Scorecard – assessing our 2018 predictions

2018, like any other, has been an eventful year in Nigeria with security forcing its way back to the front burner as the country entered campaign fever in preparation for its next general elections.

As we put finishing touches to our review of 2018 and our forecast of 2019, we did a review of our key 2018 predictions from last year and how these have panned out…

• We believe that the country’s GDP growth rate will double in 2018 despite the recent caps on production placed by OPEC. CORRECT

• We expect that political upheaval in the Middle East will cause supply disruptions in the global market leading to further increases in oil prices early in 2018. CORRECT. Despite Donald Trump junking the Joint Comprehensive Plan of Action (JCPA), the stalemate in the Yemeni Civil War, and the outcry following the death of Saudi journalist Jamal Khashoggi, oil prices rose early in the year as predicted as markets have speedily adjusted to new realities and sufficient capacity has been found to account for Iranian production

• Oil prices to drop to 2017 year end levels by the end of 2018. CORRECT. Despite rising to a year rise of $76 in early October, West Texas Intermediate Crude has slipped to around $51 as of end of November. Brent Crude, which started the year at $66.13 was at $63.31 as of the time of writing.

• Jobs lost during the recession will finally begin to return. UNKNOWN. The National Bureau of Statistics has been unable to release unemployment figures since Q3 2017.

• We will see increasing agitation from members of the middle class. CORRECT. As private citizens take more to social media to air their complaints against both government and corporate entities, the ability of individuals to organise around issues as well as the willingness of celebrities to support political activism has seen an uptick in citizen-driven initiatives such as #OurMumuDonDo. More crucially, the middle class is voting with their feet, with skilled middle-class Nigerians selling everything and relocating from the country to Europe, Canada, Australia and the Middle East in droves.

• By the end of 2018, we predict that rates will be around 12%. WRONG. The CBN has left its interest rate at 14% since July 2016.

• We do not expect the 2018 budget implementation to outperform those of the previous 2 years. CORRECT. The Budget for 2018 was not passed until the end of Q2.

• Little or no room for the implementation of capital projects for 2018. CORRECT. The late arrival of the budget, expected funding gaps, a continued lack of capacity by MDAs and the uptick in political activities has resulted in the inability of the government to achieve meaningful budget performance.

• Investment in power generation will continue to be slow. CORRECT. Issues between the government, GENCOs and DISCOs over revenue capturing (estimated billing, prepaid meters and intervention fund disbursement) have led to uncertainty in the power sector. In July, the investors in the DISCOs offered to sell their holdings back to the government, at a discount if necessary. Furthermore, the government in early December said it was not ready to grant sovereign guarantees to power investors, effectively stalling reform in the sector.

• Some projects, most notably the Afam project, to close. CORRECT.

• Nigeria will still not achieve 10,000MW in 2018. CORRECT. Average power generation in the first 9 months of 2018 was 3,781MW.

• Various initiatives have been pushed by the CBN and Federal Ministry of Finance to spur lending to the real sector by banks will start to yield dividends. WRONG. Despite various efforts, the government have been unable to persuade banks to significantly boost lending to the private sector. Credit to the private sector by Nigerian banks stood at ₦15.74 trillion in Q4, 2017 but to fell to ₦15.6 trillion by Q3, 2018.

• Lending to the agriculture sector will improve. CORRECT. The CBN has intensified its policy of lending directly to the agricultural sector through the anchor borrower scheme. The CBN also approved ₦75 billion loan to farmers under the Nigerian Incentive-Based Risk Sharing in Agricultural Lending (NIRSAL).

• We expect the market to do just as well in 2018 as a minimum. WRONG. The All-Share Index of the Nigerian Stock Exchange had a stellar 2017 returning 42% for the year on the back of foreign exchange stability (the importer-exporter FX window was opened last year). Unfortunately, the reverse has been the case so far in 2018 with the ASI down 19.41% as at 6th December due to mainly to the exit of FPIs following fight to safety (and improved US Treasury yields) ahead of Nigeria’s 2019 general elections and weak economic data. 

• The recommendations of the National Minimum Wage Committee inaugurated by President Buhari in November 2017 will not be implemented in 2018 CORRECT. Despite reaching a reported agreement of ₦30,000 in early November, the government’s subsequent foot-dragging has kept the labour unions and government on a warpath.

