 A retrospective look at Nigeria's business sector in 2022 shows a mix of too ugly and not too good. As experts say, with the forthcoming election and change of government built for this year, the sector would likely stagnate. A rewind of 2022 and how the nation's business sector fed pictures a period mad by inflation, high unemployment rate, poverty, insecurity, unfavorable foreign exchange regime, narrow depreciation against other currencies, high energy costs, slow growth domestic product growth, fuel scarcity, flooding, oil theft, conundrum, high interest rates, soaring public debt, and the narrow redesign policy with its attendance implications. On business insights for this week, we will be doing an economic outlook for Nigeria this year. Welcome on board. I am Justin Akadone. Welcome back to store business insights and lost TV Africa. We'll go straight to the discussion for the day. We have gospel, Obele, an economist I'm standing by. Many thanks for joining us, gospel. All right, gospel, let me just start by asking a general question based on what we went through in 2022. If you were to just summarize or just predict as it were, do you see Nigeria smiling before we get into the business of the day? Do you see this year as a better year? Well, it depends on where you're looking at it from. This year is a year that comes with a mixed narrative. On some levels, it will be a better year. On some other levels, it's really going to be a more uncertain year. I would really say it's going to be a bad year, but it's really going to be a more uncertain year. But on some other levels, it's going to be very positive and a very good one. Again, dependent on who is looking, what you're looking, and how you're seeking to engage and interpret chain leadership as a critical pathway to understanding uncertainty and approaching uncertainty with the necessary intelligence around market to unlock and maximize opportunities as they come. All right, gospel, the president just recently days ago signed the 2023 appropriation bill into law. I want to just ask a question right now. The finance bill was not actually signed in my head. I'm thinking that we are projecting revenues and incomes and all of that. Does it really make sense not really having defined the financial law or finance law as we are even talking about how much we are going to be making this year? Finance bill law, you get? Well, I would say it's the development story. It's a development story also because there are a lot of considerations that went into this budget. Let's not forget that the supplementary budget was presented in December and this is still the fresh of the start of the new year, taking to constitutional as well elections. The change is made. There are many other things to think about and many other constitutions to put into context. And I think that there are going to be a lot more pronouncements around the budget around revenue mobilization around the finance act as we move into January and the rest of the month. But then again the most important thing is how can Nigerians take advantage of these opportunities and navigate a very high on a certain year that is largely plagued with a very high cost of living crisis and big questions around what the electoral result or the election result would mean for policy direction and for stakeholder engagement in the later part of the year. So it's going to be an interesting series of events to look out for as we proceed into the year and I believe that somewhere around the corner we'll get to have more clarity around what the finance act will be if we're retaining or some metrics should be changing. All right, Gospel, let's talk about the inflationary trend for 2022 as we juxtapose and see what we are outlooking for this year. From January inflation jumped from 15.56% in January 2022 to about 21.47% in November. Look at the lead that's over about 6% in 11 months there about although we've not seen the figures for December yet but let's just project and see are we going to continue that particular trend? It's very likely that we'll continue that particular trend because the economics of this current inflation that we're dealing with is not really monetary you know to a very large extent they are also very structural to a very large extent the bill of monies and circulation which the central bank has been trying to manage to recent redesign and draw policy. There's also been the climate effect or okay so I mean there's a situation Ukraine won earlier in the year which has impacted on food and energy prices along the value chain. There's been a global climate effect on food generally in the world today and that has tripled down you know in terms of somewhere around October November I saw the flood crisis in Nigeria and the estimations by the FAO that is a lumen food crisis that may lead to an estimated 17 to 34 million Nigerians in poverty in 2023. So this is to tell you that the narrative around the cost of living crisis is evolving which technically would mean inflation because the inflationary numbers or the inflationary pressure permits heavily on food and also energy elements as well as basic basic necessities for the average Nigerian. So yes it's likely going to continue because these narratives are still in view and but I don't think that using inflation interest rates to curb inflation will be very sustainable it's necessary but may not be sufficient as a measure to managing inflation and also to curbing inflation in the new year. All right so humble gospel rather the 2023 budget is about 4.3 percent deficit of the nation's GDP. Analysts believe that this deficit may leave Nigeria into a huge borrowing capable of creating an economic setback for the country. Do you agree? I mean Nigeria is always in borrowing so it's not news number one and actually Nigeria would need to borrow more as it goes on and that's because of the fundamental root causal challenge of the revenue crisis that we have you know that's one and two the economy is also not growing enough in terms of capacity you know to generate its own monies you know Nigeria actually needs more money to expand as an economy in the real sense even our budget size in the real sense of things is more related to the potential above we have as a nation and investments we need to drive you know that development that we need as a nation also to state on the other side of things is the fact that we've not been able to properly unlock the non all revenue drivers you know in terms of organizing the markets that currently exist and that currently contributes more you know because in first half of 2022 we