2023 General Election Will Increase Foreign Portfolio Outflows – Olubi

Speaking on the theme, ‘A Review of 2021 Market Performance and Factors That Will Shape it in 2022,’ he listed other factors expected to cause further outflow to include rate hikes and capital controls by the monetary authorities.

Olubi added that foreign exchange (FX) would likely come under strong pressure as interest rate hikes in advanced economies would result in portfolio outflows from emerging markets.

He noted that domestic investors would be the key players responsible for the movement of the market and liquidity.

"Electioneering, rate hikes, and capital controls by the monetary authorities are expected to cause further foreign portfolio outflows and cause FPIs to remain on the sidelines.

“Even as the economy continues its recovery, corporate earnings of companies in the consumer goods and industrial goods sector are expected to be impacted by high input costs caused by high inflation and higher cost of capital due to interest rate hikes.

"The interest income of financial services institutions, such as commercial banks, is expected to rise in Nigeria, if interest rates rise as expected. This is because the United States could decide to raise interest rates.

"This act by the US could lead to downward pressure on commodity prices, drop in global liquidity, increase in the cost of funds from the international debt market and due to the fact that Ukraine and Russia are still having conflicts, oil prices might go up and production could decrease.

“Companies in the oil and gas sector are expected to have a solid year driven by strong oil prices, increasing global oil demand and OPEC+ cuts,” Olubi said.

He said that with relatively low infection rates and fatalities from the COVID-19 pandemic, the likelihood of an economic shutdown was non-existent.

"The GDP growth is expected to grow by 3.86 per cent in 2022 supported by further improvements in agriculture, manufacturing, services and the oil sector and increased government spending in areas such as advertising, printing, media, among other campaign related sectors.

"A major downside risk to this outlook is the security situation in several parts of the country, capital controls in the FX market and any unexpected severe mutation in COVID-19," Olubi said.

According to him, being an election year, government spending is expected to be at its highest complemented by improved oil revenues.

He said that this would lead to wider fiscal deficit and further increase in an already elevated debt-servicing cost.

On the removal of oil subsidy, Olubi said the suspension would dampen the impact of high oil prices in the global markets to the Federal Government's purse.

"The Federal Government will need to focus on making reducing the leakeages associated with the current subsidy/ under recovery regime," he said.

Olubi said that inflation was expected to rise further, following a direction reversal in December 2021 where inflation rose after an eight month downward trend.

"Although the MPC retained all parameters, they could still be forced to raise interest rate to combat inflation and reduce the negative real interest rate and that is if the U.S decides to raise their interest rate.

"Accordingly, the MPC could be forced to raise Interest rates to combat inflation and reduce the already negative real interest rate," he added.

Speaking on the 2021 performance of the Nigerian economy and its markets, Olubi noted that the country witnessed its largest quarterly growth (5.01 per cent) in over six years in the fourth quarter of 2021 due to positive performance recorded in the non-oil, agric and services sectors.

He pointed out that foreign investors remained on the sidelines as domestic investors, which stood at 77 per cent, dominated the Nigerian capital market (NCM).

The National Engineering and Technical Company (NETCO, a subsidiary of the Nigerian National Petroleum Company (NNPC) Ltd, has reiterated its commitment to empowering youths in its host community with vocational skills to enable them contribute to national development.

Mr Johnson Awoyomi, Managing Director of NETCO, made the pledge on Friday at the graduation ceremony of 13 youths from Iru Community, Iru in Victoria Island Local Council Development Area of Lagos State. The "Batch B Netcropreneur " beneficiaries were trained for three months at the Oluponna Fish Farming and Resource Foundation (OFFER) Centre, Iwo, in Osun State.

The graduands were trained on Agribusiness (crop and livestock farming) and Information Communication Technology, as well as Catering and Craft.

Awoyomi, represented by Mr Ahmad Kigo, Executive Director, Services, NETCO, said the training was one of the many Corporate Social Responsibility services being embarked upon by the company.

He said, "As you all know, we can solve a lot of problems if we adopt the skills acquisition method.

"We can curb unemployment, create wealth and tackle insecurity which is the present focus of the Federal Government.

"If our youths are empowered, there will be less security challenges. We are doing this not only for Iru community, but also for the benefit of the entire nation."

Awoyomi added that the skills impacted on the graduands, ICT, agriculture and event management were in high demand in the present era and would be of great benefits to them.

According to him, government alone cannot do everything, hence there is a need for citizens to play their own part in nation building.

He charged the graduands to take advantage of the opportunity to develop themselves and their community.