At end 2018, 33% of the financial managers in firms operating in Nigeria were pessimistic about the outlooks of the local economy against 14% at end 2017. This was revealed by a survey conducted by the local subsidiary of audit firm KPMG.

"We found three things driving that. One was the uncertainty surrounding the 2019 election. Secondly, there was the consistency of government policy and three was concerns about the future direction of the exchange rate. Elections have been held now and was largely peaceful. We expect confidence to rise a bit as a consequence of that. The other two factors that are the issues around the consistency of government policy and the direction of exchange rate remain. As far as consistency of the government’s policy is concerned, the question CFOs are asking and looking to is what is going to be the shape and form of the new cabinet. Who are the new ministers and will there be consistency in the general policies,” Tola Adeyemi, head of audit services at KPMG, said during a TV show on CNBC Africa.

Patrick Iyamabo, chief financial officer at First Bank of Nigeria, indicated that one of the key issues (in the banking sector notably) is inflation and regulation. "It is one of the critical areas. We are in a highly regulated sector, a bit more now, and the regulations are subject to various interpretations," he replied during the survey.

In a country with high consumption (both household and corporate), one of the key indicators to watch is inflation. Analysts expect it to decrease from 11.4% in December 2018 to 11.1% at end 2019.

For the time being, inflation is slightly lower than the prime rate, which is 14%. The monetary committee of the central bank is meeting on March 25-26 and the market is impatiently awaiting their decisions.

Some Nigerian analysts indicate that the market should not expect a large decrease in these rates. For the time being, the international environment shows a strong rise in the price of staple foods on which Nigeria largely depends. The impact is not really felt because the Naira is under less pressure.

In an analysis report published recently, FSDH Merchant Bank revealed that households and companies’ net disposable income almost rose proportionally with inflation since 2016. In other words, the purchasing power has not improved that much.

The financial reports published by NSE-listed firms are already showing the gloomy economic environment. Even though the operating results are positive, they were lower than that of the previous years.
Idriss Linge