Nigerias Economy and

Recession:
Outlook for 2017

RTC Advisory Services Ltd.

Lagos, Nigeria. October 6, 2016
Understanding Nigerias Recession
Nigerias Economy and Recession: Outlook for 2017
Nigerias Recession
According to NBS data, the Nigerian economy has
recorded two consecutive quarters of economic
contraction
In Q1 2016, GDP growth was negative (-0.36%)
and recently released Q2 2016 data reflects a
larger contraction (-2.06%)
Real GDP Growth: Q1 2013-Q2 2016
Nigeria's Real GDP Growth (%)

6.77 6.54
6.21 6.23
5.94
5.4 5.17
4.45
3.96

2.84
2.35 2.11

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -0.36
Q1 Q2
2013 2014 2015 2016

-2.06

Source: NBS & RTC Research

 Nigeria's Real GDP Growth: 1999-2016Q2
16.00
14.60
14.00

12.00
10.44
10.00
9.50 9.54
8.00 8.35

6.67 7.01 6.73 7.32 7.20

6.00 6.22
5.52 5.31 5.49
4.00 4.21
2.79
2.00
0.52
0.00 -0.36
-2.06
-2.00

-4.00
Nigerias Recession (contd.)
The economic contraction is fairly broadand
includes both oil and non-oil sectors

The oil sector contracted by 17.48% and non-oil

sectors by 0.38%
10.00
Oil and Non 8.88
Oil Growth
Real Oil and Non-Oil Growth Rates (%)
8.78
8.46 8.21
7.44 7.51
6.71 6.44
5.59
5.14
5.00 3.46 3.14
3.05
1.18
1.06
0.00
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 -0.18 Q2
-1.89 -0.38
2013 2014 2015 2016
-3.60 Oil
-5.00 Non-Oil

-6.60 -6.79
-8.15 -8.28
-10.00 -9.36
-11.40

-15.00 -14.72
-16.42
-17.48
-20.00
Nigerias Recession (contd.)
Virtually all major economic sectors are in
recessionmanufacturing, construction, trade,
transport, hotels and restaurants, finance and
insurance, real estate and government!!!
The only exceptions are agriculture and
telecommunications!
 Agriculture Sector Real Growth: Q1 Industrial Sector Real Growth: Q1
2014-Q2 2016 2014-Q2 2016
5.53
4.47 4.70 4.53
9.34
7.13
3.68 3.64 3.49 3.46 3.48 5.05
3.09 2.76

Q1 Q2 Q3 Q4 Q1 Q2 -0.26Q3 Q4 Q1 Q2
-4.51 -5.27 -3.80 -4.94
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2015 2016
-10.42
2014 2015 2016

Manufacturing Sector Real Growth: Q1 Construction Sector Real Growth (%)

2014-Q2 2016
20.00 17.88
15.41 16.00
14.01 13.47 15.00 12.66
10.70 11.32 11.17
10.00
6.42
5.00
0.38
0.00
Q1 Q2 Q3 Q4 -0.70
Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 -0.11
Q3 -0.35
Q4 Q1 Q2
2014 -1.75
2015 -3.36
2016 -5.00
-3.82 2014 2015 2016
-5.37 -6.28
-7.00 -10.00
 Trade Sector Real Growth: Q1 Transport Sector Real Growth
2014-Q2 2016 14.73
6.81 6.47
6.28
5.15 5.32 5.07 6.16
4.69
4.40
2.93 3.94 4.20 3.87 4.84 4.85 4.39
2.02

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 -0.03
Q2 2014 2015 -5.34
2016
2014 2015 2016

Information and Communication Accomodation and Food Services Real

Sector Growth Growth
9.49
7.95 8.30 26.66
23.27 23.86
6.77
6.26 18.14
5.21 5.27
4.21 4.07 11.43

1.35

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 -3.55
2014 2015-5.42 2016
2014 2015 2016 -8.97 -7.41 -6.39
 Finance & Insurance Real Growth FIs & Insurance Sector Growth
(%) Financial Institutions Insurance

8.87 9.01 9.37 9.52

7.00 8.56 8.14 6.41 6.57 6.41 7.75 8.65
7.91
8.20
7.76 6.77
5.256.87 5.11 6.64
5.04 5.15 6.62
5.07 3.57 3.72

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2014 2015 2016 2014 2015 2016

