To attract more foreign investments into the Nigerian economy, the policy environment needs to be strengthened by the implementation of more liberal and clearer policies.
This call was made by Cobus de Hart, Chief Economist for North and West Africa, Oxford Economics, who was a guest speaker at the ICAN / ICAEW Joint Economic Insight event held in Lagos on Friday, April 26, 2019.
Speaking on the theme: ‘Nigeria: The African Giant Crawling Back on its Own and its Untapped Technological Potential’, Hart stated that the Nigerian business environment is still seen as very unfriendly, especially since the wrong policies were implemented after the oil shock. He however noted that the economy has witnessed a progressive shift to non-oil outputs.
He said: “The non-oil sector is now the main driver of growth. The non-oil sector has expanded from 0.8% to 2.7%. That is actually progressive”, explaining that diversification can be accelerated with even more liberal policies.
Hart also said that the near-term outlook was encouraging with PMIs hinting at a solid start to 2019, FX risks which have eased off considerably and the loosening of the monetary policy.
According to him, despite the 2019 general elections, portfolio investor appetite is still strong, and this has prompted the Central Bank of Nigeria (CBN) to change policy direction.
Taking a cue from a 2017 World Bank report, Hart noted that Nigeria is still largely unbanked with only 39% of adults having accounts in financial institutions. Nevertheless, according to him, there is still a huge mobile money opportunity in Nigeria because of her population. Sadly, this is not the case with mobile penetration.
According to Hart: “As of 2017, Nigeria only had 39 mobile money accounts per 1,000 adults and saw only 447 mobile money transactions per 1,000 adults. In China, guess what the transactions figure was? 52,000! Despite such as a large market, Nigeria is lagging far behind its peers”.
He affirmed that Sub-Saharan African countries in general have seen a sharp increase in mobile penetration, although East African countries like Kenya still take the lead.
With the rise of financial technology (Fintech), Hart believes that Nigeria is making progress in Fintech opportunities. “It is nice to see that Nigeria is making progress in Fintech. Last year, CBN launched the Payment Service Banks (PSB) licensing guidelines with the aim to increase financial inclusion. What this does now is that it allows telecommunication companies (telcos) to provide limited financial services like holding deposits, payments and remittances, issuing debit and prepaid cards. However, they are not allowed to give loans”, Hart added.
Also speaking at the event, Paul Aplin, President, ICAEW, said that you cannot have a strong economy without a strong national accounting profession. He also noted that no institute can help the economy alone, it has to be done in partnership with other institutes that have the same vision. This, he explained, was the value brought by the synergy between ICAN and ICAEW.
Also present at the event were: Alhaji Razak Jaiyeola, President, ICAN; Dr. Andrew Nevin, Chief Economist and Partner, PwC; Michael Armstrong, Regional Director for ICAEW in the Middle East, Africa and South Asia; Chris Nyong, Auditor-General of Cross-River State, as well as representatives from the ‘Big 4’ Accounting firms in Nigeria – KPMG, Ernst & Young, PwC and Deloitte, amongst others.