The year 2022 was quite eventful as we witnessed political and economic changes that generated ripples that were felt all across the globe. Notably, the Covid pandemic eventually came to an end with the easing of restrictions in various countries. Another notable event is the invasion of Ukraine by Russia which had economic and political reverberations. Here in Nigeria, our economy was heavily battered by inflation which saw a huge rise in the cost of living/doing business. The apparent disconnect between the government’s monetary and fiscal policies can also be named as a contributory factor.
The New Year promises to be a defining year for Nigeria as the next general election takes place in February 2023. There are more people running for the presidency, and more Nigerians are becoming politically engaged and aware, making it one of the most momentous electoral events in the nation’s history.With the advent of the New Year, we now take a critical look at some important sectors of the economy and how they might fare in 2023.
In recent years, Nigeria’s information and communication technology industry has experienced substantial growth and development. Looking ahead to 2023, the growing use of cloud computing is one of the probable trends that may affect the development of ICT. The National Bureau of Statistics stated that the industry contributed 18.44% of the nation’s GDP in the second quarter of 2022. Many Nigerian organizations will use cloud computing solutions to store and analyse data as they look for ways to save expenses and boost productivity.
A potential trend that could emerge is the expansion of the e-commerce sector. E-commerce has become easier to access thanks to Nigeria’s sizable and quickly expanding population, the uptake of mobile devices, and the availability of the internet. Fintech is undoubtedly on the increase, and this trend is set to continue as more people use digital financial services. The Fintech space has seen substantial expansion in recent years and the mobile payments and digital banking space are expected to continue growing in the year 2023.
The Manufacturing sector suffered a lot in the past year with a lot of Companies closing down with the attendant job losses. A key factor that affected most manufacturing companies was the lack of foreign exchange needed to purchase critical raw materials, which was exacerbated by the CBN policy excluding some items from access to foreign exchange. Unfortunately, this trend is expected to continue in the year 2023 because the first quarter of the year will be spent on politicking and the incoming government will be sworn in on 29th May 2023 as such its not expected that a lot of changes will be seen this year in terms of monetary and fiscal policies.
Oil & Gas
Due to persistently low oil production and increased insecurity, growth slowed in 2022 and this was exacerbated by the disruptions due to the conflict between Russia and Ukraine. Nigeria presents itself as a more alluring location for foreign direct investment for oil and gas as Europe entirely weans itself off of Russian energy and the recent commercialization of the state-owned National Petroleum Company-NNPC Ltd, which would further liberalize the sector, is one of the other growth indicators in the oil industry. Nigeria’s fuel needs should be satisfied by the finished Dangote Refinery’s 650,000 b/d capacity, provided that domestic oil prices remain competitive and fuel imports are reduced.
Agribusiness remains the brightest light in this tale of despair and it is expected that the Government would ramp up policies that will aid investment in this sector. The Sector has witnessed a large influx of participants in the past year and it’s expected to continue because of the need for food for human consumption, raw materials for industrial growth and jobs for the growing population of our youths. The agriculture value chain has transcended just crop and livestock and now includes all business enterprises that buy from or sell to farmers e.g. feed, seed, fertilizers equipment, energy, machinery credit, insurance marketing, consultancy, storage, processing, transportation, packing, distribution etc. Government policies on Agriculture will be playing out this year, especially in the area of grants and other forms of agricultural financing.
Whilst we do not expect a radical improvement in economic performance in the short term, we are however optimistic that the economy may come out of recession with the right policies and enabling environment. It is advisable for the Government to place special focus on encouraging SMEs who are very germane in the quest to lift the economy out of recession.
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