BusinessDay 21 Aug 2018

34 BUSINESS DAY
C002D5556
Tuesday 21 August 2018
NEWS
Investors slam Buharinomics as markets...
Continued from page 1
“The Nigerian economy has
been very unconducive for business
since 2015 which can explain
why stocks have performed so
poorly since President Buhari defeated
Goodluck Jonathan in the
election polls. Economic growth
slowed, political uncertainty increased,
Nigeria experienced a
currency crisis and insecurity in
the north and middle belt held
back market performance for
most of the past 3 years,” said Faith
Ogedengbe, Research Analyst,
GDL Asset Management.
Following the current President’s
swearing in on May 29
2015, it took six long months for
the Presidency to name, screen
and approve its cabinet members,
a process that never exceeded 2
months since 1999.
The political uncertainty during
this period pulled the index down
by around 14.87 percent before the
ministers were finally appointed in
November 2015.
More trouble followed in 2016
as the problem moved from political
to the economy.
The continued decline in crude
oil prices, followed by the first
economic recession in 25 years
weighed heavily on stock prices in
2016. Also in 2016, Nigeria suffered
the biggest currency devaluation
since 1999 in 2016 when Naira to
US Dollar exchange rate moved
from the official figure of 197 N/$
to 305 N/$. The inflation rate in
the country doubled as a result
of huge currency devaluation as
inflation neared 20 percent at its
L-R: Obinna Muogboh, faculty, Lagos Business School and Director of Programme, Management Development Institute;
Oseyemwen Ndudi, participant at the programme; Bayo Aderiye, chairman, Health Service Commission, Lagos State;
Rene Kiamba, senior manager, sub-Saharan Africa, Global Community Impact, Johnson & Johnson, and Nicole Zefran,
communications and administrative officer, Global Business School Network, at the graduation ceremony for managers
and leaders of healthcare organisations held at the Sojourner by Genesis Hotel, Lagos.
Continued from page 1
of the year, when it was 1.95 percent,
Nigeria’s statistician-general Yemi
Kale said in an interview with Arise
TV aired on Saturday.
While the information is still being
calculated, “it is looking quite
flat,” Kale said.
“I expected the numbers should
be much better. I think the economy
is still struggling.”
The statistics office is scheduled
to release its second- quarter growth
report on Aug. 27 as compiled from
the NBS data release calendar.
peak in 2016.
As a result of the economic
headwinds, 2016 became the year
of the great loss for companies
on the local bourse. A total of 17
companies from the NSE 30 index
reported significant losses on the
books as the economy slumped to
a full year negative growth of -1.6
percent. NSE bellwethers that saw
their earnings per share decline
by over 50 percent in 2016 include
Nestle Nigeria, Ecobank, Seplat,
Transcorp, Guinness and PZ Cussons.
Lafarge Africa and Nigerian
Breweries saw their EPS decline by
more than 25 percent.
The stock market fell by around
9.41 percent in the first five months
of 2016 as the administration delayed
5 months to pass an economic
stimulus budget to pull the
economy out of recession. The stock
market rallied 4.56 percent till year
end after the budget signing which
helped to offset some of the losses
earlier in the year, bringing the total
market loss in 2016 to 5.27 percent.
In 2017 as the economy rebounded
to a full year growth of 0.8
percent, the stock market rallied 42
percent as investors got excited by
the economic recovery story which
was largely supported by the strong
rebound in crude oil price.
The stock market this year has
given up a significant amount of
its gains from last year as the NSE
index is down 9.36 percent year to
date largely due to the political upheaval
in the country as the general
elections draw closer.
Stanbic IBTC bank said in an
investor presentation published
Nigeria’s economy struggles as NBS sees...
Nigeria’s economy slumped after
a 2014 crash in oil prices. It returned to
growth in the second quarter of 2017 after
shrinking in the previous five periods.
The economic recovery story of
Africa’s largest economy has been
a tale of fragile growth, eroded purchasing
power of households and
unfriendly borrowing rates which
have inhibited economic expansion.
The International Monetary Fund
(IMF) however expects the economy
of Africa’s most populous nation to
expand by 2.1 percent for 2018, while
the international organisation also
projects the growth rate for Nigeria’s
yesterday that it sees the political
environment as a key risk to
income in the second half of the
year while International Monetary
Fund (IMF) forecast economic
growth in Nigeria this year will be
2.1 percent a far cry from the periods
between 1999 and 2014.
The average economic growth
during President Olusegun
Obasanjo’s regime was 8.5 percent
between 1999 and 2007. Under the
stewardship of President Goodluck
Jonathan between 2011 and 2015,
Nigeria’s economy expanded an
average of 4.7 percent, almost
half the growth achieved by his
predecessor.
But under President Buhari, average
economic growth fell to a paltry
0.61 percent between 2015 and
2017. If economic growth improves
to 2.1 percent this year, average
economic growth under Buhari
will improve to 0.98 percent.
In the last six months alone, the
market is down 17.44 percent. With
analysts expecting stock prices to decline
further as political uncertainty
ravages the stock market, it is not unlikely
that come February at the day
of election, the market performance
under the current administration
falls into negative territory.
The NSE All Share Index
dropped by around 602 points on
Monday, representing a decline of
1.71 percent as the market closed
at 34,663.48 points.
Similarly, the Market Capitalization
decreased by N220.07 billion,
closing at N12.65 trillion. The market
dipped significantly on the first trading
day since Buhari announced
during the weekend that he returned
to the country to jail more looters.
GDP in 2019 to be 2.3 percent.
