Just as Nigerians expect more gloomy times ahead, First Bank, a subsidiary of FBN Holdings [FBNH:NL], thinks there is still light at the end of the tunnel and that there is no recession.
The company in one of its recent presentations ‘Economy and You‘ said Nigeria’s economy is not in recession. The presentation focused on small and media scale enterprises, SME and trashed out three different areas.
An in-depth analysis of Nigeria’s emerging macroeconomic trends which showed that Nigeria is no longer the number one market for foreign direct investments, FDIs. It is however interesting that “notwithstanding Nigeria’s poor business environment, it is still easier to obtain credit in the country than it is in Norway, Sweden, Argentina, Belgium, Iran, Thailand, and The United Arab Emirates. This speaks volume of the strength of the banking industry’s support to businesses in Nigeria”
The paper looked at investment opportunities that exist in Nigeria. Trade NGN 1 trillion, agriculture NGN 17 trillion and real estate NGN 8 trillion are the top three sectors contributing to Nigeria’s gross domestic product, GDP.
The FBN’s paper concluded with an outlook for the Nigerian SME landscape.
- The economy is not in recession:
- It is still growing, albeit at a slower pace; and
- Opportunities for redistributing market share among the players in each industry;
- Poor oil price outlook means that access to FX at the official rate will continue to be difficult;
- Rising domestic prices indicate a further tightening of monetary policy;
For SMEs, these are the implications:
- Tighter borrowing conditions marked by:
- Increases in interest rates; and
- Tighter credit processes in the banks
- Still, 186m Nigerians speak to a large domestic market with huge unmet needs in trade, telecoms, crop production, real estate, etc.
- Entrepreneurs must increasingly think of their businesses outside of the vertically integrated food chains that lead up to the big corporate;
- Immense opportunities for cross-sector play exists in the fastest growing sectors of the economy;
- Source: Ministry of Finance, Budget Office of the Federation, World Economic Forum, FirstBank
These are the key take aways.
- FX restrictions on some imported materials, and the proposed ban on selected goods that can be
produced in Nigeria, offer unique opportunity for SMEs’ owners and other investors to grow their
businesses; - The continued drop in crude oil prices at the international commodities market has opened business opportunities in the downstream sub sector of the oil industry. Nigeria may become a net exporter of refined petroleum products in 2018.
FBN Holding, the parent company of First Bank, is Nigeria’s largest banking and financial services group with a total asset of NGN 4.3 trillion. First Bank, its commercial and retail banking arm is the leading provider of financial services to SMEs having a market share of over 50% of the market according to A2F SME Survey in 2015.
