Nigerians must make change happen if economy is to pick up

The move from risk managers and insurance brokers comes as Nigeria was one of five countries globally to be downgraded by trade credit insurer Coface.

The move followed a similar move by S&P Global Ratings, which recently lowered its long-term foreign and local currency sovereign credit ratings on Nigeria to B from B+.

It also affirmed its B short-term foreign and local currency sovereign credit ratings on Nigeria. The outlook on the long-term ratings is stable.

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At the same time, S&P lowered its long- and short-term Nigeria national scale ratings on the sovereign to ngBBB/ngA-2 from ngA/ngA-1. It also revised down its transfer and convertibility assessment on Nigeria to B from B+.

Coface has given Nigeria a D rating – very high credit risk. It said: “Nigeria’s GDP is set to shrink, on an annual basis, in 2016. There was also a decrease in oil production, hindered by sabotages of oil facilities in Niger Delta. Since June 2016, the naira has lost more than 35% of its value against the dollar and Nigeria has also been affected by a reduction in oil exports, which represent 90% of total exports.”

Insurance brokers, led by the Nigerian Council of Registered Insurance Brokers (NCRIB), have urged government at all levels to give greater impetus to the patronage of made-in-Nigeria goods as a way of buoying the nation’s economy.

Council president Kayode Okunoren, while applauding the ongoing efforts of government to revive the economy, suggested that policy statements should be made by top office holders at the three tiers of government urging the people to patronise Nigerian-made goods.

He noted, for instance, that the comatose textile industry would come to life if there was a sincere pronouncement that workers now have the latitude to wear homemade clothing materials on certain days of the week.

Mr Okunoren, who drew examples from other countries that had recourse to look inwards at some point, said such action will stimulate growth in the various sectors and give life to the economy.

“Definitely, insurance will also witness a boost through this step as more activities would be generated across different sections of the economy. Without an iota of doubt, demand for dollars will naturally crash when demand for local goods intensifies,” he stated.

He called, however, for sincerity on the part of government and the nation’s leaders towards patronising made-in-Nigeria goods, rather than doing otherwise.

The NCRIB president also urged Nigerians to be more patient with the present administration in fixing the economy through the various prudential steps and the ongoing war against corruption.

Meanwhile, at the recent Risk Frontiers – West Africa seminar, organised by Commercial Risk Africa, risk managers were also calling for businesses to buy locally and help drive the economy.

Hosting a roundtable on financial risk, Abayomi Oluremi-Judah, head of life operations at Continental Re, said oil, falling earnings, liquidity issues, import-led inflation, the spread of of FX being too much, and the high cost of doing business were all debated, with attendees agreeing that any solution to the current difficulties would need to be retail focused because Nigeria, for the most part, was a retail-led economy.

Overall, delegates decided Nigeria needed a change culture but the delegates agreed that would be the most difficult thing to implement. They said there should be investment in local produce and manufacturing, as well as making finances available for the retail sector. “If it is going to be spent by central government it should be spent locally,” they concluded, while adding the government needed to continue its drive to reduce corruption but ultimately reduce its role in the economy.

Mba Udonsi, a risk analyst at Heritage Bank, suggested that to start any improvements rolling, however, they agreed it was critical to have just one exchange rate in the country, ending the parallel market. The risk managers agreed this would be extremely difficult, saying it would have to be carried through totally. As the change was brought about, it would mean “sky-rocketing rates” as the two rates equalled out and Nigerians would have to be prepared to cope with those consequences.

Mr Udonsi said: “Several other solutions were provided. For example, the government should [look] back to the 1980s and 1990s when we focused on rural banking. Back then, the bankers actually sat with farmers or manufacturers, approving loans and making sure money sent out actually came back.

“We also talked about looking inwards and creating self-sustaining policies where we go back home and buy made-in-Nigeria products – that would help SMEs and generate that vibe that would actually blow up into something that could be exported. Quality issues would be resolved and the economy would pick up from there,” he concluded.