“I think Nigeria is still very hot, from the perspective of GDP growth and from other fundamentals we look at in the Nigerian economy,” Abiola Rasaq, lead researcher at UBA Capital told CNBC Africa.
Nigeria’s Gross Domestic Product (GDP) is still growing at around 6.4 per cent based on projections for 2013, nonetheless, there has been some slowdown in the country’s GDP growth.
“Yes we have seen some slowdown in terms of GDP growth coming from about 7.6 and 7.7 per cent about three years ago and we are down to about 6.7 per cent outlook for 2013 but in our own view, we think that will actually bottom out in 2014,” he explained.
Rasaq believes that in 2014, the Nigerian economy will be back to the 7 per cent region as there have been significant structural change in the GDP over the last three years.
“In as much as we continue to see increasing urbanisation in Nigeria and we continue to see continuous reforms in the agricultural sector and in services industry, we should continue to see contribution from these sectors of the economy which I call, the new growth polls in Nigeria,” he added.
With the naira outperforming other currencies on the African continent, Rasaq is confident this will be sustained going forward into 2014.
“The CBN [Central Bank of Nigeria] have created a high interest rate environment to stabilise the naira and I think that has worked well. Beyond that quantitative monetary policy measure, I think it’s also important to look at the administrative measures of the CBN which I think are actually more important in stabilising the naira,” he said.
The change from the Wholesale Dutch Auction System (WDAS) to the Retail Dutch Auction System (RDAS) is also considered to have significantly facilitated the stability of the naira as the CBN have better control of what the level of demand is in the market.
Even so, the oil theft concerns that continue to plague the country, is a major issue that worries a lot of investors.
“The significance of the oil sector to the Nigerian economy has actually reduced over the last few years, for example before 2010, we used to have the oil sector contributing about 18 per cent of the GDP, now that’s down to less than 13 per cent,” he concluded.