• Use the threat of mass action to extract an increase CORRECT. Various unions have engaged in strikes or have threatened to go on strike during the year in order to extract concessions from the government.

• Federal lawmakers, with the sceptre of elections on the horizon, will struggle to find the political will needed to enact critical laws necessary to open up key segments of the economy. CORRECT. President Buhari’s veto of the Petroleum Industry Governance Bill and the lack of progress on amending the Nigerian Railway Corporation Act are just a few examples of critical areas where the legislative branch has failed to deliver critical legislation needed to push forward needed reform in various sectors of the economy.

• 2018 will see more strikes by public healthcare workers CORRECT. Competing demands by different health sector workers have seen a proliferation of strikes in the health care sector. In education sector, the Academic Staff Union of Universities is also currently on strike and the NLC, as well as the oil unions, have embarked on strike actions this year.

• There will be a further continuation of the turf wars between various prosecutorial agencies WRONG. The legislative and executive branches have been embroiled in conflict over the appointment of a substantive Executive Chairman for the EFCC.

• There will be little progress recorded in driving effective service delivery in the judiciary. CORRECT. There is still a lively debate ongoing amongst the various participants in the legal profession. However, there has been very little progress in implementing reforms necessary.

• 2018 will witness even more increases in clashes between herdsmen, who are mostly Fulani, and local indigenous communities CORRECT. Attacks on indigenous villages in the North Central region of Nigeria in January and May 2018  led to the displacement of thousands, who are now residing in IDP camps.

• A settlement of the pastoralist crisis will prove difficult to come by in 2018 CORRECT. The perception that the APC government at the centre has not done enough to combat the menace of rampaging herdsmen has created ill will for the party in the North Central region. A July 25th protest by youths blocking the governor of Benue State Samuel Ortom eventually led to his defection from the APC to the PDP.

• The violence will abate. CORRECT. Violence in the Middle Belt finally got some much needed attention as the election season began to draw closer, and has slipped out of the news cycle.

• Kidnapping and armed robbery will keep escalating. CORRECT. Reports of kidnappings, robberies and cattle rustling continued to emerge throughout the year. The most brazen of this was the April 5th attack on five banks in Offa, Kwara state by a gang reportedly led by a dismissed police constable. The robbers used assault weapons and explosives.

• Attacks by Boko Haram decrease in frequency and increase in ferocity. PARTLY CORRECT. There has been a steady deterioration in the security profile of Borno State throughout the year. By the beginning of Q4, there was a major resurgence by the al-Bawari led ISWAP with multiple daily attacks as well as massive onslaughts against major military locations, particularly in Northern Borno and Lake Chad areas.

• Indigenous People of Biafra will be seen as increasingly unimportant in 2018 as election fever reaches a higher pitch CORRECT. The call for Igbos to boycott the 2019 election, the re-emergence of Nnamdi Kanu in Israel and continued protests by members of the group has kept the group in the news. However, the group’s actual importance on the ground has greatly diminished and it is less effective as a nascent separatist force.

• NE and NC geopolitical zones will become more heavily reliant on aid organisations. CORRECT. The continued crises in these regions, with farmers being direct targets of both Boko Haram and herdsmen, have left the people unable to feed themselves and more reliant on aid.

• Leaving many Nigerians with little recourse to the fake and substandard drug market. CORRECT. With the inability of the government to drive a drop in  cost and increase access to quality healthcare, majority of Nigerians still depend on traditional health practitioners and illegal patent and pharmaceutical stores for primary healthcare.

• The problem of food shortage will worsen in the northernmost parts of Nigeria. CORRECT. As noted earlier, the deterioration of the security situation in the NE and NC has kept farmers away from their farms.

• Opposition politicians, APC members who fall out of favour and sympathetic businesses will be targeted for harassment by agents of the state. CORRECT. The role of the police in political activities in opposition controlled states (Benue, Akwa Ibom and Rivers states), particularly in attempts to impeach governors, have been decried as unbecoming of their regular roles.

• The APC and PDP will not be the only recipients of defectors. CORRECT. As the APC and PDP concluded their  rancorous primaries, politicians seeking to pursue elective positions  defected to other parties including the SDP and the ADP.

Of the 32 projections we made at the end of 2017, 26 (81%) were correct, 4 (13%) were wrong, while 2 (6%) are either partially correct or unknown.

SBM Intelligence’s forecast for 2019 will be published at noon WAT on Friday, December 14, 2018.