Misery index improved. It moved from 35.25% to 34%. Misery index is a combination of unemployment rate and inflation rate. In dollar terms, Nigerians have become poorer because the population growth rate is more than the growth of the economy.

Income per capita declined from $1,969 to $1,917. Nigerians were not among the lowest in terms of literacy in 2018 however we ranked the 8th lowest in literacy. In other words, Nigerians have become more illiterate in global ranking.

Lagos in 2018 was the 3rd worst city to live in but it deteriorated in 2019 to become the 2nd worst city to live in. The city that beat Lagos is Damascus which is a war zone. There are many things to fix in Lagos although the govrnor is trying his best

The number of people seeking asylum decline from 60,000 to 57,000 which ties to the fact that when your misery index is reducing, the number of people seeking asylum will reduce.

In 2018, Nigeria had the second highest number of entrepreneurs: 37.5% of the population but now, Nigeria is number one with 39.9% of the population are entrepreneurs either by the side or full time. This means that the citizens are seeing opportunities to trade.

Majority of these entrepreneurs are in the informal sector. Nigeria in 2018 was the 4th lowest in the cost of living (in dollar terms) but in 2019, we are the 5th lowest out of the 23 countries that were measured. Treasury Bills declined in 2019 compared to 2018.

Treasury Bills in 2020 will yield lower. The same goes for returns on deposit in the banks. If you invested in real estate, there is a 25% chance that your house may be vacant. There is another 25% chance that your tenant will not pay you and you end up in court.

Despite the downturn in the stock market, there were some companies that fared well. If you bought C&I leasing in January, you will be worth 237% more in December. AG Leventis gave 103%. Cornerstone Insurance gave 90% returns. These ones were able to beat inflation.

Some of the worst performing stocks: IB Plc: -69% returns; GSK: -63%. 2019 was a special year. Q1 was for elections. Q2 was for transition and inauguration. Q3 was for cabinet inauguration. Q4 was for the Economic Advisory Council. The real work was in Q3 and Q4

FDI in Nigeria is around 1% of GDP. The road shows of the president is very important but investors listen more to what you do than what you say. The PIB has to be passed because of the importance of oil to our economy.

Construction, Transportation and Communication sectors are critical. Projected GDP growth in 2020 is 2.3%/2.4%. Investment in projects is very important to the powering of the economy. Investment must lead to productivity. We need to leverage on gas projects.

The ECO has certain implications but not negative. Lending to the private sector has increased with the LDR policy. I don’t think the value of the currency is any issue and I don’t see any reason for devaluation. The goal is to maintain price stability & achieve growth

Nigerians want tangible evidence that my life is better this year than what it was last year. Nigerians want strategic fundamental results. Getting those rails to be completed. These are the things Nigerians desire in 2020. Obeying court orders will attract investors

Nigeria’s GDP growth in 2020 is going to be higher than that of 2019. US elections are coming up in 2020. It is going to be a year of policy intervention. Government must be ready to react to political changes on the global scene and must take advantage of opportunities. ~Rewane