Vetiva Capital, an investment banking firm, has projected a growth of 2.5 percent for Nigeria’s economy in 2020, with higher growth potential expected from the non-oil sector.
Highlighting the short-term benefits of the border closure and the Central Bank of Nigeria (CBN)’s drive to spur real sector expansion, Vetiva said: “In 2020, we expect agriculture growth to edge higher to 2.5 percent, as the CBN’s supportive initiatives continue to bolster farming operations amidst improved security conditions. Specifically, we highlight that the CBN’s Anchor Borrowers’ Programme (ABP), geared towards spurring credit facilities to the agriculture sector, has significantly helped to boost rice output across the country. Furthermore, the government’s recent trade protectionist stance against its neighbouring countries (Benin and Niger) is expected to shore up food output growth in the near term, as food (mainly rice) demand is completely channeled to local producers.”
According to Vetiva, the manufacturing sector is expected to expand by 1.2 percent in 2020, supported by a mild recovery in textile output, which contracted for two consecutive quarters in 2019.
On the oil sector front, Oil & Gas Analyst at Vetiva, Luke Ofojebe, said: “Going into 2020, growth in the oil sector is expected to slow, as potential investments in crude exploration remain on the sidelines amidst regulatory uncertainty. We note that delays in the passage of the Petroleum Industry Governance Bill (PIGB) have halted investment inflows into the oil and gas space over the last five years, with Nigeria’s crude production remaining predominantly static at 2 mb/d, despite increasing oil reserves.
The recently amended Deep Offshore and Inland Basin Production Sharing Contract Act (DOIBPSCA), which stipulates a flat royalty rate of 10 percent for deep-water fields, four times above the average royalty rate of 2.3 percent paid by offshore oil majors in 2018 is expected to have an impact on investments in the sector.”