Communique from May 4,2017 Breakfast Meeting



The quarterly breakfast meeting of the Treasurers of the corporate sector was held in Africa & Asia Room of the Eko Hotels & Suites, Lagos on Thursday 4th May, 2017. The theme of the Breakfast meeting was “Nigeria’s Road to Economic Recovery: 59 Steps in 60 Days” with panel discussions on the Nigerian Autonomous Foreign Exchange Fixing (NAFEX).

The Keynote speech with the title “Getting Out of Recession” was delivered by Dr. Ayo Teriba, Chief Economist and CEO, Economic Associates. Other panel Discussants were experienced practitioners drawn from the banking industry. In his keynote speech, Dr. Teriba, conceded to the irrefutable fact that the current state of the economy is challenging and turbulent in terms of economic growth, inflation, foreign exchange rate. Hence, the focus of his address was on ways of deriving value from the current economic state, which he discussed on two main heads of ‘economic circles’ and ‘policies’.

It was strongly opined that the recession, although presumed and anticipated to be structural, is purely cyclical as evidenced in the way it appears to be temporary but has begun the process of reversing itself. The recent success of the OPEC price rally and dialogue in the South-South region of the country which resulted in the current increase in oil price are indisputable evidences that the recession is cyclical.

Asides the many deliberations on the impact of the recession, suggestions on a possible way out (ranging from diversification of the economy to intensive investment in agriculture) have been made. While the suggestions remain laudable ones, we cannot fail to recognise the fact that there is a global commodity glut and hence commodity prices cannot lead to recovery - at least in the short term. Needless to say, agriculture is being held back by the huge gap between production and supply due to transportation cost, which leaves us with a slim chance of reaping the immediate benefits of diversification.

However, it is not all gloom and doom for Nigeria as there are sure avenues, like infrastructural development in rail and energy, that can ensure sustainable growth and development in the country. In essence, diversification can only thrive in the presence of infrastructural development in such areas that amplify the nation’s area of strength and prepare the ground for future diversification. Also, contrary to popular opinion, oil exports can lead to a greater boost of the Nigerian economy compared to other non-oil revenue.

Economic policy was the other focal discussion point at the breakfast meeting. These policies were considered in the light of their impact on easing the burden placed on the economy by the recession.

Financial policy was discussed in view of the foreign exchange rate. The CBN responded to the hike in foreign exchange by restricting domestic and external demand of FX. However, the appropriate reaction should have been a quantitative easing not a tightening.

Accordingly, the following were put forward as a way of curbing forex scarcity; bridging the infrastructural gaps, promoting economic stability and deriving value from the current economic situation, promoting exports, opening the vents of forex through non-oil channels and investments by soliciting remittances from diaspora via government bonds and FDI. Countries like India and Saudi Arabia are laudable examples of countries that are opening up their economy by relaxing policies and making public announcements that would attract FDI even though they still maintain a restricted list of sectors not opened up to FDI. The undeniable benefits of opening up the economy are evidenced in India, which is currently the most open economy for FDI in the world.


Another major highlight of the seminar was the panel session where astute practitioners in the financial market sector deliberated on issues bordering on the Nigerian Autonomous Foreign Exchange Fixing (NAFEX). They also buttressed the need for the Federal Government to stimulate liquidity by opening up the economy. As a call to action, it was advised that the government should put in place a department that would focus on encouraging FDI through various channels and policy appeals.

In addition, it was also recommended that the CBN should be more transparent with their policies and replace the current reactionary approach to managing forex with a more sustainable one that thinks ahead in order to boost supply. Further, it was recommended that the CBN needs to ensure firm banking supervision in order to aid impactful policy implementation and end the instability commercial banks bring due to their excess liquidity.

Market participants were also not left out as they were encouraged to actively participate in the market and cease in their deliberate speculations and inaction as no nation can shrink its way to economic recovery. It lies with the corporate bodies to bring the economy back on track. FMDQ is also helping with transparency by providing price quotes to boost the confidence of market players.

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