-11.28-10.82
-13.16 -13.24

Real Estate Growth Public Administration Real Growth

5.90 5.96 6.95
4.95
3.17 3.08 2.97 1.17 1.27 1.21
2.06
0.79
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2015 2016
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 -4.40
-6.13
2014 2015 2016
-10.64
-4.69 -12.53 -12.78-13.11
-5.27
 Plastic and
Electrical
and
Real Structure of the Nigerian Manufacturing Sector
Rubber Electronics
products Basic metal , Motor vehicles & Other

Structure of the Manufacturing Sector

0.06% Iron and assembly Manufacturing Oil Refining
3.71% 1.73%
Steel 0.78% 5.40%
Non-Metallic 2.63%
Chemical and
Pharmaceutical Products Products
2.38% 4.06% Cement
9.08%
Pulp, Paper and Paper
Products
0.82%
Wood and Wood
Products
3.31%

Textile, Apparel and Footwear

22.69% Food, Beverage and Tobacco
43.32%
 Manufacturing Sector Real Growth: Wood and Wood Products Real
Q1 2013-Q2 2016 Growth
30.00 13.5212.6613.32
24.59 12.2811.26
25.00 21.1522.65 9.22 8.47
18.95 8.08
20.00 15.4114.0116.00
13.47 5.63 5.62 5.70 5.84
15.00
10.00
5.00 0.38
0.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -0.34
Q1 Q2
-5.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -0.70 Q1 Q2 -1.75
Q3 Q4 Q1 Q2 2013 2014 2015 2016
-3.82 -3.36
-10.00 2013 2014 2015 2016
-7.00 -5.94

Oil Refining Real Growth: Q1 2013- Pulp, Paper and Paper Products Real
Q2 2016 Growth(%)
56.7553.3553.0053.79 49.6049.72
49.19 44.64
36.86
8.71
17.85
Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 14.2016.34
-6.75 -11.47-12.59 8.12
-15.23 6.81 6.77 6.82 6.87
2013 2014 2015 -22.59 2016
-25.15

-53.85 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -1.55
Q1 Q2
-64.54 -6.17
2013 2014 2015 2016
 Cement Real Growth: Q1 2013-Q2 Chemical and Pharmaceutical
2016 Products Real Growth (%)
50.00 92.32
41.1141.73
40.00 37.1736.87 62.79
30.6228.11 32.01
28.08 53.06
30.00 23.2122.7521.2221.32 41.61 38.50 39.52
32.92
20.00 25.57
17.36 16.24 15.13 17.16
10.00 5.89 2.35

0.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
-10.00 -4.35-5.48 2013 2014 2015 2016
2013 2014 2015 2016

Food, Beverage & Tobacco Real Non-Metallic Products Real Growth

Growth: Q1 2013-Q2 2016 (%)
42.52
15.98
35.69 34.70 37.14
12.3513.08 33.46
29.86 29.56
24.20
6.40 5.67 5.17 6.49 5.16
17.87
13.08 13.22 12.66

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -0.82
Q1 Q2 Q3 Q4 Q1 Q2 5.51
2.92
2013 2014 2015 -5.63 2016
-5.90 -5.53
-8.87 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
-11.12
2013 2014 2015 2016
 Textile, Apparel and Footware Real Plastic and Rubber Products Real
Growth Growth (%)
31.3430.36 31.0930.69
34.7534.3234.3834.4634.49 29.5029.3230.40 28.73
29.2030.2230.74
22.73
16.9916.2615.73

4.80 3.11
1.48 2.78

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
-3.17 -2.96 -1.71
-5.23 2013 2014 2015 2016
2013 2014 2015 2016

Basic metal , Iron and Steel Real Electrical and Electronics Real Growth
Growth(%) (%)
18.20 18.08
16.29 9.19 8.87
14.94 6.41 6.28 6.47
13.45 12.85 4.20
2.34 2.67 2.33 2.75
10.5011.18 0.55

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 -0.38
Q2 Q3 Q4 Q1 Q2
-2.36
4.47 2013 2014 2015 2016
2.67 2.86 2.56 1.87

