Massive retrenchment looms in banking and public sector, says Rewane

Managing Director/Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane has explained that the country may record massive retrenchment in both banking and public sectors by June next year adding that unless the impact of Rewane, who made the prediction in his latest monthly economic views, which he presented at the Lagos Business School recently indicated that unless the impacts of the initiatives are felt in the economy, “Commercial banks will commence massive staff retrenchment in second quarter of 2016, state governments will also retrench sharply in quarter of 2016.


The stock market index will decline further till quarter of 2016 and corporate earnings for the fourth quarter of 2015 will be weak. Inflation will spike to 11 per cent in the first quarter of 2016 before falling to nine per cent in the third quarter of 2016.” But, in his opinion, earnings will recover sharply in the third quarter of 2016, adding that there would also record massive civil works and construction (of roads, bridges, railways) then.

“Oil prices will recover to $55pb by second quarter 2016. Oil production will also increase pass two million barrels per day in first quarter of 2016. Official rate of the naira will depreciate to N220/$1, while parallel market rate will appreciate to N235/$1.

“The MPR will be reduced to 10 per cent per annum and CRR to 15 per cent. Petroleum subsidy will be history in 2016.The ease in monetary policy stance and the stimulus package of the government is expected to reflate the economy, thus impacting positively on corporate earnings,” he added Desirous of stimulating the economy as well as to encourage banks to lend, the monetary policy committee, MPC, of the Central Bank of Nigeria, CBN, had at its meeting last month eased monetary policy by reducing the benchmark monetary policy rate, MPR, to 11 per cent and slashed the cash reserves requirements, CRR, to 20 per cent.

Also, the bankers’ committee at its retreat last week unfolded plans to aggressively support the non-oil sector as well as young graduates in the country. On the other hand, the Federal Executive Council, FEC and the National Assembly recently approved the Medium Term Expenditure Framework, MTEF and Fiscal Strategy Paper, FSP for 2016 to 2018 and proposed a N6 trillion budget for 2016. The Minister of Budget and National Planning, Senator Udoma Udo Udoma, had said the MTEF/FSP that was approved would provide the fiscal policy direction of the government in the next three years, with the federal government announcing some measures aimed at relating the economy.

The CBN Governor, Mr. Godwin Ifeanyi Emefiele, last week said the central bank is contemplating to unveil a programme through which it would support young graduates that are operators of micro, small and medium scale enterprises (MSMEs) at concessionary pricing in 2016. This is just as the Minister of Finance, Mrs. Kemi Adeosun, said the federal government would soon go to the debt market to raise fund in order to finance its capital expenditure. Emefiele clarified that the programme would be completely different from the N220 billion MSME development funds that had been launched by the central bank.