Standard Chartered Bank's Chief Africa Economist Razia Khan, yesterday advised the federal government to initiate reforms that would prevent the economy from external shocks in the event of a slump in crude oil price.
Speaking at the GTR Conference in Lagos, the economist stressed that Nigeria with its demographic and potential, has the capacity to be much-more than an oil producer.
She pointed out that the sharp drop in crude oil price around year 2015, was an opportunity to reform the economy.
"The dependence on oil is still very much in place. Is Nigeria preparing for a situation where oil prices could weaken again? The real question for the Nigerian economy is can it move away from its basic oil dependency?" she added.
In her assessment of the sub-saharan Africa economy, Khan pointed out that Nigeria and South Africa, which hold over 50 per cent of the region's GDP, largely determine the performance of the region's GDP.
"For Nigeria, a lot of consensus for the country's GDP growth hovers around two per cent," she said, even as she welcomed the return to the January to December budget cycle in the country as well as efforts by the Central Bank of Nigeria to boost private sector credit.
"It is too soon to see the impact of the AfCFTA. But what do know is that there is a broad base agreement to proceed with this exercise that dismantles 19 per cent of the tariff barriers that impedes intra-regional trade and if that is done, it is going to improve trade which is at a reasonable low level.
"One thing we are always concerned about as investors and participants in the African economy, is exchange rate risk," she added.
Commenting on the global economy, the economist said the emergence of the Coronavirus in China poses a challenge to the global Gross Domestic Product (GDP).
"Many of you would understand that this is a precarious time for the global economy and we have not even factored the impact of the Coronavirus in China. What we do know is that in emerging markets, China and India, account for between for 55 per cent of GDP.
"The slowdown in economic activities in China due to the Corona virus will hurt the global economy. This is likely to have a significant impact in global GDP growth and this would see investors pulling back from those risky markets. Another thing that should be watched closely is the oil market.
"Whatever is the near-term impact of the Coronavirus, our view ultimately is that oil prices should be better supported in the years ahead and that is good news for countries that produce oil like Nigeria."
Meanwhile, Rand Merchant Bank Limited, which was one of the leading sponsors of the conference, noted in a report that trade is a major tool for boosting economic growth and capital formation.
"At RMB Nigeria, we have vast experience in facilitating global and international trade by leveraging on our infrastructure encompassing people, process and systems to deliver customized trade solutions for our clients," the bank stated.
It pointed out that RMB Nigeria 's interconnectivity with several banks across the globe harnesses trade opportunities and delivers economic and capital growth to the nation.
"Trade landscape in Nigeria has evolved over the years. As Nigeria is an import independent economy, Trade alliances with countries within and outside Africa is key for the growth of Nigeria.
"RMBN therefore is here to partner with organisations to drive Trade solutions that will enhance business growth in Nigeria.
"We have partnered with various key organisations in Nigeria from multinationals to local corporates to assist in Trade facilitation between these organisations and the rest of the world
"At Rand Merchant Bank, we take Trade Finance seriously. Our solutions which cater to our clients' needs, addresses known risks associated with Trade Finance.
Whether you are an importer or exporter, RMB will help you navigate the waters of international trade and reduce inherent risk. It is for this reason we are recognised as a leading trade finance bank on the African continent," it added.