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -1.04
Q1 Q2
2013 2014 2015 2016 -21.25
 Motor Vehicles & Assembly Real
Growth (%)
31.4030.5830.62
Other Manufacturing Real Growth
25.44 23.5824.0124.28
(%)
16.51
48.27
2.16
39.85
37.60
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 -0.48
Q2 Q3 Q4 Q1 Q2 32.96
29.57
2013 2014 2015 2016 26.38 26.59
-11.20-12.98

-19.19
14.40

-29.35

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
-2.13 -1.06
2013 2014 -5.67 -6.40
2015 2016
-12.22-13.13
Nigerias Manufacturing Capacity Utilisation (%)
Manufacturing Capacity Utilisation (%)
62.00
60.00
58.00
56.00
54.00
52.00
50.00
48.00
Developments in Agriculture Sector: 1999-2016 Q2
Developments in Agriculture Sector: 1999-2016 Q2
60.00 40.00
35.00
50.00
30.00
40.00
25.00
30.00 20.00
15.00
20.00
10.00
10.00
5.00
0.00 0.00

Agriculture Real Growth (%) Agriculture Sector Contribution to Total GDP (%)
Developments in Brent Crude Prices: 1999-2016Q2
Crude Oil, Brent (US $/bbl): 1999-2016Q2
120.00
111.97
110.94 108.86
100.00 97.64 98.94

80.00 79.64
72.70
65.39
60.00 61.86
54.43 52.37
45.95
40.00 38.30
34.36
28.27 28.85
24.42 24.97
20.00 17.81

0.00
Telecommunications Data: 2013-July 2016
Operator Jul 16 Apr 16 May 16 Apr 16 Mar 16 Feb 16 2014 2013

Connected Mobile (GSM) 222,440,207 213,113,202 214,668,963 214,668,963 211,732,836 210,202,453 184,782,512 159,758,538
Lines
Mobile (CDMA) 3,611,926 3,664,581 3,678,680 3,678,680 3,678,796 3,677,676 3,743,811 7,684,026

Fixed Wired/Wireless 348,933 353,201 353,278 353,278 353,830 353,923 365,871 2,233,981

Total 226,426,215 217,150,404 218,700,921 218,700,921 215,765,462 214,234,052 188,892,194 169,676,545

Active Lines Mobile (GSM) 149,708,077 149,179,083 148,189,043 146,866,356 147,398,854 149,787,120 136,772,475 124,841,315
Mobile (CDMA) 2,404,777
371,613 454,092 487,141 525,743 1,170,031 2,149,120 2,187,845
Fixed Wired/Wireless 164,114 170,539 171,974 176,211 176,579 186,772 183,290 360,537

Total 150,262,066 149,818,906 148,848,158 147,568,310 148,745,464 152,123,172 139,143,610 127,606,629

Installed Mobile (GSM) N/A N/A N/A N/A N/A N/A N/A 218,522,048
Capacity
Mobile (CDMA) N/A N/A N/A N/A N/A N/A N/A 18,400,000

Fixed Wired/Wireless N/A N/A N/A N/A N/A N/A 11,342,677

N/A
Total N/A N/A N/A N/A N/A N/A N/A 248,353,725

Teledensity 107.33 107.01 106.32 105.41 106.25 106.16 91.15

99.39
Why Are We In Recession?
Nigerias Economy and Recession: Outlook for 2017
Lets first clarify the diversification issue
Nigerias GDP is quite diversifiedso the problem
is not structure of domestic production

The issue is undiversified structure of government

revenue and exports (FX) revenue
 Administrati Human Health
ve and
Education
& Social Real Structure of the GDP This chart of Q2 2016
Support Services
1.88% 0.74% Arts, Entertainment &
Services
Business Recreation
Other Services
3.09% GDP shows GDP is quite
Public Administration 0.23%
Services
0.02%
2.45% diversified..
Professional, Scientific &
Technical Serv.
Finance & 3.68%
Insurance
3.05% Agriculture
Real Estate 22.55%
Accomodation 7.57%
& Food
Services
0.67%
Utilities
0.51%
Crude Petroleum & Natural Gas
8.26%
Information and Communication
12.68%

