Still on interest rates
- Banks will face stiff competition from loan sharks as they take advantage of stringent borrowing conditions.
- Higher Borrowing cost on personal loans, corporate loans and overdrafts
- Shift to peer-to-peer lending
- Highly leveraged companies will be susceptible to loan defaults
- Urgent need for capital restructuring.
- Implementation of GSI for corporates will force responsible borrowing but could affect loan growth.
- Extension of regulatory forbearance to target sectors in the economy.
- Continuous interventions in key sectors of the economy by offering lower interest rates.
- More consumer protection activities to combat rising interest rates.
- Clampdown on unregistered FinTechs to safeguard subprime borrowers
• CBN will continue with capital controls to manage demand side of forex
- External reserves will need another Eurobond or foreign denominated loan to cross $40 billion.
- Oil price rise not expected to contribute significantly to external reserves
- Capital Importation fell to lowest since 2016 at just $6.7 billion.
- Expect it to remain low this year
- Capital repatriation will pile pressure on forex demands -dividends, royalties, fees etc.
- Return to global travel will increase demand forex among individuals
- Inflation will trigger higher import bills thus ncreasing forex demands
- Reliance on Dangote Refinery to address fx demand on imports
How forex situation could play out
- Employees will seek remote working opportunities to earn forex
- Increase in migration to Canada, US and other European Countries
- Savings in US Dollars
- Higher demand for PTA
- Stash forex in offshore accounts
- Hedge replacement cost through price hikes
- Visa hawking
- Dangote Refinery a possible game changer
- Reduction in forex transaction limits.
- Exposure non-performing forex loans
- Increase in commissions from forex transactions
- Increase in hedging activities
- More FX loans
- More Eurobond facilities to boost FX reserves
- Drive for higher non-oil exports will continue
- Reduce oil theft to boost oil and gas exports
- Sale of more government assets to increase forex reserves
- Continuous tightening of FX Controls to control demand for FX
- Possible devaluation at the official market as FX disparity widens
- More sanctions against banks and corporates seeking alternative fx supplies
- More CBN Policies to boost FX imports – 2021 Naira4Dollar; 2022 RT 200 FX
- These policies will need strong institutions to partner with Banks and Businesses to execute on exports growth.
- More CBN rants against FX operators
- BDC Ban may be lifted as election nears
Source: Nairametrics. by Ugodre Obi-Chukwu