Economic and financial analysts have said
that 2014, being a run-up to the election year in the country, is a
waiting period for most investors as they will like to see the direction
the country will go before making any investment decision.
According to the experts, the
pre-election year is a trying period and most investors will watch with
keen interest as events unfold in the political and economic landscape
of the country.
Analyst and Director at DLM Investments
and Securities, Mr. Idowu Ogedengbe, says although a lot of activities
in the year will be dependent on the budget, political activities will
still dominate the country.
He said, “This year is the run-up to the
election, so investors are sceptical. There are quite a number of people
that are looking from the sidelines.”
Ogedengbe noted that there would be so much spending this year as political activities would take the centre stage.
He, however, hoped the government would also pay attention to the economy, rather than political activities alone.
The Managing Director, Financial
Derivatives Company Limited, Mr. Bismarck Rewane, equally posited that
this year would be a time most investors would rather want to wait and
see events unfold in the economy, especially the political aspect due to
the elections coming up in 2015.
However, he noted that much spending due
to political activities would translate to much consumption, adding that
the development would lead to a boom for consumer goods companies.
Rewane pointed out that he was not too sure if there would be much jobs and investments because 2014 is a pre-election year.
He explained, “Jobs are a function of
capital formation, and the level of capital formation in 2014 may not be
as high as envisaged because all the focus will be on electoral
activities. New investments will come in 2015; year 2014 will be a year
of wait-and-see.
“What you see in 2014 will be the result
of what happened in 2013. So, the jobs you see in 2014 are the results
of the investments you saw in 2013. The question you need to ask is what
were the investments made in 2013? If there were no new major
investments in 2013, you may not see the result.
“But in 2014, if the people are clear
that the political situation has improved, then they will begin to
invest; you will see the effect in 2015. 2014 is not going to be a bad
year, it’s not going to be different from 2013, just that growth will be
higher and business activities will be more because of the election
activities.”
But Ogedengbe said the coming on board of
a new governor of the Central Bank of Nigeria by June when the
incumbent, Mr. Lamido Sanusi, leaves, should usher in a new monetary
policy.
According to him, Sanusi’s tight monetary
policy stance did not help growth and investments as the policies
affected the growth of the real sector.
“The CBN’s tightening monetary policy
stance did not really help the economy. We expect a new CBN governor to
provide liquidity in the financial system. We expect him or her to relax
the monetary policy to provide money for the real sector to enhance job
creation.
“We also expect the reforms in the power
sector to start yielding results this year. Once the power firms kick
off, we expect to begin to see the effect on companies by way of
increased profitability occasioned by reduced operating cost,” Ogedengbe
said.
For Rewane, the next CBN governor will
have to align monetary policy with monetary conditions because there is a
difference between the two.
The FDC boss said he knew the monetary
policy in 2014 would change in line with the new players in the Monetary
Policy Committee occasioned by the change in the leadership of the CBN.
Rewane said, “More importantly, we must
note that the Nigerian currency is already coming under pressure. Some
things will have to happen to support the currency. The high Monetary
Policy Rate didn’t go well for some people like manufacturers, but they
also benefitted from it. What they lost in terms of high lending rates
from banks was gained in a stable exchange rate. They were able to bring
their goods in at fair prices.
“The MPR is an indicative rate; it is a
benchmark rate which other rates are tied to. So, if that rate moves in
any direction, it will move other rates. However, we are moving into a
new monetary policy era. There will be a new committee, so we don’t know
what will happen.”
Sanusi has, however, reportedly argued
that relaxing the monetary policy makes no meaning if there is no
electricity to power the real sector.
No comments:
Post a Comment