Manufacturing
9.42%
Solid Minerals
0.15%
Construction
Trade 4.30%

Structure of Nigerias Real GDP

17.57%

Transport
1.17%
Why Are We In Recession?
Legacy Factors
Policy Factors
Political/Security Factors
Legacy Factors
Oil Dependency
For Government Revenue (79.8%, 75.4% & 72.3%) and Export (FX) Income
(96.89%, 95.2% & 95.4%) in 2012, 2013 and 2014 respectively
Oil Price Collapse
From over $100 pb to $50
Low Sovereign Savings
Foreign Reserves down to $30bn @ 2015 from over $65bn in 2007
Political Risk in 2015 due to general elections
Effect on Foreign Direct Investment (FDI) and GDP Growth
Fiscal Leakages and Corruption
Reduced value-for-money from government spending
Policy Factors
Governance Vacuum
No Cabinet for 7 months in 2015
Policy Vacuum
Lack of clarity over economic policy (which subsists till today)
Wrong Policy Choices
Especially FX policy (till June 2016) and downstream
deregulation
No Strategy for Private Capital
Financial Sector Weakness
Weak Economic Cabinet
Policy Factors (contd.)
The consequence of policy factors above has
resulted in low investor and market confidence from
both domestic and foreign investors and impacted
FX inflows, FDI, new domestic investment, capital
markets, employment and economic growth.
Nigeria: Capital Importation
Capital importation declined to an all-time low of $647.1million in Q2 2016. According
to NBS, this level of FDI and Portfolio Investment is the LOWEST on RECORD
 Monthly Avearge Exchange Rate of the Naira
IFEM(USD) BDC(USD)
396.15
336.93
309.73

196.13 197

181.78
Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug.
2015 2016
Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug.
2015 2015 2015 2015 2015 2016 2016 2016 2016 2016 2016 2016 2016

IFEM (USD) 197 197 196.99 196.99 196.99 197.00 197.00 197.00 197.00 197.00 231.76 294.57 309.73
BDC (USD) 216.64 222.68 224.83 232.40 258.30 289.78 329.83 320.93 Source:
320.71 CBN,
336.93 2015
351.82 364.47 396.15
Parallel Cash 223 225 240
Transfer 236 235 245

Source: CBN & RTC

Exchange Rate Movement: Aug15 Aug16 Research
 External Reserves ($'Million)
35,000.00
30,000.00

29,916.58
25,000.00

29,069.78

28,161.68

27,823.59
30,192.21
30,343.62

26,195.61
27,089.61
27,864.60

25,417.40
31,322.41

26,363.44
26,387.29
20,000.00

24,566.42
15,000.00
10,000.00
5,000.00
0.00

Sep-16* as at 9/29/2016 Source: CBN&RTC Research

Inflation: Aug 15 Aug 16
Inflation Rate (%)
19.0
18.0 17.6
17.1
17.0 16.5
16.0 15.6
15.0
13.7
14.0
12.8
13.0
12.0 11.4
11.0
10.0 9.3 9.4 9.3 9.4 9.6 9.6
9.0
8.0
Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16
Capital Market Developments: 1999-2016Q2
NSE Market Capitalisation and All Share Index
25,000.0 70,000.0

60,000.0
20,000.0
50,000.0
15,000.0 40,000.0

10,000.0 30,000.0

20,000.0
5,000.0
10,000.0

- 0.0

Market Capitalisation(N'Bn) ASI

Unemployment and Underemployment
According to the NBS, of Nigerias economically active
population of 106.69million (by June 2016), only 79.9
million were in the labour force.
As at end of Q2 2016, of the 79.9million labour force
population, 15.4million (19.3%) were underemployed, while
13.3% were unemployed.
A total of 26.6million people (32.6%) were either
unemployed or underemployed.
The unemployment/underemployment rate for youths aged
15-24 years was 58.3%!!!
Nigerias Unemployment Statistics
Nigeria's Unemployment Rate: 2010-Q2, 2016
Old New ILO

32.6
31.2
29.2
27.4 26.5 27.3
24.7 25.4 25.2 25.1 24.3 24.2
23.9
21.4

12.1 13.3
10.6 10 9.7 9.9 10.4
7.6 7.1 7.8 7.4 7.5 8.2 7.2
6 6.8 6.4 6.4
5.1 4.8 4.6 4 4.8 5.0
2.2 2.1 3.3
1.9
Developments in Nigerias Unemployment Situation
Nigeria's Unemployment Situation (%)
Old New
35
32.6
31.2
30
27.4 26.8
25 24.7 25.0
23.9
21.4
20 19.7

