What drives Nigerian economy?

Summary of Yesterday’s LBS lecture on the implications of the forth coming elections on the economy
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What drives Nigerian economy?

(1) External Macroeconomic Environment
(2) Domestic Macroeconomic Environment

Factors that influence the Macroeconomic Environment are;

(1) Policies
(2) Trade
(3) Capital Flows
(4) Diaspora Transfers
(5) Global Conditions

Critical outlook;

(1) Interest Rate
(2) Strength of the US Dollars
(3) Global growth prospects
(4) Price of Oil
(5) Oil production depending on stability and quota
(6) Blocking of leakages & Public finance reforms & Recoveries
(7) Right decision on MPR
(8) Peaceful Election in 2019
(9) High foreign reserves
(10) Budget deficit
(11) Inflation and strength of the Naira
(12) Tight Fiscal Conditions

The 2019 Elections & Your Business;

(1) Where are we now and what are the issues?
(2) Prior to Elections - Is there anything we can see?
(3) What are we looking at as a Corporate Client?

Capital Flows;
(1) For the past 3 months, we have seen Net outflow from the country
(2) CBN has re-emphasised a stable currency and are ready to support the Naira. Which means CBN will introduce higher interest rates to maintain stability and access to credit will be affected and tough, hence is not advisable to borrow now.
(3) 31% of the economy is currently contracting while the remaining 69% is what we are trying to grow.
*Not too good for the economy.
(4) We are only experiencing 7% of GDP growth in the economy.
- 4% of GDP is coming from Oil
- 3% of GDP is coming from Non-Oil
*Not good for the economy

Critical Issues during & after the Elections;

(1) What is the disposition of the Govt. in the event that it loses?
-  Will there be stability & Smooth transition?
-  How will key indicators react to the signals communicated by electioneering
-  How will the policy conversion be re(framed) by the Elections & their possible outcome?
-  New Helmsmen at CBN?
-  New Administration?
-  Signals communicated by first steps (including composition of “Core” or Kitchen cabinet.

How will Macroeconomic indicators respond to Electoral Uncertainty;
(1) Inflation will increase
(2) Foreign portfolios investment will decline
(3) Exchange rate instability? (Our currency now is over valued by 10%)
(4) Implications of reserves? (Threshold of reserve is $34.3B, if it goes below this value, then we have a crisis.

How do Elections affect Investors;
- Our Politicians have no ideology
- Credibility of counted votes still an Issues 

Equity Market Experience Significant Correction owing to heightened domestic uncertainty;

-   Market is headed SOUTH (down)

Corporate are contending with tight margin Conditions;

-  Production Cost is high
-  Second Qtr, we observed declining inflation in consumer prices
-  Corporate margins are under pressure
- Sales growth has slowed down
-  Growth has been 1.8%

Performance of sectors;

- Real Estate is badly affected
-  Agriculture is growing at 1.2%
- Oil is about 9.5%
-  Manufacturing is slightly below 1.2%

Conclusion;

If Elections goes on smoothly;

-  Cost of funding might still be an issue
-  Slow Growth will continue
- Debt Issues
-  NLC wage demand
Etc