Cabinet Delay Slowing Down Economy – Stakeholders

With President Muhammadu Buhari yet to name new ministers who will drive the economy during his second tenure in office, analysts and economists in the country have said the delay in forming a cabinet will further slowdown the growth of the economy.

Nigeria’s growth has been forecast at 3.5 per cent but analysts say a delay in the budget and lack of ministers to lead the pathway for the economy will see the country falling short of the predicted economic growth for 2019.

According to managing director of Afrinvest Securities Limited, Ayodeji Ebo, the prolonged delay in forming the cabinet and passing the 2019 Appropriation Bill into law has formed an air of uncertainty over the economy, impacting business activities negatively.

He said: “As a result of the election, growth level in the first quarter was not very impressive. So the continuous delay of the passage of the budget and appointment of the cabinet would cause a set back to the anticipated investments in the economy, especially for the foreign investors as they need to know those that will drive the economy.

“The continuous delay will lead to a slowdown in economic activities based on what a lot of local and foreign investors are still waiting to see before they can take major business decisions. They want to know and understand the view of the minister of finance; who is going to be the next minister for petroleum and some of the critical sectors like power and so on. The permanent secretaries have a limitation of how much decisions they can take.’’

Senior lecturer, Department of Economics, Pan-Atlantic University, Dr Bongo Adi, noted that if there is a further slide in the price of crude oil in the international market, there is a higher possibility of the economy falling into another recession.

Bongo while noting that there is no sense of urgency on the part of government to tackle the economy for growth, said the economy is moving at a very slow rate and is most likely not going to meet the growth forecast. “We have not been able to optimise our production. We are expected to produce 2.2 million bpd but we have not hit that target.

“I think the average for the past few months has been 1.7 million bpd, so we have not actually hit the target. Given that the budget is benched marked on that, it means that we are again missing our revenue target. Supposing that oil price goes down, it worsens the situation for us. 2016 was not the first time that we got into a recession, Nigeria had been prone to recession over time.

“We have had about three or four bouts of recession. Each time it came, there was that sense of urgency even in the military era and they worked hard to record about seven per cent post-recession growth but in this case, we have only managed to record about 1.5 per cent post-recession growth and it hasn’t improved since 2017 that we got out of the recession. This is the third cycle post-recession and the economy has yet to significantly improve.”

Also, operators in the capital market believe the delay in appointing ministers and other key officials by the President is among the major deterrents to investment in the nation’s capital market.

Speaking on the performance of the equities market, the chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion stated that the continuing slide in investor confidence in the nation’s economy and weak market fundamentals have also reflected in the performance pattern before and after the 2019 general elections.

Also, the managing director of HighCap Securities Limited, Mr. David Adonri said that investors, especially foreigners, were unlikely to make significant investment in the market, if any at all until, they had a clear picture of the policy direction of the government.

According to Adonri, the policies of the government would determine the return of the foreign investors and an upturn in investment in the capital market.

“The economic policies of the government will make the capital market attractive or unattractive for investors, both local and international investors. If the government comes up with policies that make Nigerian instruments very attractive and then stabilises the exchange rate or the exchange rate is at a level where foreign investors believe it will not depreciate materially further, then you will see the return of foreign investors, which may up their share in the market,” he said.

Also, a senior stockbroker with Calyx Securities Limited, Tunde Oyediran said that the delay in the cabinet is obviously slowing down activities of the Nigerian equities market.

He noted promptness in carrying out that economic policies propel investors’ investment in the country, saying that delay in appointment and policies pronouncement create uncertainty to the investors.

“This is not good for the market as we want a government with timely pronouncement for investors to market a rightful decision,” he said.

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