The Group Managing Director, Afrinvest, Ike Chioke has called for the removal of electricity subsidy in Nigeria.
Chioke, speaking at the Half year investment parley of the investment firm in Lagos on Tuesday, urged the Federal Government to remove the subsidy on electricity.
According to a new report by the Nigerian Electricity Regulatory Commission, NERC government spending on electricity subsidy reached N2.8tn as of December 2022.
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While the removal of the subsidy might lead to higher inflation, Chioke expressed hope that the savings made would be utilized to alleviate the hardships faced by poor Nigerians.
He said:
“There is still one more subsidy element that the government needs to tackle and that is electricity subsidy. We see that will likely push inflation from 23 per cent up to 24 per cent towards the end of the third quarter of the year before we can then see inflation being reined in. But most of this would depend on the policy direction of the new government.
“In the fixed-income market, you see a lot of volatility but volatility is good if you are an active trader. In the equity market, we have seen a significant correction in the market.
“It is up by over 20 per cent from when President Tinubu came in but you have to be selective because there have been windows of profit-taking that put pressure on the market.
“Generally speaking, Nigerian stocks are undervalued relative to their comparative emerging market peers in South Africa, Morocco and Egypt.”
He also highlighted that investors were eagerly awaiting the appointment of ministers and the policy direction of the new administration.
He said:
“There is still a bit of upside but that upside momentum is still with some investors sitting on the sidelines, waiting for the government to settle down, waiting for the FX policy. People don’t want to bring dollars into the market when they are not sure of the way out.”
The Managing Director of Afrinvest Consulting, Abiodun Keripe, confidently projected in his presentation that global trade would remain fragile.
Keripe said:
“Global growth will mostly likely come in fragile at 2.4 per cent. The body language from key central banks across the world suggests that they are ready to increase rates if inflation shows that it is not ready to come down.
“The (Nigerian) oil sector is recovering but growth is still in the negative territory. In the non-oil sector, that was where we expected most of the growth in the first quarter. It expanded by 4.3 per cent.”
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