Lagos - A local finance house is upbeat the
President Muhammadu Buhari administration will eventually resuscitate the
economy owing to its endorsement internationally.
“The Buhari presidency and the APC (All Progressives
Congress) secured a strong popular mandate in elections in March 2015, and
enjoy widespread international goodwill,” First Bank of Nigeria’s (FBN’s)
Capital Markets entity said.
“Their agenda is to diversify the economy away from oil
and replace the rentier model. Previous administrations have gone down this
road and abandoned the journey in the face of opposition from vested interests.”
FBN noted the federal government sought to achieve its
agenda fiscally, and did not expect to be rescued by a marked recovery in the
The financial firm noted government’s fiscal plans were
expansionary to allow for higher capital spending, funded by sharply increased
non-oil revenue collection.
“This will require sizeable efficiency gains, anti-fraud
measures and the squeezing of unremitted dues from all taxpayers. We do not
think the FGN is fiscally irresponsible, and expect it to trim spending in the
event of revenue underperformance.”
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FBN projected an “unexciting growth dividend” this year.
“We see a pick-up in GDP growth to 4,5 percent in 2016 on
the back of fiscal expansion and sector-specific reforms. Over time, household
consumption will recover, leading to acceleration in growth.”
The financial house meanwhile projected the devaluation
of the local currency, which has lost power against major currencies amid the
Central Bank of Nigeria has resisted such calls
The Naira is trading at US$0,005.
FBN forecast the exchange rate to buckle under the
“Exchange-rate stability remains the objective
of the CBN. Weak oil prices and therefore weak fx (foreign exchange) inflows
point, however, to a devaluation in 2016.”
- CAJ News