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Business News of Sunday, 12 June 2022


‘Telecoms, financial services, others responsible for Nigeria’s growth’

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The telecommunications and financial services sectors, as well as investment in strategic industries, are responsible for Nigeria’s economic growth resilience according to the Chief Economist, African Export Import Bank, Dr. Hippolyte Fofack.

The economist said Africa had exhibited remarkable growth resilience in recent years bouncing back from its first recession in a quarter of a century, with aggregate output expanding by 6.9 per cent in 2021.

He disclosed this in a report titled, ‘Africa’s 2022 Growth Prospects: Poise under Post-Pandemic and Heightening Geopolitical Pressures.’

Fofack said, “Despite the protracted negative effects of conflict and insecurity, especially in the Sahel region, members of the Economic Community of West African States are also expected to enjoy robust growth in 2022.

“The sub-region will be supported by the usual assortment of strong performers (Benin, Cote d’Ivoire, Ghana, Guinea and Senegal), and by Nigeria, where the purchasing managers’ index (PMI) rose sharply to 57.3 in February 2022, the largest expansion since November 2019.

“The telecommunications and financial services sectors, as well as extensive investment in strategic industries, are enhancing growth resilience in Nigeria. The oil sector, too, will benefit from a gradual easing of OPEC+ production cuts and higher prices, which have received another boost from the Ukraine crisis.

“The latter are expected to remain above the country’s fiscal breakeven price of $62 per barrel.”

It stated “In effect, in addition to supporting the recovery of Nigeria’s economy through counter-cyclical credit expansion, these measures are accelerating the diversification of sources of growth and trade.

“Building back better is crucial in a country where vulnerability to commodity price cycles has long stymied its ambitions for macroeconomic stability and long-run growth. Compared to 2019, the growth in credit exceeded N4tn ($9.6bn) and targeted critical sectors such as manufacturing, which has sustained the growth of labour-intensive employment opportunities and acted as a stable vector out of poverty.

“That industry had been long neglected despite its tremendous potential for effective integration into the global economy — in which trade has been driven by manufactured goods with increasing technological content — and for inclusive growth through the expansion of stable employment opportunities.

“Manufacturing received the largest allocation of domestic credit to the private sector last year, a trend that forecasters expect to continue. Policymakers are committing to diversification away from oil and gas, as this will reduce excess vulnerability to boom-bust cycles and sustain the broadening of fiscal space to strengthen the foundation of macroeconomic stability in the medium and long term.”