Industrialists back CBN on monetary policies
appear moderate as commodity prices have remained low, with oil prices reflecting strongerthan-anticipated supply and inflationary pressure softened.
“Financial market sentiment has generally been strong with continued gains in the Nigerian equity and debt markets. Foreign share of total trade in the local market has gathered momentum even as institutional investors continue to account for a substantial share of transactions. Local and foreign investments are expected to continue to take profit on the low price financial instruments,” he said.
The Nigerian Stock Exchange (NSE) has gained 40 per cent year-to-date following the confidence of foreign investors in the local economy and this goes to show that the country’s economy is on track to recovery.
However, the chamber believes progress can still be sustained through exchange rate stability to preserve the success of the Investors and Exporters’ (I & E) window of the foreign exchange market occasioned by foreign investor confidence together with the zeal and commitment of Nigerian exporters who are conducting their transactions at the window rather than the parallel market.
The recent sustained rate convergence across different segments of the forex market as well as exchange rate stability is making access to forex easier for businesses.
Commenting on the steady increase in foreign investment, he recalled that according to the Nigerian Investment Promotion Commission (NIPC), the country’s economy attracted US$22 billion (N7.17 trillion) Foreign Direct Investment (FDI) for 41 projects across 22 states, between January and August 2017.
Recall that the NBS reported that foreign capital importation to Nigeria (was US$1.8 billion in Q2 2017.
“The significant increase in FDI could be linked to the resilience of the economic fundamentals as well as the stability across all segments of the foreign exchange market. The outlook for foreign investment is promising as the potentials for returns on investment thickens,” he said.
The chamber, however frowned at the poor performance of the 2017 budget pointing out that there is a need for complementary policy to cushion the potential impact of the delay in 2017 budget’s fiscal interventions.
To meet the 2017 borrowings targets and to make the 2018 deficit finance projection a reality, real interest rate must be attractive and competitive especially to local as well as foreign investors.
ACCI also observed that the positive growth of the Nigerian economy that started in Q2 2017 is gathering momentum with the real growth of the economy set to accelerate in the subsequent quarter.
ACCI considers the skewness of growth toward the oil and gas sector and crop sub-sector of agriculture, while the subdued growth rate of the sectors of the economy with high job propensities in manufacturing, construction, trade, hospital and in general services, to indicate that growth is neither diversified nor broad-based.
The chamber advanced imperative reasons for its position to include: “To avoid potential disruption to the economic growth’s momentum with a view to allowing the economic growth sufficiently create employment and recedes inflation; allow the economy find and settle at a new price and wage equilibrium level; give more time for the impact of the fiscal stimulus implemented by the Federal Government to consummate and enable diversified growth.
It is also “To make Nigerian assets, equities, debt instruments relatively attractive and competitive as well as preserve returns on investment in the near term with a view to have real positive interest rate,” the Chamber said.