Abuja, Nigeria [July 26, 2024]: Norrenberger, an industry leading, integrated financial services Group, has released the Norrenberger Economic Outlook (NEO) report for H2 2024 at its recent Economic Outlook webinar held on Thursday, 25 July 2024. The event featured key industry players as guest speakers, discussing critical insights from the report titled “Nigeria – Beyond the Reforms”.
The report highlighted key drivers to the GDP growth, citing elevated crude oil prices, sustained high interest rates and a stable crude oil output between 1.3mbpd and 1.5mbpd. Nigeria’s gross domestic product (GDP) is projected to grow by 3.1% in real terms in 2024, higher than the 2.74% recorded in 2023.
In retrospect, the report noted that the Nigerian economy demonstrated resilience in the first half of 2024, navigating through numerous macroeconomic challenges despite facing significant headwinds such as high inflationary pressures, increased foreign exchange (FX) volatility, insecurity, dwindling reserves, and fluctuations in foreign investments.
However, real GDP printed a growth of 2.98% in Q1 2024, an increase compared to 2.31% recorded in the corresponding period of 2023, although lower in contrast to 3.45% recorded in the previous quarter.
Meanwhile, economic growth has been largely driven by the services sector combined with a rebound in the oil sector, on the back of improved crude output.
ICT and banking drives growth as industrials suffers
The Nigerian industrial sector, once considered a cornerstone of economic development, comprising mining and quarrying, manufacturing, electricity, water supply, and construction subsectors has faced significant challenges in recent years, leading to tepid growth and low GDP contribution, in contrast to the likes of services and the agricultural sector.
- According to the report, inadequate infrastructure remains a critical hurdle for the industrial sector, ranging from insufficient power supply, unreliable transportation network, dollar supply crunch, and high cost of credit.
- In recent years, the sector has also suffered from low investment, while witnessing some exits like the divestments of GlaxoSmithKline (GSK), Shell, Kimberly-Clark, and Diageo in the first half of the year.
- The services sector on the other hand has recorded impressive growth, driven by the ICT and banking sectors, both growing by 5.43% and 33.3% respectively in Q1 2024.
The report highlighted the harsh economic consequences emanating from the several reforms implemented by the government in the last year, for example, the high cost of credit, increased poverty rate, and erosion of corporate earnings especially in the manufacturing and ICT sectors.
On the flip side, some of the positives that have been recorded as a result of the reforms such as improving foreign reserves level, improved capital importation, increase in FAAC allocations to the three tiers of government amongst others.
Other projections
The report indicated an expectation of tapering inflation rate albeit at elevated levels.
“We anticipate that inflation will persist at elevated levels, driven by factors including supply chain disruptions, currency depreciation, and rising production costs. Consequently, interest rates are likely to remain high in the short-to-medium term, as the Central Bank of Nigeria (CBN) continues to employ tight monetary policy to tame rising inflation and ensure FX stability.”
“In terms of foreign exchange dynamics, we anticipate the exchange rate to oscillate within the range of N1,400 to N1,500 against the US dollar, driven in part by the CBN’s efforts to attract foreign portfolio investments (FPIs) and normalize the FX market. This anticipated narrow band is expected to provide some respite to businesses and investors, aiding in planning and decision-making processes,” the report noted.
The Group Managing Director/CEO of Norrenberger, Tony Edeh commented on the report saying, “The NEO report provides a comprehensive analysis of the Nigerian economy, highlighting both challenges and opportunities. It is our hope that this report will serve as a valuable tool for businesses, investors, and policymakers in navigating the complex economic landscape.”
About the report
The Norrenberger Economic Outlook (NEO) report for H1 2024 is a comprehensive review of the Nigerian economy in the first half of the year, highlighting various changes across different markets and offering an outlook for the rest of the year.
The report is designed to help readers gain invaluable insights into monitoring pivotal economic drivers and navigating fiscal pressures.
Additionally, the report delves into the economic landscape and potential of various states within Nigeria, identifying dominant and thriving sectors in the economy. From agriculture in the northern regions to technology hubs in the southwest, and oil production in the Niger Delta, the report highlights opportunities that transcend the immediate impacts of the current reforms.
Notably, the report not only examines the current economic conditions and the effects of recent policies but also identifies future opportunities within the Nigerian economy. It serves as an essential guide for investors and stakeholders aiming to make informed decisions in a complex and evolving economic environment.
Click this link to download the full report: https://tiny/NEObeyondthereforms
About Norrenberger
Norrenberger is a financial services Group providing bespoke financial solutions that add value to our individual and institutional clients. With a team of experienced professionals, Norrenberger offers a comprehensive range of services, including asset management, private equity, development finance, investment banking, securities trading, pensions, insurance, fintech and digital banking.
Our component companies are licensed, authorised and regulated by either the Securities & Exchange Commission (SEC), Central Bank of Nigeria (CBN), Nigerian Exchange Limited (NGX), National Pension Commission (PenCom) or National Insurance Commission (NAICOM).
Website: www.norrenberger.com