saw that none all sector only contributed about 1.1 trillion there are more in all revenue sorry in revenue than the all sector you know and that's to say that the quick wins are there you know this sector also contributes about 94 95 percent of Nigerian economy services sector alone contributes about 57 percent to the Nigerian economy that's to tell you that the low-hanging fruits are there but for some reason we've not been able to maximize that and they've been a lot of focus around the all sector and the somewhat leakage is around the Nigerian economy so because you have a strong and clear revenue crisis that the political economy regardless of who is in power now in regards of administration the political economy have not been able to step up in terms of will to deal in terms of reforms and all of that just to properly structure this revenue base to ensure it's productive and sustainable there's a likelihood that we'll resort to debt financing for to close our debts in the future sorry our budget deficits in the future and again budget deficits are not necessarily a bad thing debt are not necessarily a bad thing the big question is what are you borrowing for and are you borrowing to plug into sectors that would be productive enough to to to set resource debt in the future all right it is really not a very good I'll leave you ask me in the wake of all the issues and the long queues and being experienced them across Lagos and other states the country is still planning on spending about 3.36 trillion naira on subsidy between January to June this year what does this really portend in real terms gospel yeah um thank you for asking the question I mean that personally I do not think that the argument is really a subsidy um yeah government is spending a lot of subsidy that's very very um it's not sustainable to be very honest but then again if you take out the subsidy we you can imagine what how much it would cost you know to have to buy a few this one the likes but that's either subsidy really really exists you know to start with um so those are different sides of the conversation what I know is that subsidy is not sustainable in any way because it's eating heavily on our revenue block and um there are big larger conversations on table outside subsidy that that lack of ability to address those issues are being reinforcing the need for subsidy number one is the fact that i've been close to 70 to 85 percent of the of consumers of pms are actually households and businesses in Nigeria so if you fix power by 50 percent you realize that you know households will have will not have any business going to the printing stations um businesses will have no business going to the the stations to get fuel and all of that and which you mean that you reduce the demand pressure on pms all right and that means technically that you reduce the amount of pms and all of these things you need to import because demand has dropped and if you reduce the demand it means that you will not need to pay any subsidy any longer because you are not importing as much as you require one of reasons why subsidy is the major issue because you need to import so much because it's high demand for these services or these products in contact to be very honest that the Nigerian government created its own crisis and and in the main in trying to fix those prices or these issues you're recreating new levels of crisis in context you could have also fixed the local refineries fixing local reference will relax uh demand for imported fuel and all of these dynamics you know so the big ticket competition even if you remove subsidy there is a big there's a huge dependent economy on oil consumption in terms of oil consumption and that may reinvent the wheel of some sort again if you close our subsidy and push those monies into a government funding program like shopee during the genital era the big ticket questions will now be how many Nigerians will have access to shopee funds for businesses and all of that for sorry business development growth and all of that you know and what would these funds be used for in terms of enabling prosperity or relaxing the cost of living crisis as we have today so these are different legs of conversion that we can look at if for whatever subsidy itself is not a sustainable pathway for the current and the next administration all right let's look at our nations and forexom regime it's like a full blown crisis if you ask me for for instance in January the naira stood up to the dollar at um 415 naira official rate where the black market rate was about 567 naira or today the situation is worse the official rate stands at 448.8 to the dollar while the black market is about 737 naira going forward in 2023 what should we be doing as regards our forexom uh regime if you don't um Nigeria is at the situation i mean we're in a situation where um time has passed and we are now in an emergency state you know you need to get back to the basics to fix a lot of these issues we have today there is no hard and fast tool to fix in anything right now and um it's good enough that we are having a new administration coming and i would expect that the focus should be fixing these structural issues i mean come on it's not going to take anything for you to fix it and what are these structural issues your economy needs to be more competitive you know and in being competitive that gives you negotiation power within the international and regional community where a lot of institutional engagement are being done or you know are being carried out you know in terms of currency wars and fall against your currency and the Nigerian economy itself also needs to be much more productive than it is today you know and we also need to consume made in Nigeria to a very large extent as much as we can all of these things will go along with to powering up our local economy once your local economy is powered up and you're competitive facing regionally and globally it's a lot easier for your currency to gain value in the scheme of things you know and the only thing i just mentioned are the necessary conditions that must happen and on the on the on the sufficient conditions of condition of things would be for us to begin to institutionally manage our currency meaning that in the face of a dollar in the face of the yuan euro pound and all of that what negotiations that we have in what policy initiatives are we engaging in to ensure that the naira is being protected in view of these global shocks these are important issues that we need to discuss not some form of matter fast food approach that the central bank is trying to push into