‘New wage implementation to aid consumer spending this year’

Though consumers’ purchasing power remains low, analysts at United Capital Plc have projected modest improvement in consumer spending if the N30,000 minimum wage proposal is implemented.

In their projection, which is contained in the investment banking firm’s Economic outlook for the 2019, themed: ‘Sailing Through the Storm’, the analysts noted that the implementation of the wage plan and review of salaries will aid aggregate consumption spending, with a direct impact on activities in the trade sector as consumer wallets receive a boost.

President Muhammadu Buhari had on Wednesday, inaugurated an advisory technical committee for the implementation of the proposed N30, 000 new minimum wage for Nigerian workers.

He also announced that the Federal Government would review the salaries of workers currently earning above the national minimum wage.

The appointment of the advisory committee comes a day after the Nigeria Labour Congress (NLC) held a nationwide protest over the wage demand.

Indeed, the outlook projected that the pace of output growth is unlikely to rise sharply in 2019 given election uncertainties which may constrain new investments and other economic activities in H1- 19, especially if the initial outcome of the February election is inconclusive.

“More so, a possible poor implementation of the 2019 budget, complicated by the volatile oil market outlook, both point to a weak economic momentum. Put differently, we expect economic activities in Nigeria to remain dependent on unstable oil output and constrained non-oil output growth”, the outlook showed.

In the firm’s sectoral review, the report stated that output growth in the agricultural Sector is subdued by clashes between farmers and herders which undermine the successes of the several policy incentives by the Federal Government and the CBN (including the Presidential Fertilizer Initiative [PFI], Anchor Borrowers Programme [ABP], Commercial Agriculture Credit Scheme [CACS], the more recent Real Sector Support Facility [RSSF] as well as the foreign currency ban on 41- items), aimed at spurring growth in the Agricultural sector.

“Similarly, activities in the manufacturing sector are likely to remain challenged by extreme operating environments amid gaping infrastructure, weaker volume growth, elevated operating expenses, distribution bottlenecks, and a high-interest rate environment.

“We highlight the severe impact of the Apapa-gridlock as well as the inadequate power supply on players in the manufacturing space as noted earlier.

Contrariwise, we expect economic activities in the Services sector, driven majorly by Trade, to improve due to the relative stability in the currency market.

However, high borrowing costs, low demand for properties, rent service charge defaults, and low construction activities will continue to slow down activities in the real estate sector.