INVESTORS CAUTIOUS ON NEW GOVERNMENT

INVESTORS CAUTIOUS ON NEW GOVERNMENT

on: June 01, 2015

Private sector industry leaders have taken cautious positions in reaction to the change of government particularly at the national level in Nigeria, thus throwing the markets into limbo which may linger until definite statements on the direction of economic policies are made by President Mohammadu Buhari. Last Friday ex-president Goodluck Jonathan handed over Nigeria’s economy in perhaps its most trying moment since the advent of the current democratic dispensation.

Economy analysts have highlighted the public sector and macro-economic challenges faced by the Jonathan administration in its last one year as a major source of concern in the private sector.

Key amongst the challenges is the massive and sustained decline in government revenue due to lower crude oil prices. Inflation is also tiptoeing northwards while external reserves continue to dwindle as monetary policy tightening is almost reaching its elastic limit. Rising government debt, fuel scarcity crisis and epileptic power supply are also some of the challenges that the new government will have to grapple with to impact positively on the private sector. Against the backdrop of the foregoing, economy analysts at Afrinvest, a leading investment banking group in Nigeria, last weekend reiterated its outlook for key macro-economic indicators post transition.

On its bear case it sees oil price trading below US$60.00 in the near to medium term while government revenue base will remain low.

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