Some analysts have made projections on the trajectory of the nation’s economy in 2021, saying the year will be challenging but there will be light at the end of the tunnel.
They spoke during an interactive zoom webinar by the Nigerian-British Chamber of Commerce with theme, “ 2021 Economic Outlook’’.
Mr Bismarck Rewane, the Keynote Speaker, said that 2021 would be a year of economic reform with gradual recovery in domestic economy.
Rewane, Chief Executive Officer, Financial Derivatives Company Ltd., said: “So many things happened in 2020.
“ In Nigeria, we went from virus to lockdown, to recession, double digit inflation and low interest rates. Nigeria also has an inflation situation.
“There were high Premium Motor Spirit (PMS) prices, electricity tariff hike, low interest rate, #End SARS protest and insecurity.
“We had negative growth of -3.62 per cent, high inflation of 15.7 per cent and in January 2021, it is expected to be at 16.1 per cent.
“However, 2021 it’s going to be different because we are going from disruption to eruption.
“The year 2021 will still be challenging but there is a light at the end of the tunnel. It will be a year of economic reform,” he said.
According to him, there will be gradual recovery in domestic economy, likely increase in the Diaspora remittances and positive growth in Q3 of 2021.
He said that inflation would remain a problem, currency pressure would persist and adoption of exchange rate flexibility was expected.
Rewane said that the drivers of change in 2021 included African Continental Free Trade Area (AfCFTA), ECOWAS protocol, changing trading partners, FOREX rationing, domestic refining capacity, removal of subsidies and political squabbling.
For the consumers in 2021, Rewane said that consumer disposable income would remain squeezed due to VAT increase at 7.5 per cent, electricity tariff hike and increase in price of PMS.
“The sectors with vast opportunities in 2021 are manufacturing, ICT, telecommunications, construction, trade and agriculture.
“Manufacturing will benefit from the Central Bank selling of foreign exchange, intervention programmes and AfCFTA; companies like Nestle, Unilever, Dangote group will increase their production and export across the boarders and get the benefits.
“Telecommunications will also experience considerable growth and trade, wholesale and retail trade, which is about 16 per cent of the Gross Domestic Product (GDP) will expand.
“Agriculture needs to be supported because of the disruption due to herdsmen.
“There will be gradual recovery in manufacturing, trading and the real estate sectors, while sectors that will struggle initially are education, aviation and real estate.
“But as the year goes by, all the sectors will begin to move,’’ he said.
Rewane advised that the Central Bank of Nigeria comes to terms with the fact that without inflation being curbed, investments would be low and growth tepid.
Contributing, Mr Innocent Ike, Acting Managing Director (MD) and Chief Executive Officer (CEO) of Polaris Bank, said that economic activities will be subdued and there will be uneven global growth in 2021.
“For oil prices, because economic activities at the global level is not fully back because of the second wave of the COVID-19, oil demand will be muted.
“For a country that largely depends on oil, that means further challenges for us,’’ he said.
He said that global capital flow will be adversely affected and advised that technology be adopted as a way of life.
On the external drivers for economic recovery, he said the nation should look forward to demand for our goods and services, supply of capital, input, technology, equipment, raw materials and manpower.
He also advised that the nation must begin to think of ways to source for our input, raw materials, capital and other resources locally.
Ike urged the private sector to work with the government and identify opportunities to de-emphasise imports, build local capacities and drive economic development on a sustainable basis.