The 2018 and 2019 GDP prediction
for Nigeria is far less than the
figures IMF forecasted for the Africa
continent. The Washington-based organisation
said in its World Economic
Outlook that it expects the SSA region
GDP to increase 3.8 percent in 2019.
On whether or not the political
uncertainties surrounding the forth
coming election has effect on the
economic growth, the statistician-
General, Kale said the political season
in Nigeria and for most developing
countries always affect the economy
and it could be positive or negative.
“Positive in the sense that if the atmosphere
is not too toxic, then there
Tinubu nursing presidential ambition in...
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This, he said, explains why Tinubu
is supporting President Muhammadu
Buhari’s re-election bid
in 2019, with the hope that power
will return to the South West in 2023.
The latest revelations seemed to
have cast a doubt on the promise by
the Presidency that the Igbo would
produce the President in 2023,
should the region vote for Buhari in
the next general election.
The Senate President was reacting
to a statement credited to Tinubu
where he accused Saraki, Speaker of
the House of Representatives, Yakubu
Dogara and other defectors that
left the APC to PDP on account of
automatic tickets promised to them.
In a statement personally signed
by him on Monday, Saraki traced
the sour relationship between him
and Tinubu to his opposition to the
Muslim-Muslim ticket when the ex-
Lagos State governor wanted to be
Buhari’s running mate in the build
up to the 2015 general elections.
Recalling the meetings he held
with the APC stalwart to resolve the
crisis in the party, Saraki said: “Tinubu
himself will recall that during the
various meetings he had with me at
the time he was pursuing reconciliation
within the party, I raised all the
above issues. I can also vividly recall
that he himself always expressed his
displeasure with the style of the government
and also mentioned that he
had equally suffered disrespect from
the same government which we all
worked to put in office. I also made
the point that whatever travails I have
gone through in the last three years
belong to the past and will definitely
not shape my decisions now and in
the future.
will be increase in economic activities;
people will be spending, politicians
will be spending and there will
be a bit more money in the hands of
consumer and the economy tends to
benefit from that,” Kale said.
On the other hand, when the
political season is toxic, “foreign
investors will get scared, they will
be taking their money, I think that
is what is happening in the Nigeria
stock Exchange (NSE), and for the local
investors, they will apply the wait
and see approach,” kale explained.
Comparing Nigeria with the United
States, Kale said Nigeria is unlike
the U.S where investors know that
despite the election uncertainties,
“However, during those meetings,
the point of disagreement
between me and him is that while
I expressed my worry that there is
nothing on ground to assure me
that the administrative style and
attitude would change in the next
four years in a manner that will enable
us deliver the positive changes
we promised to our people, he
(Tinubu) expressed a strong opinion
that he would rather ‘support a
Buhari on the hospital stretcher’ to
get a second term because in 2023,
power will shift to the South-west.
This Tinubu viewpoint was not only
expressed to me but to several of my
colleagues. So much for acting in
national interest.
“It is clear that while my own decision
is based on protecting collective,
national interest, Tinubu will rather
live with the identified inadequacies
in the government for the sake of fulfilling
and preserving his presidential
ambition in 2023. This new position
of Tinubu has only demonstrated
inconsistency, particularly when
one reviews his antecedent over the
years.”
The Nation’s Number Three
Citizen accused the Buhari administration
of consistently treating
the “legislature with contempt and
acting as if the law making body
should be an appendage of the
Executive.”
According to him, the government
excluded many stakeholders
who worked strenuously to get the
administration into office and treated
them like second-class citizens.
He pointed out that the National
Assembly has not been constructively
engaged or carried along in key
policy decisions, particularly those
that require legislative approval.
EXPLAINER: Lagos embarks on Geographic...
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Poland and ongoing post-delivery
training.
Speaking at the signing of the
MoU, Melchior said that, the
project is currently the largest
Geographic Information System
(GIS) project in West Africa and a
major export of technology from
Europe to Nigeria.
According to him, one of the
key subjects discussed during
the meeting was the pioneering
nature of this project as the delivered
UAVs constitute the most
reliable, safest and cheapest way
to accurately capture cadastral
data less than 10cm accuracy on
an ongoing basis.
The Asseco CEO said that,
“The platforms delivered have
been internationally awarded in
Poland, Australia and the United
States. Their flights can be fully
automated and they possess several
emergency features, such as
parachutes enabling repeated
vertical landing.
“The six operators of Lagos State
Ministry of Science and Technology
will constitute a competence hub in
Lagos and Nigeria in this field.
“The project is handled in full
cooperation with the Nigerian Civil
Aviation Authority and the Office
of the National Security Adviser to
ensure adherence to all applicable
safety and control procedures,”
Melchior said.
Hakeem Fahm expressed appreciation
to Asseco Software
Nigeria for the professionalism and
performance so far.
“Beyond the strategic collaboration
between Lagos State Ministry
of Science and Technology and Asseco
Software Nigeria, this project
is a practical example of localisation
of technology and knowledge
transfer from Europe to Nigeria,”
Fahm said.
the economy is structured to work
in a particular way and the system
continues to work.
“But in Nigeria we understand
that the system and the virtual system
are tied to whoever wins, so
everybody is nervous; who is going
to win? Will the person change the
policy? And so when it gets toxic it
has a way of squeezing the economy,”
kale concluded.
Nigeria’s rising political tensions
leading to the 2019’s presidential
elections and a broader emergingmarket
sell off have taken a toll on
its Stock Exchange.
The local bourse has returned
-7.59 percent year to date (YTD).