The Financial Institutions Training Centre (FITC) has partnered with the CFA Society Nigeria to host the second edition of the National Economic Development Outlook Series (NEDS) 2023.
The event, held virtually was meant to equip individuals and organisations with a firm understanding of the macro-economic environment in Nigeria and how to win under the circumstances.
The event attracted a cross section of speakers, panelists, local and international economists, and participants across the financial services industry, including banking, insurance, securities markets, and industry regulators, who came together to share and learn contemporary insights on the programme theme; What Next for Nigeria’s Economic Growth? “Overcoming Inflation, Rising Interest Rates, Debt and Uncertainty”.
The 2023 edition featured notable local and international experts in the financial services sector. They included Dr. Ayo Teriba, Chief Executive Officer (CEO), Economic Associates; Ken Erikume, Partner Tax, PwC; Tilewa Adebajo, CEO, The CFG Advisory; Kike Mesubi, MD, RMB Nigeria Asset Management; Tosin Ojo, Principal, Sahel Capital, and Chizor Malize, MD/CEO FITC.
The A-list speakers analyzedthe 2023 macro-economic outlook, emerging market debt crisis and possibility for contagion, rising inflation and rising interest rates, and sharedcerebral and intellectual insights on contemporary economic imperatives and challenges relevant to Nigeria’s economic development.
In her welcome address, the host, and Managing Director/CEO FITC, Chizor Malize, stated that the NED series is one of the Institute’s visionary programmes, that brings together significant personalities to deliberate on the issues that are critical to the nation and its economy and to provide business insights for organizations to steer and navigate the unique and precarious economy.
She also stated that the NEDS 2023 reiterates FITC’s mandate to advance knowledge in banking, finance and related competencies, through seminars, workshops, conferences, public legislation, roundtables and industry relevant publications.
According to her, the National Economic Development Outlook Series signifies a persistent poise to contribute meaningfully in terms of building requisite knowledge and capacity, and proffering economically viable solutions to a range of macroeconomic problems that are threatening the sustainability and prosperity of Nigeria,”
President of the CFA Society, Nigeria, Ibukun Oyedeji, reiterated the focus of the event, which deliberated on economic issues, overcoming inflation, Nigeria’s rising debt profile, the outlook on fixed income, equities, Monetary Policy Rate, the Finance Act 2023, its implementation and the comparison of it to the prior Finance Acts in Nigeria.
She also stated CFA Society Nigeria’s commitment through the collaboration with FITC to fulfill the objectives of building capacity and professional excellence, and ensuring high ethical conduct in the financial markets, for all stakeholders.
Chief Executive Officer (CEO), Economic Associates , Dr. Ayo Teriba delivered the keynote address, which he anchored on the Federal Government 2023 Budget.
He stated that the current reality is that the world is in the eye of the storm, the ripples of the geopolitical tensions have presented the global landscape with the perfect storm in which both the income statement and the balance sheet are in turmoil.
“On the transaction side of things, there are news of shocks to energy and food prices, because of disruptions to global supply chains, and these have precipitated new peaks to inflation across the world. While on the portfolio side, we have seen shocks to equity prices, many global companies have shared a shocking amount of market value lost since the Russia-Ukraine war broke out, thus dimming global prospects, and inflicting on global systems” he said.
He also stated that Central banks around the world have felt obliged to tighten monetary policy, adding higher interest rate to the mix, thus, the world has had to grapple with renewed inflationary pressures, high commodity prices, particularly energy and food prices, and higher interest rates.
On the brighter side, he revealed that despite these circumstances, economists have projected that the situation is temporary, as the inflationary spike has peaked and there are signs of declining inflation which might be persistent, thus leading to commodity prices weakening in no distant future, and markets will rebound, consequently, enabling recovery, for the global and national economy.
Distilling it to Nigeria, Teriba divulged that the country needs to urgently take measures to boost revenue, reduce interest costs, and to rebuild so as to stabilize the exchange rate. “If there is unease at the global, national and subnational level, there will be unease at the corporate level. Organizations have to reflect on the best responses for their balance sheets and income statements, they have to look for innovative ways of soaring above the storms” he said.
He also buttressed the fact that Nigeria is struggling to pay interest on debts and is seeking to borrow more, thus heaping more interest burden on the country, should government go ahead with the debt issuance. “Debt will increase by 10.5 trillion from 2022 deficit financing and we cannot find revenue of that magnitude. External debt doors are closing on Nigeria because global rating agencies have placed Nigeria under review for downgrade, this resulted in most of the borrowing in 2022 from domestic means” he stated.
Teriba also expressed the need to expand budget conversations beyond revenue, spending, deficit and debt. “Nigeria must leverage state owned assets to generate revenue, or issue equity / convertible bonds, while also exploring issuable equity liabilities as a better and more sustainable substitute to debt liabilities” he said.
In his remarks, CEO, The CFG Advisory, Tilewa Adebajo, stated that Nigeria spent millions of naira on subsidies in 2022, buttressing that if these monies were pumped into the economy, instead of being used on subsidies, there will be a positive impact especially on the nation’s deficit. He also stressed the need for structural reforms of the Nigerian economy.
“Nigeria’s economy is a potential economy of a trillion-dollar GDP, and is the largest in Africa, if we can realize our potential and seize opportunities around us, a large percentage of our revenue will no longer go to debt servicing” he said.
