5 Things That Could Impact The Nigerian Economy in 2022 By Elvis Eromosele
Each year is peculiar. The start, the end and everything in between are unique for each year. So, we can almost confidently say, 2022 will be a different year.
But as humans, we naturally like to have a sense of what the year will look like. It is supposed to help planning, enable anticipation and strengthen hope.
Here are my thoughts on the five big things that will impact the Nigerian economy in 2022.
Do feel free to debate the points and if possible do add yours.
The coronavirus will remain a menace. The world cannot wish the COVID-19 pandemic away. It will remain a reference point for policy and business decisions for at least another year – its third year.
The ability of the virus to mutate is the biggest factor in the fight to curtail its spread and impact.
Through the first quarter, airlines are expected to continue to cancel thousands of flights as the Omicron variant cases cause global travel disruptions. This is not surprising as crews test positive, or are forced to self-isolate to stem the spread.
Reports indicate that while Omicron is milder than other variants (read Delta) but the huge number of infections is cause for concern.
Advanced countries are talking of the second round of vaccine booster jabs while developing countries are struggling to get the first jab to go round. It is not a pretty picture.
Throughout 2022, countries will continue to impose measures to keep the virus in check in direct response to emerging realities. For most countries, the policy will shift from a containment strategy to one of mitigation including self-monitoring, mask-wearing, social distancing and strict rules concerning private gatherings but life will go on despite COVID-19.
Production and more equitable distribution of vaccines and the availability of treatment drugs will further help stem the spread.
Expectation: The politics around the virus will be reined in with the focus on containment.
Push for Equities
Equities are pieces of a company, also known as “stocks.” When you buy stocks or shares of a company, you’re purchasing an ownership interest in that company. In 2021, MTN called on Nigerians to own a share of the company. There was a stampede.
MTN showed that despite reports to the contrary Nigerians still have an appetite for investing in shares.
Granted, the company ran a tight and relatable campaign but the result was truly impressive.
Of course, MTN is fundamentally a solid and well-run company. It is a leader in the Nigerian telecommunications space, owner of a payment service bank (PSB) license and one of the only two companies with 5G license.
40 per cent of telecommunications subscribers are on the MTN network. With the increasing quest for connectivity data usage and voice calls expected to remain high over the next decade, expectations are high.
One expects that with Nigeria’s me-too type business environment, many other firms are likely to try and reach out to Nigerians in 2022.
Some will succeed, many will struggle. There are no guarantees, each must justify its quest to raise funds.
Expectation: A number of firms will seek to fuel growth and diverse their investors base by offering equity.
Financial inclusion, according to the World Bank, is access to valuable and affordable financial products and services delivered responsibly and sustainably. These services include payments, savings, credit, insurance, and transactions.
In Nigeria, the Central Bank (CBN) has since 2012 stated its goal to deepen financial inclusion in the country. It has actively pursued this objective over the decade, howbeit in fits and stops. The granting of provisional PSB licenses to MTN and Airtel in 2021 is viewed as a massive step forward in the right direction.
PSBs can accept deposits from individuals and small businesses, carry out payment and remittance services within the country, issue debit and prepaid cards, operate electronic purses, and other activities prescribed by the CBN.
Analysts talk of it as a game-changer.
With the final approval, they will join OPay and Paga as major players in that space.
The license to telco is significant because of their wide coverage of the country, especially in rural areas where most of the unbanked population reside.
This will, no doubt, help fast-track the CBN’s financial inclusion goal.
2021 was a good year for fintechs in Nigeria. Three unicorns emerged, several agreements partnerships were reached and new players joined the market. Fintechs are equally at the forefront of deepening financial inclusion in Nigeria.
Expectation: More wins. More partnership. More Financial Inclusion. A fintech will move to acquire a bank.
Politics will be the elephant in the room in 2022. No one and nothing can hide from its impact. 2022 is the eve of the election year, the almighty 2023.
Political parties will seek to hold their primaries to decide candidates for the various offices, INEC will intensify the registration of voters and distribution of permanent voter’s cards (PVCs) and governance will essentially ground to a halt as politics takes over the activities of government.
The gladiators for the national prize will struggle to outspend each other, hasten to distribute the usually branded rice, garri and noodles combo and form/rework alliances.
Naturally, hidden secrets will come to the fore with accusations and counter-accusations flying in the media both traditional and new. Politics in 2022 will be peculiar.
Expectation: The youths will find their voice by aligning with the old guards.
The Nigerian economy is largely import-dependent with import bills in steady increase over the last couple of years. Naturally, this puts undue pressure on the Naira precipitating greater outflow of Forex and creating a trade deficit that weakens local production of imported goods. It is a vicious cycle.
In simple English, we don’t produce or export enough to gain enough forex to do the things we need to do as a country. Businesses scramble and scraper to find dollars to carry on operations. It is a vicious cycle.
In Nigeria, Omicron is just another word but inflation is feared. This is not surprising.
The rising prices of consumer goods are worrisome. The price of rice, garri and beans have gone through the roof and cooking gas has more than doubled in the last 14 months. It is a scary situation.
Expectation: The economy would continue to stagger under the strain of inflation.
Nigerians are naturally resilient people. We’ll find a way to overcome the odds and do something extraordinary in the year. And of course, the Principle of impotence provides a good excuse for action in spite of insufficient data.
Happy New Year!
Elvis Eromosele, a Corporate Communication professional and public affairs analyst lives in Lagos.