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‘Nigeria may lose Brexit’s benefits to infrastructural, others’



‘Nigeria may lose Brexit’s benefits to infrastructural, others’


With the European Union’s (EU) approval of the agreement it reached with Britain over Brexit setting the stage for the United Kingdom’s planned withdrawal from the EU on the scheduled date of March 29, 2019, analysts at Cowry Asset Management Limited have said that any benefits that Nigeria will derive from Brexit, could be lost due to the country’s huge infrastructural and human capital deficits.

The analysts stated this in the firm’s, “Cowry Weekly Financial markets review outlook” obtained by New Telegraph.

Specifically, the analysts said: “ We opine that the unintended benefits resulting from the exit of the UK from EU could elude Nigeria in the face of massive infrastructural and human capital deficits.”

Although the experts did not explain how these deficits will deny Nigeria any benefits from Brexit, the country’s infrastructure gap is estimated to hit $878 billion by 2040.

According to the Founder/Group CEO, Quantum Global Group, Jean-Claude Bastos De Morais, the estimate of Nigeria’s infrastructure gap by 2040 is based on forecasts of an annual Gross Domestic Product (GDP) increase of 4.1 per cent and a population that is rising by 2.4 per cent per year at current trends.

In a recent report, analysts at Financial Derivatives Company (FDC) predicted that Brexit could lead to the Central Bank of Nigeria (CBN) stepping up monetary tightening thereby pushing up lending rates.

Britain voted to exit the EU in 2017, a decision that has now been termed “Brexit.” According to the FDC analysts, Brexit will boost trade between Nigeria and its former colonial master.

Experts at FDC said: “Nigeria’s trade with Britain will increase with soft or hard Brexit; trade with commonwealth countries will be stronger; concessioning funding from commonwealth sources; international financing will become more expensive; companies likely to hedge on forex-denominated transactions and CBN may respond by tightening further – lending rates to increase further.”

Analysts believe that Nigeria would be a key trade partner post-Brexit negotiation. For instance, in an interview with the UK Telegraph early this year, the Chairman of the Commonwealth Enterprise and Investment Council (CWEIC), Lord Marland of Odstock, said many Commonwealth countries offer new opportunities for Britain.

“There are one or two really encouraging, optimistic places on the horizon,” he said. “ You’ve got the big populations such as Nigeria, which is going to be 320million people – bigger than the United States – in under 10 years. They love British products…it’s a huge consumer market. Fundamentally there is a lot of disposable wealth. The Commonwealth’s influence has been especially felt in Africa, and in Nigeria.

“Nigeria has the largest economy in Africa, and 30 percent of its exports go into bloc’s market. India alone, also a Commonwealth member, accounts for 15 percent of Nigeria’s exports. Nigeria is also the fifth largest economy in the Commonwealth, and with South Africa, represent about 70 per cent of Commonwealth African trade. After South-Africa, Britain is Nigeria’s second-largest trading partner, with the relationship worth an average of around £3.8 billion annually.”

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