Building on Adebajo’s remarks, The MD, RMB Nigeria Asset Management, Kike Mesubi further reinforced the need to remove subsidy, noting that the amount spent on subsidy can be injected into the real sector of the economy, like infrastructure and real estate. “As it stands a huge sum from oil produce is spent towards subsidies, if that goes off, that is additional money to develop the economy and will ultimately increase the revenue that has been budgeted for the year” she said.
Speaking on the impact of subsidy removal on the inflation numbers, Mesubi remarked that removing subsidy will further increase inflation, because of the components of the inflation basket, with food and energy aggregating for a large portion of it. However, she pointed out the need for the economy to go through these lows in order to benefit from the opportunities inherent. Thus, the high inflation numbers shouldn’t be a concern, provided that the subsidy removal is used judiciously for economic development.
Focusing on investment, Mesubi revealed that Equity is an asset class that investors should start to look at and gradually allocate a certain portion of their portfolio to, because historically, equities have been renowned as an inflation-hedge and based on current realities, investors need investments that will protect their portfolio from high inflation rate.
She further advised investors to decide on investments from the opportunity perspective, sharing that opportunity exists in the cement area because Nigeria has infrastructure deficits, and if the issues around the infrastructure deficits are addressed, then opportunities will exist for the cement businesses who will be critical suppliers for these projects. She added that telecommunications, agriculture and oil and gas are also areas of opportunity, as they are the resilient sectors. “Telecoms from the perspective that we have seen growth and opportunity in that space, and the opportunity continues to grow, as data continues to be a major area of opportunity in terms of the broad band penetration. Agric from a demand point of view, we are certainly not producing as much as we need, so there will be opportunity from a demand supply perspective, oil and gas is also an area of opportunity” she noted.
Partner, PwC, Kenneth Erikume speaking on tax revenues, commended the efforts of the FIRS in ensuring the tax administration process is digitized, while also introducing some reforms around taxation of non-residents, introduction of VAT collection, by digital service companies, thus growing tax revenue from 6.4 trillion in 2021, to 10.1 trillion in 2022, a 58 per cent increase.
He further analyzed this and noted some risks in performance for 2023. “From the 10.1 trillion in 2022, 2 trillion was added in the form of petroleum profit tax, which was largely due to the outcome of the oil price increases arising from the impact of the Russian war on-Ukraine. If the Russian War on Ukraine quells and the price of crude oil stabilizes, this will adversely affect the petroleum profit tax revenue for Nigeria” he said.
Speaking further in terms of widening the tax net, he noted that there is still a lot of work to be done in unlocking the informal sector, which is a large chunk of the Nigerian sector, and ensuring that there is an inclusion of others who aren’t already in the tax net.
Erikume further opined that government assets need to be leveraged to stimulate the economy and raise immediate revenue for the nation, and more engagement and advocacy needed to be had with the government to ensure that provisions in tax laws take into consideration the business angle thereby ensuring more robust tax policies.
Dr. Teriba added that Nigeria needs to rethink writing IOUs / promissory notes against expected income and begin to leverage on assets for debt issuance, as the expected income might not materialize, thus building up debts. “Asset based instruments, bonds or equities are more sustainable. These are not claims against income, but a contract that gives opportunity for investors to earn revenue from assets, an adjustment that Nigeria needs to make” he said.
The event moderator, Tosin Ojo, Principal, Sahel Capital riding on the comments of the panelists and data presented, emphasized the Nation’s dire situation, especially taking into consideration Nigeria’s debt profile, and recognized the interesting backdrop around the assets that Nigeria owns and the opportunities that lie therein for the Nation.
The event which was free to attend ended with participantsfrom all over the world commending the session for being very engaging, insightful, educative and robust in dialogues.
FITC is a world-class innovation-led knowledge and professional services firm providing cutting edge Learning, Advisory and Research Services to clients in the Financial Services and other sectors, within and outside Nigeria.
Established in 1981 as a non-profit organisation limited by guarantee to provide capacity building and serve as a knowledge hub for the Nigerian Financial Services Sector. FITC is owned by the Bankers Committee, i.e., CBN, NDIC, and all deposit money banks in Nigeria.
For four decades, FITC has been at the forefront of innovative knowledge offerings designed for an array of C-suite executives, directors of banks and other financial institutions. Leveraging on international Faculty and partnership, FITC has led the knowledge space in delivering high valued capacity building solutions for Board Directors and C-suites.
FITC is a recipient of the 2022 Culture of Innovation & 2022 Working Environments and Practices /Flexible Working categories, Business Culture Awards, International Federation of Training & Development Organisations (IFTDO) ‘Change Agent in Learning and Development in Africa’ Award, 2020 Business Excellence Award (The BIZZ Award), 2020 Strategy Innovation & Change Award, The International Business Excellence (IBX) Award, 2021 Winner, Global Business Excellence Award, among others.
Founded in 2013, CFA Society Nigeria is part of the worldwide network of CFA Institute member societies that lead the investment profession globally by promoting the highest standards of ethics, education, and professional excellence for the ultimate benefit of society.
CFA Society Nigeria represents the interests of 400+ investment professionals in Nigeria through advocacy, education, events, and professional development.
CFA Institute, the global association of investment professionals, sets the standard for professional excellence and credentials and is a champion of ethical behaviour in investment markets and a respected source of knowledge in the global financial community. There are more than 160,000 CFA charter holders worldwide in 164 markets and currently there are 1300+ registered CFA Candidates in Nigeria.
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