15 14.9
13.4 13.3
11.9 12.3 12.7 12.1
10 10.6 10.0
9.0
7.8
5 5.1 6.0
4.7 4.2
3.1 3 2.3
0
 The FX Conundrum
A major contributor to recession was the denial and policy
incoherence over FX policy until policy changed in June 2016
The Fixed Exchange Rate was unsustainable:-
Loss of investor confidence
Shut off both FDI and portfolio flows
Limited manufacturing and other sectors
Depleted FX Reserves
Distorted FX markets and introduced multiple rates

Remittances Recoveringbut FDI/Portfolio Flows Still Unsure

The FX Conundrum (contd.)
The Continued Ban on 41 items in a market-based FX
market
Perpetuates multiple exchange rates. Manufacturers who rely on
some of these imports will have to buy from the parallel market
assuring a ready market (and therefore premium of official rates)
for the parallel market
Signals lack of commitment to market-based FX system and
therefore affects potential inflows
Reinforces currency devaluation (there will always be a significant
gap between official and parallel market rates
Is inconsistent with a flexible, market-based system and affects
confidence
Fiscal Policy
The budget relies exclusively on borrowing for fiscal stimulus
in the absence of private capital strategy
Debt service is already over 25% of budget and up to 40%
of government revenue.
Inconsistencies between monetary policy (which pursued
monetary tightening through Treasury Single Account (TSA),
and raising Cash Reserve Requirement (CRR) and Monetary
Policy Rate (MPR) for banks versus the executives intended
fiscal stimulus through budgeted borrowing persists
The big gap in policy is absence of a strategy to leverage
and optimise private capital!!!
 Nigeria's Debt Developments: 1990-2015
70 90

60
Nigerias Debt Stock: 1990-2015
76.59 56.2
63.98
80
54.58 54.0
70
50 48.08
43.95 57.93 60
41.21

Percentage of GDP
Total Debt ($'Bn)

40 50
37.44 34.83
32.4
41.26 40
30

30
20
18.95 20

10 13.39
9.60 10.35 10.55 10.6 10.71 10

0 0
1990 1995 2000 2005 2010 2011 2012 2013 2014 2015
Total Public Debt ($'Bn) Total Debt as % of GDP
 DomesticDomestic
1500
Debt DebtService Developments:
Service Developments: 2010-2016
40

2010-2016
1300
35.32
35

27.62 30
1100
Domestic Debt Service (N'Bn)

24.05

Percentage Ratio (%)

22.47 25
900 21.22
19.85 19.37 18.65
20
700 15.12 15.92 1,361.88
15.34 15
10.58 11.98 953.62
500 865.81
794.1 10
720.55
6.86 537.39
300 5
354.13
100 0
2010 2011 2012 2013 2014 2015 2016
Debt Service Debt Service as % of Total Budget Debt Service as % of Budget Revenue
Nigerias Fiscal Operations
Components of Gross Federally Collected Revenue
(N'Bn)
3,000.00

2,500.00

2,000.00

1,500.00 Non-Oil Revenue

Oil Revenue

1,000.00

500.00

0.00
Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16
Components of FGN Revenue (NBn)
Components of Gross Oil Revenue (N Bn)

Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16

Oil Revenue 1,808.86 1,795.53 1,723.11 1,466.22 1,210.77 839.02 949.45 830.81 666.13 537.19

Crude oil/Gas Sales 516.63 577.41 470.99 331.18 274.09 215.40 196.29 212.86 82.43 112.54

PPT/Royalties 874.47 838.89 916.31 809.89 573.30 325.03 495.39 388.66 314.04 212.78

Others 417.76 379.23 335.81 325.15 363.38 298.59 257.78 229.28 269.66 211.86

Components of Gross Non Oil Revenue (N Bn)

Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16

Non Oil Revenue 686.27 817.77 1,060.35 744.58 844.87 558.19 956.32 717.15 602.46 621.86

Value-Added Tax (VAT) 213.80 194.15 193.39 192.88 195.66 203.18 202.11 177.78 196.57 194.61

Companies Income Tax & 178.12 404.20 422.60 202.38 174.94 159.36 415.67 279.13 176.26 171.71
Other Taxes

Customs & Excise Duties 121.63 136.28 151.53 156.80 138.08 127.59 138.83 141.67 135.51 106.54

