Mr. Bayo Olugbemi is Managing Director, First Registrars & Investor Services Limited. In this interview with ZAINAB ONI, he picks holes in the policies of the Federal Government and regulators of the Nigerian Stock market but says there is hope in the horizon. Excerpts:
How will you evaluate the Nigerian economy in the last two years under President Muhammadu Buhari’s administration?
It has been very tough; while all businesses have been going down, the inflationary rate has gone up and the naira has depreciated. However, one would say that in the past three months, the economy had given us hope that there are better days ahead.
Things are getting better, the capital market in particular is making a rebound, which is partly due to a lot of reasons, like the return of some foreign investors that left the country earlier, and relative stability witnessed in the foreign exchange market. Also, the Federal Government recently released its economic recovery roadmap, which is giving hope more or less to all the stakeholders in the economy.
Can you tell us some grey areas that need to be fine-tuned to rescue Nigeria from recession?
One area that I think we should look at is, massive capital spending. Yes, it is not yet where we expect it to be but things are getting better, compared to what it was. Now, I think we have a better mix. What I mean is the mix between the capital expenditure and recurrent expenditure, which is getting better. At a point, it used to be terribly skewed at a ratio of 80: 20 in favour of recurrent expenditure.
Like I said, we are not there yet but I think we are better off than what it was before. There cannot be any economic development, if we have dilapidated infrastructure and now, it seems the government is now doing better in that area. A lot of things have been happening both in Lagos and the federal level. We have developments in terms of construction, like the Lagos –Ibadan expressway, the rail project and the recently refurbished Abuja International Airport. By the time you bring all these things together, definitely, it will bring about a lot of changes and economic development.
Aside from that, which others areas require the attention of the government?
The power sector needs to be revisited again because, if there is stability in power, it will affect industries positively. Today, a lot of industries, businesses and homes spend so much money to generate their own power. The capital invested in powering generators is costly and also, the running cost of diesel. The cost of doing business in Nigeria is one of the highest in the world, owing to irregular power supplies and other poor infrastructure. But if what the government is doing at the moment is sustained in the next few years, I think it will be better.
Can you assess the performance of the capital market in the first quarter of 2017?
The first quarter was a little bit stable but between April and now, I think it has become better, because we have some impressive reports from some of the quoted companies and listed companies in the previous year, from January to December.
How would you describe the Central Bank of Nigeria’s intervention in the foreign exchange market?
I would not say the CBN is intervening because when we talk of intervention, people may take it as if the market is being manipulated in a way; but intervention here means, one of the reasons there has been a high increase in foreign exchange is because demands outweigh supply. Whether we like it or not, the government is a major contributor to the stability of the forex because, our major forex earning comes from oil.
Many times in 2015 and last year, there were troubles in form of instability in the oil-producing areas, which contributed to the low output of oil being produced. But there were steps taken by the government, which has brought about stability. It has stopped the unrest and even the price at the international market has also been stabilised.
I think to a large extent, there is availability of forex, which is stabilising the economy because, now, more companies and industries can import necessary raw materials and that is now relaxing the instability in the market, as it is easing out difficulties in doing business.
there should be a centralised export agency that handles everything that has to do with export
Despite all the challenges facing the banking sector, what do you think the future has for the sector?
The future is bright for every sector of the economy, if there is sustainability of policies introduced by the Federal Government. If by next year, we see an increase in investment in infrastructural development and capital expenditure-because we cannot continue to spend on things that would not bring in money to us-the economy will grow better. When we invest in capital projects, in infrastructure, they will definitely attract more investment and more development to the economy
