NISM YPro August 2016. Volume 2, Issue 6
Apologies for the late issue; it’s been an incredibly busy past quarter!
So much has happened over the last few months, that it’s almost hard to find a way to summarise the implications. As most of our membership is based in the city of London, I guess the main word (can we call it one now?) that has been on everybody’s lips, mentioned in nearly every meeting, at every social event and maybe even in our dreams (or nightmares) is none other than BREXIT.
For those who don’t know, the UK recently held a referendum determining whether or not they should leave the EU. The economic consensus advising against exiting the EU was unprecedented; the experts all sang a chorus of “No!”. Unfortunately, the exact opposite happened: the UK did vote to leave the EU.
Now, we are in uncharted waters. So far we’ve seen a 12% drop in the value of the pound, the BoE cutting rates from 0.5 to 0.25, a massive drop in real estate prices, a new government, and banks lining up to announce restructuring plans, hiring freezes or even layoffs — not to talk of triggering insecurity across the EU generally.
As Nigerians at home and in the diaspora, why should we care? Of what relevance is this? To truly contextualise it, we should quickly run through the developments in Nigeria too. Sorry, it truly is a long message from me this time!
- Currency fears
The naira was devalued or depreciated, depending on who you believe. The bottom line is that the naira is trading on the interbank market at around 310/320 (from being previously held at 200 to the dollar) and is now 400 to the dollar on the parallel market. Dollar scarcity is still an issue and, contrary to expectations, foreign investment simply hasn’t returned to bring much needed dollars into the economy. - Violence & Insecurity
From the Niger Delta Avengers to the resurgence of Biafran secessionist movements, Nigeria has seen a rise in militant agitation. Worse still, the violence of militant herdsmen and perennial problems with Boko Haram have killed thousands and displaced millions. Boko Haram alone is now responsible for more deaths than ISIS. This is an emergency that cannot be ignored. - A fledgling banking sector
Our banking sector is under immense pressure and extremely exposed to Oil & Gas. This is important since oil recently dipped below $40 per barrel again and is only just hovering above — a significant drop from the recent c.$50 price which had us feeling much more hopeful. - But… Not all doom and gloom
For fear of painting a bleak picture, I must highlight some good developments. Yes, we are finally moving towards FX market liberalisation, which hopefully means that the government can find the financing it needs. Also, increased efficiency and transparency has been noticed in the civil service, oil scarcity has basically ended and the government seems to be making a concerted effort to tackle security risks. In addition to these changes, the prospects of cross-continental collaboration are looking good, with the introduction of an African Union passport and the approval of a $56bn industrialisation package for the continent over 10 years or so by the African Development Bank.
With all these factors in mind, it is also crucial to remember that the EU is one of Nigeria’s top five trading partners and our top source of imports. BREXIT and instability in the EU could have serious knock-on impacts on our economy. New changes in government, both in the UK (and even the US), could mean new foreign policy goals, revised approaches to movement of people, trade and aid, as well as the need to forge new relationships with a different set of leaders.
With that being said, I’ve mentioned before that remittances account for more than FDI and aid combined. The UK is one of the biggest sources of remittances to Nigeria, not to talk of Europe as a whole. A decrease in confidence resulting from economic uncertainty in Europe could potentially result in less remittances being sent home — and this would create a significant dent in much needed inflows to Nigeria.
Here is the note I want to leave this on. Nigeria, our home, needs support. It needs investment and it needs our expertise. We have an opportunity here! While Europe seeks to be less integrated, Africa seeks to be more united and we should continue this momentum. Send money home and send more money home than you’ve done before; it couldn’t be more important and should go further!
Are you full with ideas for fixing issues back home, ideas that have been making the rounds in your mind for years now? Act on them. Reach out to other NISM members. Reach out to the leadership. Let’s make it happen! We can’t afford to be complacent anymore. We either have to see ourselves as citizens that can take control of the future direction of our nation, or leave it to despair and I absolutely believe we are better than that!