Others 172.72 83.14 292.83 192.52 336.19 68.06 199.70 118.58 94.12 149.00
Political/Security Factors
Impact of Niger-Delta militancy on oil production
Income lost on approx. 800,000 barrels of oil per day for 5
months
Impact of Herdsmen/Farmer conflicts on agricultural
production across the country, but particularly in the
North Central
Continuing (though reduced) impact of Boko Haram
activity on agricultural output and trade in North-East
and impact of grave Internally Displaced Persons (IDP)
situation in the region
Policy Options for Recovery
Nigerias Economy and Recession: Outlook for 2017
Leveraging Private Capital
Urgently enact PIB(s) and fast-track Incorporated JV strategy for upstream
oil JV operations (and reduce government share)
Privatisation or concessioning of major/regional airports and refineries
High-level concerted PPP strategy for infrastructure and raising profile of
ICRC and BPE
Deregulate downstream oil sector (as opposed to government raising petrol
prices). Consider government investment in public transport to assuage
citizens pains.
Implementation of National Integrated Infrastructure Masterplan (NIIMP)
Channeling pension fund investment towards infrastructure and mortgages
 Asset Sales Strategy
PURPOSE
Shore up Reserves and calm markets
Signal Private Capital Strategy
Release funding for infrastructure
Achieve fiscal stimulus and create jobs
Deepen capital markets
Improve Economic Efficiency
Generate capital for health and
educational infrastructure
SECTORS ENTITIES/STRATEGY
Incorporated JVs with lower government
shareholding. Stop $5 Billion annual JV
funding burden on budget
OIL AND GAS
NLNG- sell 20% to partners and 5% on
NSE. Involve communities
TRANSPORT- AVIATION Concession major international and
regional airports
Sell-off all refineries and fully
REFINING deregulate downstream refining and
petrochemicals
Telecommunications spectrums
OTHERS
Investments in financial institutions
Policy Refinements
CBN should immediately restore 95HS Code items (out of 680 HS
Codes under the 41 banned items list) identified by MAN as critical
raw materials for industry to valid for FX status
Taxation
VAT Increase: Necessary, but is this expedient due to economic recession?
Can VAT increase be balanced with social intervention or deferred for
18 months?
Reduction of Corporate Tax rate may also be deferred for 18 months
For now policy should continue to focus on widening the tax net and
effective tax enforcement
Procurement Reforms: Constitution of National Procurement
Commission
Promote Exports
Refined Petroleum Products
Core policy required are full downstream petroleum sector deregulation
and incentives for building private refineries
Agro-Manufacturing and Processing
Key issues are power, export incentives (especially resumption of the Export
Expansion Grant (EEG), doing business reforms and access to finance
Mining
Solid Minerals reforms and global investor outreach signaling policy
certainty and investor-friendly policy
ICT
Informal Sectors: Sports, Music, Film and Entertainment
Privatise sports administration
Legislative Action: Priority Legislation
Federal Competition and
Consumer Protection Bill
Petroleum Industry Bills (PIB(s))
Review of Companies and Allied
matters Act (CAMA) and
Investment and Securities Act
(ISA)
Nigerian Railway Authority Bill
National Transport Commission
Bill
Nigerian Ports and Harbours
Authority Bill
Federal Roads Authority Bill
National Roads Funds Bill
Secured Transactions in
Movable Assets Bill
Nigerian Independent
Warehouse Regulatory
Agency Bill
National Development Bank
of Nigeria Bill
Land Use Act*
Finance and Credit
Current financial sector conditions are contributing to
economic decline
Review and fine-tune TSA operation to improve liquidity and
payment efficiency
NMRC was a good first step: Address other issues impeding
mortgage sector to stimulate real estate, construction and
financial sectors
Land Use Act and Land Administration; Commercial
Courts/Divisions; High Interest Rates; Operation of NHF Act; etc.
Political/Security Actions
Continued efforts to restore normalcy in North-East
and resolve IDP situation
Political engagement and security measures to end
sabotage of oil infrastructure in the Niger-Delta
Zero tolerance for herdsmen/farmer clashes in the
North-Central and across the country
Social Investment
Government may have to intervene in the social sector to
assuage the high level of misery.
We favour interventions in:-
Public Transportation-low interest rate loans through BoI to
transportation unions and investors to buy buses with government
waiving import duties and charges
Food Security-Fertiliser and Agronomy Support
Education-Teacher Training, Vocational and Technical Education
and School Infrastructure.
Will government commence its school feeding and other
proposed social investment programmes?
Policy Leadership and Confidence
Some changes in personnel may be required.
The President may also consider appointing a Chief Economic
Adviser or a Council of Economic Advisers
Government should also fill all important vacancies in federal
regulatory agencies and MDAs
Government should launch a new economic reform programme
and signal a bold commitment to investor-friendly economic
direction based on attracting private capital from domestic and
international investors
Government must vigorously pursue Doing Business and
Investment Climate reforms (Trade and Investment)
Outlook for 2017
Nigerias Economy and Recession: Outlook for 2017
Politics: Towards 2019
APC
Evolves towards NW + NE SW APC
core (CPC) and former Under Tinubu, recreates
Tinubu Loyalists from SW AD/ACN-type bastion
plus Amaechi & Oshiomole

