HighlightTrending Story

Flexible exchange rate, development beyond oil will be decisive for Nigeria’s growth, says UBS CIO

117

[dropcap]T[/dropcap]he UBS Wealth Management’s Chief Investment Office (CIO) Thursday  in a new report said liberalization of naira exchange rates will be crucial in attracting foreign investment.

UBS said Nigeria’s economy offers significant potential but it must widen its tax base and broaden its activities away from oil, according to the latest report by the wealth management’s Chief Investment Office.

“We see tremendous potential for Nigeria’s economy, which is Africa’s largest, but in order to achieve its potential, current reform programs must be implemented and in some instances, accelerated. The current climate of higher energy prices and relative domestic stability indicate now is the right time to act,  said Ali Janoudi, Head of Central and Eastern Europe, Middle East and Africa, France and Belgium International at UBS Wealth Management.

Michael Bolliger, Head of Emerging Market Asset Allocation at UBS Wealth Management’s CIO, said: “In the near term, oil will remain an important source of income for Nigeria. However, the impressive growth rates of non-resource-rich countries in Africa clearly indicate that development beyond oil is the way forward.”

The report highlights that of the 64 nations the IMF projects to have average real GDP growth of more than 4% in the next five years, more than half are in Africa.

As Africa’s largest country both in terms of GDP and population, Nigeria offers enormous potential for the nation’s domestic market, according to the report’s findings. The UN expects Nigeria’s population to reach up to 1 billion people by 2100, offering unusual potential for growth. At the same time, population growth presents a significant challenge in terms of job creation for new labor market entrants and the nation’s geographic limitations, considering Nigeria’s territory is approximately the size of Texas.

In addition, UBS CIO research shows that indicators relating to governance and ease of doing business are clearly weaker than for peers, thus underpinning the need for reforms as foreseen in Nigeria’s Economic Recovery and Growth Plan.

Decisive factors outlined in the report include efforts to broaden the country’s tax base and to diversify its economy. Nigeria’s revenue base heavily relies on oil-related activities, which exposes the nation’s fiscal balance to energy price shocks and volatility risks.

Nigeria is Africa’s largest oil exporter and while commodity exports remain a major growth driver in many African countries, their importance is slowly declining as domestic demand plays an expanding role in sustaining growth. Some of the continent’s fastest growing economies are concentrated in non-resource-rich countries like Côte d’Ivoire, Senegal, Kenya and Ethiopia, which are expected to grow between 6% and 8% in the next few years.

The report points out that the manufacturing industry is probably one of the most overlooked sectors in Africa, despite the continent’s potential to become the world’s next low-cost manufacturing hub and a leading global player in resource-intensive manufacturing.

Competitive labor costs, abundance of raw materials, convenient transit locations for export and large markets for local consumption position many African countries well to replace Asian competitors as attractive locations to produce goods and draw manufacturing foreign direct investment.

In the short term, further progress toward the liberalization of the Nigerian currency’s exchange rate will have a decisive impact on the inflow of such investment, the report said.

 

Editor’s Note

UBS provides financial advice and solutions to wealthy, institutional and corporate clients worldwide, as well as private clients in Switzerland. The operational structure of the Group is comprised of our Corporate Center and five business divisions: Wealth Management, Wealth Management Americas, Personal & Corporate Banking, Asset Management and the Investment Bank. UBS’s strategy builds on the strengths of all of its businesses and focuses its efforts on areas in which it excels, while seeking to capitalize on the compelling growth prospects in the businesses and regions in which it operates, in order to generate attractive and sustainable returns for its shareholders. All of its businesses are capital-efficient and benefit from a strong competitive position in their targeted markets.

UBS is present in all major financial centers worldwide. It has offices in 54 countries, with about 34% of its employees working in the Americas, 35% in Switzerland, 18% in the rest of Europe, the Middle East and Africa and 13% in Asia Pacific. UBS Group AG employs approximately 60,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).

 

Leave a comment

Related Articles

Ogun begins sale of rice at discounted prices to workers

Ogun State Government has commenced sale of rice to its workforce as...

NFF debunks appointing Amunike as Super Eagles coach

The Nigerian Football Federation (NFF) has described as fake news that it...

Kidnapped RCCG pastor rescued, says Oyo Govt.

The Oyo State Government announced the safe rescue of Pastor Olugbenga Olawore...

APC declares Ondo governorship primary inconclusive

In Ondo State, the All Progressives Congress (APC) 2024 Governorship Primary Committee...

In a rebuttal, NUSA tells South African Police Nigerians didn’t attack police, damage properties

Contrary to claims by the South African Police Service (SAPS), the Nigeria...

Ondo gov. primary: Commissioner assaults senior journalist, damages his phone

  …..NUJ calls his action as barbaric and unacceptable The Ondo State...

Ondo APC guber primary: 171,922 delegates elect candidate out of 16 aspirants

No fewer than 171,922 accredited delegates are voting in Saturday’s All Progressives...

Tinubu appoints Emomotimi Agama as SEC DG

Mr. Emomotimi Agama has been appointed the Director-General of the Stock Exchange...

Driver nabbed for slaughtering 80-year-old boss, wife in their Abuja apartment

Pa Adebola Ezekiel, an 80-year-old man, and his wife, Abiodun Ezekiel, have...

NNPC Ltd., First E&P, achieve 20,000 bpd production at OML 85

The Nigerian National Petroleum Company Limited (NNPC Ltd) and its joint venture...

Nigerian Sovereign Investment Authority invests $500m in infrastructure

The Nigeria Sovereign Investment Authority (NSIA) says it has invested over $500...

Breaking: N300m laundering charge: FCT High Court discharges, acquits ex-AGF Adoke

After a seven-year trial, Justice Inyang Ekwo of a Federal High Court...

Latest on Yahaya Bello: Police I-G Egbetokun withdraws policemen attached to ex-governor

Following former Kogi Governor Yahaya Bello’s refusal to surrender to security agencies...

NNPC Ltd., partners donate 2,300-seat ultra-modern library to Niger Delta University

In its bid to create a conducive learning environment and create access...

Sports Minister affirms Nigeria’s readiness for Paris 2024 Olympics

The Minister of Sports Development, Senator John Enoh, has restated the ministry’s...

Kidnapping, terrorism: Ogun Gov. Abiodun donates drones, 25 patrol vehicles to police, other security agencies

Police I-G, Egbetokun, in Abeokuta to receive them, says Ogun remains the...

Tinubu wittingly picked Northerners to occupy significant positions in his govt – Ribadu

The National Security Adviser, Mr. Nuhu Ribadu, has said that President Bola...

Alleged N80bln fraud: EFCC declares ex-Kogi Gov. Yahaya Bello wanted

The Economic and Financial Crimes Commission (EFCC) has declared former Kogi Gov....

NPA secures $700m facility from Citibank for Apapa, Tin-Can Ports rehabilitation – MD

The Nigerian Ports Authority (NPA) has negotiated a loan of $700million from...

Arrest parents found near UTME CBT centres during UTME – JAMB

The Joint Admissions and Matriculation Board (JAMB) has directed all Computer-Based Test...