Volatile oil price, fiscal uncertainties may cut GDP projection to 3.5 per cent

The persistent fall in the international price of crude oil, plummeting earnings capacity of consumer goods companies and fiscal policy uncertainties have been identified as facilitators of Nigeria’s faltering growth projection, now mooted at about 3.5 per cent by some analysts.

The nation’s internationally projected growth at five per cent, though lower than last year’s six-pointer record, is now in jeopardy with continued oil price volatility that has been hitting hard on the nation’s fiscal projections and performance.

Besides, the chain reactions of the country’s fiscal uncertainties are now manifesting in slower economic activities by individual consumers and the consequences on the revenue and profit performance of consumer goods companies.

The multiplier effects in the medium term could be sub-optimal utilization of capacity in these companies and possible lay-offs, which would compound the 8.2 per cent unemployment increment record of the Nigerian Bureau of Statistics (NBS).

Already, indications have emerged that no money has been disbursed for the implementation of capital votes in the 2015 budget, with four months to the year.

The Lead director of Centre for Social Justice, EzeOnyekpere,who bared fangs over assessed lull in economic activities, queried: “But how will the economy grow or employment improve when government has not invested in capital projects contained in the 2015 Appropriation Act, while the operating environment for the private sector is filled with strong headwinds?”

“It is on record that not a single kobo has been released for capital projects in the year 2015. What is not clear is whether the non release of funds is due to the paucity of funds or operational reasons associated with the change of government.

“It seems that the new government is not up to speed in fiscal reporting. The last budget implementation report on the website of the Budget Office of the Federation is that for the second quarter of the year 2014.

“The reports for third and fourth quarters and full year report for 2014 have not been prepared, while the first and second quarter reports for 2015 are outstanding. In the absence of the budget implementation reports, no one can say with certainty what has actually been spent at the federal level.”

In a note to The Guardian at the weekend by Afrinvest Securities Limited, the Head of Research at the company, AyodejiEboh, though raised hope that there may be economic rebound in the second half of the year, said it would only be marginal and cannot offset loses to measure up with previous projected Gross Domestict Product’s growth.

“Following expectations of a stronger economy in thesecond half of 2015 on the back of improved fiscal management strategies, we believe growth reports in the remaining periods of 2015 will be improved albeit marginally.

“Consequently, in the face of continued volatility in global oil prices, slower economic activities reflected in revenue and profit performance of most consumer goods companies and fiscal policy uncertainties, we have revised our GDP forecast for 2015 to 3.5 per centfrom the previous five per cent,” he said.