Economy
Naira may fall to N900/$ from demand pressure – Report
The firm that has a worldwide presence through the member firms and collaborating firms of Andersen Global disclosed this in its report titled ‘Nigeria’s 2023 economic outlook’, which was presented by its partners in Lagos.
The report read in part, “In 2022, the value of the naira was relatively more stable in the official market than in the parallel market thereby widening the premium between the two exchange rate windows. This was due to the heightened demand pressure spurred by FX illiquidity.
“FX excess demand pressure is expected to continue in 2023 fuelled by varying factors such as elevated global interest rates attracting portfolio investments away from Nigeria; a structurally import-dependent economy; currency speculations if the gap between official and parallel market rates are not closed; etc, which will make the naira to remain pressured in the foreign exchange windows.
“Based on this, should the CBN continue to maintain the gap, the official rate is likely to be devalued to about N500/$, while the parallel market rate depreciates to about N900/$ by the end of 2023 unless mitigating measures are taken.”
On the 2023 budget, it said the total revenue was estimated to be N10.49tn and total expenditure was approximately N21.83tn, thereby indicating a budget deficit of N11.34tn, a 39 per cent increase from the last budget’s deficit of N8.17tn.
According to the report, “The Director-General of the Debt Management Office stated that improvement in revenue generation serves as a solution to the increasing debt profile. Despite the increase in government income and expenditure altogether, the education and health sectors are still underfunded.
“The rising inflation rate and the impact of the Russia-Ukraine war on food and energy prices are factors likely to affect Nigeria’s 2023 budget performance.”
It noted that the financial services sector grew by 12.7 per cent in Q3, 2022.
The sector had also been driven by several factors such as technology adoption, increasing population, increase in credit to the private sector, the rise of the fintech industry, competitive landscape and government reforms among others.
“Recent trends in the sector include a focus on digitisation and adoption of new and emerging technologies, currency redesign and cash withdrawal limits, bank and fintech partnerships, insurtech, etc,” the statement said.
By Francis Onoh
It is the right of every Nigerian to be financially included in the system. Data from the country’s foremost financial institution, the Central Bank of Nigeria (CBN) and the organisation Enhancing Financial Innovation and Access show that approximately 40% of Nigerians adults are financially excluded.
Attaining the 3.4% projected growth in the economy’s GDP will be difficult if not impossible, if the petty traders, the local skill workers and the roadside sellers are excluded from financial services and products that can aid their businesses. Enhancing financial inclusion for economic growth requires that financial literacy be extended and incorporated into the activities of organisations that work at the grassroots, for example, religious institutions.
Although with low levels of literacy, Emeka, Haruna or Bankole as devoted adherents of their various religions, are more likely to understands that their money is secure in the financial sector, that products such as pension plan, health insurance schemes and access to credit are available for citizens who are financially included, if and only if leaders of their religion introduce financial literacy to them. Combining their obligation to teach articles of their faith with introducing their members to financial literacy is one way to go if our country has to remedy the financial exclusion created by poverty and limited access to formal education.From the Global Multidimensional Poverty Index, the dimensions of poverty are Health, Education and Standard of Living.
Access to financial services can encourage people to enrol in a health insurance scheme to ensure good health within a manageable expenditure. A financially included person will have formal or informal education by association, which will invariably improve the living standard.
A financially included person is more likely to increase their business share if they access credit facilities in the financial sector and stand a better chance to benefit from government poverty alleviation programmes or even access funds from international development.
Making about 40% of Nigerian adults, which is about 35 million people, financially included will enhance capital formation assets, improve citizens’ disposable income, grow the nation’s financial sector and in extension catalyse industrialisation, which the country direly needs at this time. Financial inclusion for all is a necessary good that should be pursued by the Nigerian government at all levels, and stakeholders, such as religious leaders, must be made aware of their obligation in this space.
The time to do this is now.
Francis Onoh writes from Enugu
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