Latest merchandize trade report by the National Bureau of Statistics (NBS), which showed a decline in the country’s foreign trade surplus in the first half of this year, as well as weak second quarter 2019 capital importation data earlier released by the bureau, indicates that a lack of market-oriented policies is hindering Nigeria’s economic growth, analysts at Cowry Asset Management Limited, have said.
The analysts, who stated this in a report obtained by New Telegraph yesterday, said they expected the weak data to lead the Federal Government into amending its policies to encourage private sector participation in building the economy.
They said: “We expect FG to tweak its policies to drive private participation as the meagre FDIs inflow and the shrinking foreign trade surplus suggest that Nigerian economy is stifled due to dearth of market-driven policies. Also, Nigeria is still at the mercy of ‘hot money managers’ for currency and interest rate stability as portfolio investments still constitute the major foreign capital inflow.”
As the analysts pointed out, the NBS merchandise trade report shows that while Nigeria’s foreign sector merchandise trade value rose year-on-year (y-o-y) by 15.43 per cent to N16.84 trillion in H1 2019, the merchandise trade surplus declined by 63.14 per cent to N1.42 trillion in the same period.
Similarly, according to the capital importation report released by the NBS, the economy recorded a decline of $3.2billion in investment inflow from $8.48billion in the first quarter of this year to $5.82billion in the second quarter.
The report stated: “The total value of capital importation into Nigeria stood at $5.82billion in the second quarter of 2019. This represents a decrease of 31.41 per cent compared to Q1 2019 and 5.56 per cent increase compared to the second quarter of 2018.”
It further disclosed that the largest amount of capital importation by type was received through portfolio investment, which accounted for 73.76 per cent or $4.29billion of total capital importation.
The report added that this was followed by “other investment,” which accounted for 22.41 per cent of $1.3billion of total capital imported and Foreign Direct Investment (FDI), which accounted for a paltry 3.83 per cent or $222.89million of total capital imported in the second quarter of this year.
Although the NBS did not give reasons for the decline in investment inflows, the general belief in financial circles is that delay in appointing and assigning portfolios to cabinet members may have affected investor confidence.
In addition, analysts believe that President Muhammadu Buhari’s decision to appoint mainly experienced politicians and very few technocrats as ministers sent a signal to foreign investors that the president was not disposed to carrying out major fiscal reforms in his second term in office.