Nigeria’s Economy Will Not Remain Same Post-Recession – Analysts

Nigeria’s Economy Will Not Remain Same Post-Recession – Analysts

After three consecutive of huge decline, experts at the weekend assured that Nigeria’s economy is poised for a robust recovery from its current recession-mode based on ongoing efforts by the monetary and fiscal authorities.
This, they noted, is based on the fact that the nation’s economy has never strictly followed economic principles, owing to its resilience over the years, among others.
Addressing participants at a one-day stock traders and investors summit in Lagos organized by Investdata Limited, the analysts is at the verge of recovering, hence the need to put structures in place that would ensure that post-recession, Nigeria’s economy does not return to where it is coming from.
According, Alhaji Garba Kurfi, a stockbroker and chief executive of APT Securities & Funds Limited, one of those measures is the concrete efforts at diversifying the economy towards agriculture.
The effort, he said, reflected in the latest GDP figures presented by the National Bureau of Statistics, with agric sector accounting for 28.65% in Q3, the largest since the 1970s, up by 4.53% from Q2’s 22.55%, noting that “the recession has only awaken our consciousness to the need to do things right. Those in the rural areas are happy about the recession because, today they get better value for their agric produce, unlike before when they produce at N10,000 and cannot sell because the imported brand is going for N8,000 per bag.”
Another good thing, he said, is that for the first time since 2008, members of the OPEC unanimously agreed to cut production quota by 1.2 million, exempting Nigeria, Libya and Iran; while none members- Russia has offered to reduce its output by over 0.3m barrels per day as a way of shoring up price, which is good for Nigeria’s efforts to build foreign exchange earnings and reserves, to be helped by ongoing negotiations with the Niger Delta militants, and give investors a measure of confidence in the economy.
For David Adonri, managing director of High Cap Securities Limited, the OPEC quota cut is a welcome development and a sign of wonderful days ahead, particularly for Nigeria.
But according to him, “the fear is if the price of crude get oil gets to the point where shale oil becomes profitable again, we could not get into trouble against. I foresee $60 per barrel.”
Also, Kurfi noted that the Nigerian Stock Exchange (NSE) has recorded negative double digits growth for the third consecutive year, beginning in 2014 when it was the worst performing equities market in the globe after losing 16%.
The third year of negative growth, he noted in his presentation: “Outlook for 2017 and how to navigate the stock market in a recession economy,” negates the history of the Nigerian bourse.
Many stocks on the exchange, he noted are selling at their worst price after listing their shares for trading, just as many recorded their worst prices in decades during the current year, a situation discerning investors would be watching keenly and taking advantage of the rock bottom prices to harness value in the coming months.
A situation where market capitalization of companies listed on the Nigerian Stock Exchange have lost a cumulative N3.2 trillion in 22 months to October 2016, he assured, may not arise again in the next 15 to 20 years.
He lauded the Federal Government’s decision to boost the economy through its N-Power programme with capital expenditure of N1.9 trillion, just as the ongoing fight against corruption that has been extended to the judiciary.
He lamented taking a case to court eight years ago, which has not even taken off the ground.
Kurfi believes that these efforts, including the negotiations with the Niger Delta militants and the fight against Boko Haram insurgency in the North East would greatly boost the economy in 2017.
Back to the stock market, the stockbroker urged equity investors to change their investment strategy and play short term by not buying to hold at a time when “cash is king.”
According to him, companies “that gave you interim dividend are telling where to go” in terms of those to invest in, just as stocks with good dividend yield… look for stocks with multinational and institutional investors, and you would never be wrong.”
Continuing, he urged the participants, “identify volatile stocks, make money, exit… don’t lament. If you continue lamenting , you are deceiving yourself… If you buy a stock and you make 10 to 15% loss, sell… cut your loss… cash is king, always hold cash and stand by.”
Adonri, who spoke on “the safest recession-proof investing techniques for 2017,” noted that the capital market is awash with opportunities for investors whether the economy is growing or not, with falling equity prices an opportunity for bargain hunting.
At a time when irrational investor behaviour is commonplace during a market collapse, he enjoined investors to reverse their strategy at a time like this and embrace counter-cyclical stocks because they do well at this time.
“This group is composed of companies with dividends and massive balance sheets or steady business models that are recession-proof. These high yield stocks such as fast-moving consumer goods, pharmaceuticals and tobacco tend to hold up better,” reminding all that it is during challenging times like recession that all of the great fortunes are made.
“Recessions can provide you an opportunity to buy assets cheap and the best time to invest, “meaning you can pick up stocks, bonds, mutual funds, real estate, private businsses and more for far lss than you could just a few years prior.
“Only those who improve their position in the market will smile next year because those who threw away their assets will come to beg you for them later.”