Business Monitor International


Nigeria Business Forecast Report

Published 22 July 2014

  • 53 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Nigeria Business Forecast Report

Core Views

  • Political risk was one of the dominant discussion themes during BMI's visit to Nigeria in June. Although there was some acknowledgement that the deteriorating security situation is part of the electoral cycle as the January 2015 elections approach, there is a sense that the emergence of Boko Haram has crystallised the usual threat associated with elections.

  • Nigerian economic growth will slow to 6.5% in both 2014 and 2015 (from 6.7% in 2013) as security issues, elections and uncertainty about monetary policy weigh on private consumption and investment. The impact of these issues will not be too significant or longlasting and our forecasts therefore remain relatively robust, small downgrades aside. However, we note that risks are to the downside.

  • Although there is some concern that monetary policy will be loosened under the new central bank governor, this is unlikely in the lead-up to the February 2015 election due to pressure on the currency. The trajectory of policy after the election is more difficult to predict but we believe that the aggressive loosening that some are expecting is unlikely.

  • Increased spending, much of which relates to upcoming elections, is as much to blame for Nigeria's recent fiscal deterioration as lower-than-planned oil production. The deficit will remain small at only 2.2% of GDP in 2014 and a low debt-to-GDP ratio means that a fiscal crisis is not imminent. However, challenges to the oil sector over the longer term mean that risks will build if the issue of fiscal opacity is not dealt with.

  • The naira will remain volatile over the next six months as downside pressure will emanate from the approach of elections and shifting global financial market sentiment. However, central bank support will prevent the unit from depreciating significantly. Pressure should subside after the election but uncertainty over the trajectory of monetary policy poses risks to this view.

Major Forecast Changes

  • No major forecast changes.

  • ...

Table of Contents

Executive Summary
5
Core Views
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Domestic Politics
8
On The Ground: Political Risk Concerns At The Fore
8
Chapter 2: Economic Outlook
11
SWOT Analysis
11
BMI Economic Risk Ratings
11
Economic Activity
12
Security Issues To Weigh On Northern Consumption
12
Table: Economic Activity
12
Exchange Rate Policy
14
NGN: Manageable Pressure With Downside Risks
14
Table: Currency Forecast
14
Monetary Policy
16
Monetary Loosening Unlikely Despite Mixed Policy Signals
16
Table: Monetary Policy
16
Fiscal Policy
17
Small Fiscal Deficit Belies Profligacy
17
Table: Fiscal Policy
18
Chapter 3: 10-Year Forecast
21
The Nigerian Economy To 2023
21
Power Sector Key For Long-Term Productivity
21
Table: Long-Term Macroeconomic Forecasts
21
Chapter 4: Business Environment
25
SWOT Analysis
25
BMI Business Environment Risk Ratings
25
Business Environment Outlook
26
Institutions
26
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
26
Table: BMI LEGAL FRAMEWORK RATING
27
Table: LABOUR FORCE QUALITY
28
Infrastructure
29
TABLE: AFRICA - ANNUAL FDI INFLOWS
29
Table: TRADE AND INVESTMENT RATINGS
30
Market Orientation
31
TABLE: TOP EXPORT DESTINATIONS, USDmn
32
Operational Risk
33
Chapter 5: Key Sectors
35
Pharmaceuticals & Healthcare
35
Table : Pharmaceutical Sales , Historical Data And Forecasts
36
Table : Healthcare Expenditure Trends , Historical Data And Forecasts
37
Table : Government Healthcare Expenditure Trends , Historical Data And Forecasts
37
Table : Pri vate Healthcare Expenditure Trends , Historical Data And Forecasts
37
Telecommunications
38
Table : Telecoms Sector -Mobile -Historical Data & Forecasts
39
Table : Telecoms Sector -Wireline -Historical Data & Forecasts
40
Table : Telecoms Sector -Internet -Historical Data & Forecast
41
Other Key Sectors
43
table: Oil and Gas Sector Key Indicators
43
TABLE: Infrastructure Sector Key Indicators
43
TABLE: Food and Drink Sector Key Indicators
43
Table: Autos Sector Key Indicators
44
TABLE: Freight Key Indicators
44
Chapter 6: BMI Global Assumptions
45
Global Outlook
45
Global Recovery Still On Track
45
Table: Global Assumptions
45
Table : Developed States , Real GDP Growt H, %
46
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
46
Table : Emerging Markets , Real GDP Growth , %
47

The Nigeria Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Nigeria and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Nigeria's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Nigeria's economic and industry growth through end-2018.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Nigeria's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in Nigeria, including currency volatility, the commodity price boom and protectionist policies.

The Nigeria Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Nigeria economic policy-making and performance impact on corporate profitability over 2014-2018?

BMI provides our fully independent 5-year forecasts for Nigeria through end-2018 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Nigeria Business Forecast Report features BMI's forecasts with supporting analysis for 2014 through to end-2018, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2018 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Nigeria and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Nigeria, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Nigeria over the next 5-years?

BMI's Nigeria country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Nigeria Market - Political Strengths, Weaknesses, Opportunities and Threats facing Nigeria.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for Nigeria's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Nigeria's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for Nigeria, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of Nigeria's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in Nigeria will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Nigeria's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2009-2013, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2014-2018, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express