The Nigerian economy is still groaning under paucity of financial resources occasioned by declining global crude oil prices which heightened mid-2014. This has reduced the quantum of revenue allocations to the State and Federal Governments, resulting in some states owing several months of salary arrears. The country’s foreign reserve nose-dived by 15.7% from $34.469b as at 31/12/14 to $29.069b as at 31/12/15. The occasional draw-down on our foreign reserve is an attempt by the CBN at providing as much foreign exchange as would stabilize the Naira exchange rate. But despite the control measures, the Naira daily depreciates in the parallel market. As at the end of the second week of January 2016, the exchange rate of the Naira was as low as N300 to US$ 1, down from about N180 in December 2014. The Federal Government is not well disposed to devaluation contrary to the views of foreign investors.
The upper chamber of the Nigerian National Assembly recently gave a nod to the policies so far formulated by the CBN to strengthen the Naira. The FG’s 2016 N6.08tr. budget proposal has been submitted to the National Assembly for debate. The Government believes its anti-corruption and looted funds recovery drives, in addition to diversification of the national revenue base will go a long way in funding its budget. It is hoped the efforts of the CBN will also be effectual in controlling inflation which increased from 8% in December 2014 to 9.6% in December 2015.
Looming staff downsizing in some organizations and reduced industrial productive activities are the likely ripples to be generated by reduced Government revenue, reduced allocation of foreign exchange to the productive sector and little or no lending by the banks. These in turn may reduce pension remittances by employers on behalf of employees. The stock market is in its present low ebb as a result of divestment of foreign interests and loss of public confidence. Bank deposit interest rates are low because of excess liquidity in the system. All these tend to inhibit the level of growth of pension funds under the management of Pension Fund Administrators. However, it is expected that with the successful implementation of the 2016 budget, the economy will be re-engineered for growth.