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Insecurity challenges in the country which continued after 2022 may worsen poverty and high unemployment rate in 2023, according to a report by Augusto&Co, a research, credit ratings and risk management firm.
The firm said in its report titled ‘2023 outlook: Nigeria, a nation on the precipice’ that, “In addition, Nigeria’s insecurity challenge will continue to be a major issue in 2023. It worsened in 2022 and is now rife in many sections of the country.
“The scale of the challenge will require a two pronged approach, deploying resources to military artillery, personnel and intelligence; while also confronting the more deep-seated problems of pervasive poverty, high unemployment and extreme levels of inequality.”
According to the report, the World Bank has revised its economic growth projection for Nigeria downwards to 2.9 per cent from 3.2 per cent initially stated in June 2022.
It stated that Agusto & Co had a slightly more optimistic forecast, at three per cent and hoped the GDP growth would be supported by election spending, improved oil output (to 1.3-1.4mbpd19) and still high oil prices ($88pb20), but would be constrained by low investment and productivity.
How quickly Nigeria could stem rampant oil theft and vandalism would be crucial to boosting foreign exchange earnings and providing the CBN with enough ammunition to intensify its interventions in the forex market, it said.
However, it added, it expected high global interest rates to continue to limit capital inflows and add to currency pressures in 2023.
The report said the likely restructuring of the Ways and Means stock (estimated at N22.7tn) in 2023 would likely span several years to avert a liquidity crunch but was likely to tighten credit conditions if it assumed largely domestic uptake by banks.
“This would also push up debt servicing costs significantly as Ways and Means Advances are projected to account for 30 per cent (the largest chunk) of Nigeria’s N77tn debt stock by May 2023,” it stated.
It added that, “The removal of subsidies, and the attendant incentive for smuggling, should finally bring an end to the confusion over how much petrol is actually consumed in Nigeria and, in theory, should also right-size petrol imports (which account for 15 per cent of the total import bill), conserving valuable foreign exchange.
“However, the launch of the 650,000bpd Dangote refinery in January 2023 is a potential game-changer as it could completely eliminate Nigeria’s petrol imports. This hinges crucially on the complete price deregulation of petrol as the export market presents a significant opportunity that will be virtually impossible to pass up.
“The 60,000bpd Port Harcourt refinery is also expected to be completed and back on stream in Q1’23.”
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