11 August 2014

Nigeria: 'Boko Haram Threatening Nigeria's Economic Growth'

The increased act of terrorism by the Boko Haram sect is threatening Nigeria's economic performance, a report has stated.

The Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, stated this in his monthly economic news and views presented at the Lagos Business School's executive breakfast meeting recently.

The National Bureau of Statistics (NBS) had in July, released the first growth data under the revised GDP, showing a drop in first quarter growth to 6.21 per cent, from 6.77 per cent in the fourth quarter of 2013. The growth was two per cent lower than originally projected. It was 5.5 per cent in 2013 and 4.2 per cent in 2012.

More than $21 billion of foreign direct investment poured into Nigeria in 2013, up by 28 per cent from 2012. The country indeed has attracted the most foreign direct investment in sub-Saharan Africa since 2007, according to Ernst & Young.

But analysts have warned that the country must show enough commitment to tackling the activities of the terrorist group going forward.

"Boko Haram insurgency continues to reduce the market size and production in the north-east/central regions," the FDC report stated.

Continuing, it noted that forex traders' sentiment in July was positive, thereby leading to exchange rate convergence between the official and interbank markets of 14.64 per cent to N6.12 According to the report, money supply (M2) increased to N15.93 trillion in June, representing a growth by 0.13 per cent month-on-month. However, on an annualised basis, it showed that M2 grew by 3.31 per cent, driven by an increase in both net domestic and foreign assets.

Money supply is expected to increase in the second half of 2014 due to increased government and security spending as well as the Asset Management Corporation of Nigeria (AMCON) bond redemption.

The FDC report pointed out that at its current level of $39 billion, the country's external reserves would be able to cover 8.2 months of import. "Speculative attack on the naira is over for now. Oil price averaged $109pb in July while production was flat at 1.9mpbd," it added.

Furthermore, it showed that real estate activities slowed down in July due the rains, saying that some players in the construction sector were gradually winding down operations due to political uncertainty.

"The sector remains attractive to foreign investors especially in Lekki due to upcoming developments - Dangote refinery, airport, seaport. There was increased demand for office space and flats in Ikoyi and Victoria Island," it stated.

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