The Standard Chartered Bank has stated an urgent need for long-term macroeconomic reforms to steer the Nigerian economy towards growth and attract foreign portfolio investments.
The bank said such step was necessary following the geopolitical tension and uncertainties in the global landscape.
The Chief Economist and Head of Research for Africa and Middle East at Standard Chartered Bank, Ms. Razia Khan, made the presentation.
She added that with Federal Reserve System (FED), European Central Bank (ECB) on its way to increasing interest rates, there will be more capital flight from Nigeria, which may trigger increased interest rates from external borrowing and other declining economic variables.
She said this in her keynote address at KPMG Alumni Conference 2022, where stakeholders converged to discuss, “Clarity in Uncertain Times: Unlocking Hidden Opportunities for Businesses.”
According to Razia Khan, “Right now, we face a great deal of uncertainty globally.
Although the world’s central banks are reacting first and foremost, to the threat of inflation, the expectation is that from March onwards, the U.S. will have to start tightening, there’s a whole series of U.S. Fed rate hikes that are built into financial markets.
“We know that now that the European Central Bank (ECB) will likely have a tightening bias perhaps earlier the markets had been betting about. And all of this alongside the geopolitical risk alongside the uncertainty is likely to feed risk aversion in markets.
“So, if we were looking for that benign scenario, where risk appetite would be strong investors would be looking for where the growth opportunities were, you will see surplus capital being deployed from the more mature economies, growth prospects are normalizing and that going into emerging markets with growth prospects, long term growth prospects is supposed to be a lot brighter.
But the problem is, in the very near term, it seems unlikely to happen.”
She added that Nigeria has a big investment requirement, which should benefit from the savings of the rest of the world.
