Nigeria’s economic posture for the second quarter is not looking steady. There is so much happening to the economy now and most Nigerians may not even know.
The Naira is not in an amazing shape against the dollar and other foreign currencies. Also the Monetary Policy Rate, MPR, hike and increasing inflation rates are all fighting for the little amount individuals have in their bank accounts.
According to the official selling rate of the Central Bank of Nigeria, CBN, Naira to dollar stands at ₦460.48, but, at the parallel market, the naira sells at between ₦745.00 to ₦750.00 to a Dollar.
Is it no longer news that investors and manufacturers will have a lot of challenges to contend with in the second quarter of 2023.
Indeed, investors would pass on the burden of increased energy costs, hike interest rates, and inflation to the consumers of their goods or services, in this case, Nigerians.
CBN’s recent position to raise MPR to 18%, and the poorly implemented Naira redesign and cashless policy, have been heavily criticised by financial analysts.
However, the CBN justified its policies, saying raising interest rates would help tackle inflation.
Tough Financial Situation Coming
Financial expert and CEO of SD & D Capital Management, Mr Idakolo Gbolade, said increasing MPR will further hurt the financial situation of Nigerians.
He stressed that the impending subsidy removal in May would momentarily affect Nigerians.
According to him, the incoming government policy thrust might be a game-changer.
He said investors’ perception of the economic direction of the new government could go either ways.
“The hike in MPR will further hurt the financial outlook for Nigerians looking at the impending removal of fuel subsidy, which will increase the pump price of fuel and other associated products.
“The interest rate increase will propel inflation to increase and affect all aspects of production.
“The investors will profit from increased interest rates as it would further improve their interest margin and make investment returns increase.
“The new administration’s policy thrust will determine the economy’s second quarter performance.
“The new government is expected to hit the ground running in critical areas of appointment of those that will steer the ship of the new government.
“The perception of investors on the economic policy direction of the new government will either affect the economy positively or negatively.
“The momentary relief in the cash crisis should be followed with far-reaching policy directives to control inflation and increase government revenue while eliminating waste.
“The new government must exhibit its competence early in their administration and take painful but positive steps to steer the economy on the path of growth”, he said.
