The group managing director Cowry Asset Management , Johnson Chukwu has said that lack of currency reforms is worsening foreign exchange pressure and increasing forex shortages in the country.
He also said that the resulting negative fiscal balance will lead to a further deterioration of the exchange rate at both the official and parallel market.
Speaking virtually on the” First Quarter 2022 Economic and Financial Highlights and Outlook for investors in second quarter 2022″, Chukwu said the non oil sector will drive marginal economic growth as we expect Information Communication Technology (ICT), real Estate, construction and trade to continue in the growth trajectory.
Describing the banking sector as a key enabler of economic activities, he said the nation’s banks have shown enough resilience, agility and adaptability.
He said that the banking sector as a payment and settlement infrastructure will remain crucial and essential to the economy.
He sated that in order to further enhanced capital adequacy more bank are beginning to embrace holding company structures and are veering into the financial technology space.
He also added that the nation’s commercial banks are going into holding company structure to escape from the Central Bank of Nigeria tight monetary policies.
Some of the banks that have concluded or at advanced and planning stage to move into holding companies structure according to him include , GTCO Plc, , United Bank for Africa, Access Bank Plc, Fidelity Bank and Zenith Bank.
The Managing Director of Cowry Asset Management, pointed out that labour mobility as a result of skilled workers being tempted by offers in developed countries, is leading to a brain drain in the sector, particularly in technology- intensive departments.
He said that the impact of Russian and Ukraine war contributed to high prices of diesel and aviation fuel with a resulting in the increase in cost of manufacturing, logistic and transportation.
He said the rising inflation levels as a result of the on going war between Russia and Ukraine has caused the prices of commodities to surge northward which will translate to increased revenue for companies in this regard.
He said the worsening subsidy expense is exacerbating Nigeria’s fiscal balance.
He said the suspension of the planned subsidy removal for 18 months and the resultant addition of N2.55 trillion in into the budget expenses to cater for it. He stared that the proposed take-off of the Dangote refinery in the course of the year would help to improve supply of petroleum products in Nigeria.
On the food scarcity, he said good inflation declined marginally due to a good harvest but the scarcity expected as we approach the planting season, adding that with the high level of strategic grain reserves of the Central Bank , it is believe that food prices will remain relatively moderated.