PDP
Reduced to SS/SE core
seeks to re-admit PDM
(Atiku & Co), nPDP (Saraki
& Co) and Middle-Belt
Three (3) Political Economy Scenarios
Status Quo-More of the same!
Sustained period of low/negative growth-GDP growth -2% to 2%
Low FDI, FX Volatility, current policy posture, low market confidence

Better Days-Things are getting better!!

Moderate/High economic growth-2% to 4%
Pro-private capital economic reform programme, new appointments, higher FDI &
portfolio flows, better macroeconomic indices, political reconciliation

Meltdown-Multiple Points of Crisis!!!

Economic contraction worsens below -2%
Financial sector deteriorates, political risk rises, social context more dire; major anti-
free market move e.g. nationalisation of banks and power companies
Real GDP Growth
Nigeria's Real GDP Growth (%)

6.77 6.54
6.21 6.23
5.94
5.4 5.17
4.45
3.96

2.84
2.35 2.11

0.82

*f-forecast
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -0.36
Q1 Q2 -0.47
Q3*f Q4*f
2013 2014 2015 2016

-2.06
Source: NBS & RTC Research
Oil and Non-Oil Growth
Real Oil and Non-Oil Growth Rates (%)
10.00 8.88 8.46 8.78 8.21
7.44 7.51
6.71 6.44
5.14 5.59
5.00 3.46 3.14
3.05
1.18 1.20 1.77
1.06
0.00
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1-0.18Q2-0.38Q3*f Q4*f
2013 2014 2015 -1.89 2016
-3.60 Oil
-5.00 Non-Oil
-6.60 -6.79
-8.15 -8.28
-10.00 -9.36
-10.00
-11.40

-15.00
-14.72 -15.00
-16.42
-17.48
-20.00
Real GDP Growth: 2011-2017
Real GDP Growth: 2011-2017

6.22
5.31 5.49

4.21

2.79

1.50

-0.47
2011 2012 2013 2014 2015 2016*f 2017*f
 Administration Real Structure of the Nigerian Economy: 2016
2.26%
Human Health & Social Services Arts, Entertainment & Recreation
0.70% 0.21%
Administrative and Support Education Other Services
Services 2.27% 3.31%
0.02% Professional,
Scientific & Technical
Finance & Serv.
Insurance 3.71%
2.90% Agriculture
Real Estate 24.27%
comodation 7.28%
& Food
Services
0.90%
Utilities
0.49%
Information and Crude Petroleum & Natural Gas
Communication 8.57%
11.52%

Manufacturing
9.27%
Trade
17.29%

Construction

Projected Structure of the Nigerian

Transport
3.71% Solid Minerals
0.12%

Economy: 2016
1.19%
Conclusions
Our projections do not suggest a radical improvement in
economic performance in the short term; though the economy
may come out of recession, the period of low growth may
persist.
There remains some scope for enhanced economic growth
dependent on a more pro-reform, pro-private capital policy
posture. The main catalyst for such policy moderation may be
external pressure.
Political risk may begin to rise again in the course of
2017/2018 as the 2019 elections draw nearer and political
calculations increase in fluidity.
RTC Advisory Services Ltd
MEDIFE House 5th Floor, 58/60 Broad Street, Lagos, Nigeria
Contacts: Opeyemi Agbaje: opeyemiagbaje@rtcadvisory.com, 0802 223 5804
Kehinde Ayanbadejo kehindeayanbadejo@rtcadvisory.com, 0805 477 3659