the economy right now and is largely reactive in nature and would hurt the economy and the naira to a very large extent as we move into 2020 the current approach is not sustainable and it will further make the naira devalue in the face of other currencies as we go into the economy as we go into the year 2020 let's not also forget that the q1 elections and the lack of policy direction ahead of the next administration is also a big ticket conversion on the table that may impact on the value of the currency namely while you have a highly consumption driven economy as well so we hope that the the structural fundamentals will be will be done right at the necessary level the institutional fundamentals will be done right at a sufficient level and at those two levels the naira will be in a better position and give or take at the end of 2023 if they are done rightly all right there's a whole lot to discuss and this is an election you like we have been saying since we started the show but i need to set a bit of an agenda right now for whoever wins the election the presidential election because there's a whole lot you know to be done with the economy with 33 percent unemployment rate and insecurity in the northeast in the southeast and nigerians are not being able to even get the average staples to eat what should be the primary focus as it is now for the incoming or the next administration you know after the elections yeah i would say four things number one would be the issue of insecurity has to be dealt with because i mean everything bothers on that if your environment is not safe it can be prosperous you know there's no amount of policy anything you want to introduce if there's a perception of insecurity or insecurity itself those two elements the perception and the and the realistic nature of realistic nature of insecurity would worsen things for that underlying so there's need to deal with that then number two there's need to take advantage of the low-hanging fruits when there has a lot of low-hanging fruits adjusted about non-off sector i talked about the service sector i talked about a lot of said these are actually export ready you know i talked about the informal sector these are low-hanging fruits that we can use to show up every week that we can use to encourage or enable businesses to thrive in terms of pushing in the right policies and all the likes so once we deal with the low-hanging fruits you know i mean give or take interdependently there's need to also fix the economy you know the major drivers fixing the low-hanging fruits closing the cases of all that will encourage more revenue and you know sort of that push and that drive the economy needs to begin to experience newness and some prospects towards prosperity also will be the need to fix social infrastructure for social infrastructure we talk about hard infrastructure and soft infrastructure hard infrastructure will be all the rails the road networking everything we need to get it running internet and all that the hard infrastructure the soft infrastructure will begin to rework the political ideology the cultural ideology the behavioral patterns you know and the cultural patterns of the people you know to ensuring that as much as you're fixing the hard things the culture and institutions are also jet towards enabling people to thrive and i don't know if you go i'm trying to say so even if you have good infrastructure if your culture does not enable people to try you know it will it will draw people down the ladder and all of that so there's need to look at all these lenses at least as it from a takeoff standpoint then begin to deal as we go on and and i believe that if you look at it from this context it's a lot easier to drive reform and skill reforms more sustainably all right gospel as we round off right now we cannot go without talking about the cbn policies or policy direction or policy misdirection as it were as we closed that 2022 we're talking about them the cashless policy naira redesign and of course uh nigerians have to grapple with the fact that they have to you know obtain the new naira before the end of um january but that doesn't seem to be the case because um the banks are still paying with the old notes what do we do very quickly as we round off gospel yeah i mean to be honest the cbn has tried a lot of things you know into fix the economy and to fix problems that are not really monetary or not primary it's concerned so sort of positions as though it's firefighting on many grounds and the policies have been very incoherent you know and as a result of that crunch time pressure and all of that on the central bank will seem a lot of poor internal controls you know within the system and then that's why you mentioned what you just said right now in terms of central uh commercial banks still dispensing old notes and the life so a lot of internal control have to come to the fore to ensuring that this new policy succeeds you know and also to ensuring that um there has to be a lot more constitution next time in terms of rolling out policies i mean the uk by opposition where um due to the um to the loss of the queen realize that the new currency the new pound note has to carry the king's picture but that would be launched till mid-twenty four and the goal is for that to co-circulate with currency currently existing uh notes that has the queen's picture so there has to be a pattern and the plan you know and we need to pace things for that especially in very vulnerable and highly volatile economies that we find ourselves in and these are part of the commission that may worsen inflation as we go on because there is not supply demand pressure around accessing the new notes and withdrawal limits and right these new policies would not necessarily encourage the cashless economy no it may improve each transactions but Nigerians there's also going to be a rise in cash stack you know amounts of money that Nigerians will want to hold you know um in disposal because they know that there's a limit to cost every month and all of that so we hope that the central bank will be will be more not considerate all right collaborative in its approach in the coming year all right thank you so much um gospel for all the useful insights you have shared to various sectors of the economy i'm afraid time is never ever our friend talking about it yeah i know pertinent issues we do appreciate your time once again thank you for having me yes uh gospel obelis an economist and he has done justice to all of the discusser for today business insights return again same time next week i am justin akadony many thanks for watching