Economy

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The drastic appreciation of the naira must be supported with devaluation or proper free-float of the local currency, else, the gain will only be a stop-gap, Bloomberg is reporting.

Quoting JP Morgan Chase and Renaissance Capital, Bloomberg said until Nigeria “devalues or makes a clear switch to a free-floating currency”, it “will struggle to lure back foreign investors”.

Forwards suggest more declines to come, investors are shunning naira assets, and a web of alternative exchange rates only adds to the confusion over the currency’s real value.

John Ashbourne of London-based Capital Economics told the revered newspaper that the number of exchange rates in the country “further complicates” an already convoluted system.

Bloomberg data shows that naira forward contracts maturing in three months trade at 354 per dollar, suggesting the currency will drop 11 percent in the period. Naira six-month contracts are quoted at 381.

In the past week, the Central Bank of Nigeria (CBN) had taken a number of policy actions which has led to a record appreciation of the naira from 520 to 450.

The bank has pumped $371 million, $230 million and $180 million into the forex market in the past seven days, but investors want more in devaluation or free-float, owing to the fact that the currency remains 30 percent weaker on the black market than on the official one.

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President Muhammadu Buhari

Nigeria’s Presidency has said the recent economic indices released Tuesday by the National Bureau of Statistics (NBS) has shown that the country is on a path to economic growth, attributing the “upward trajectory” to the “efforts” of the Federal Government.

Special Adviser to the President on Economic Matters, Dr Adeyemi Dipeolu, stated this in statement made available to the media. The statement said the Buhari administration was hopeful that with the recent peace engagement with the people of the Niger-Delta, increased oil production output as seen in the last quarter 2016 report would be sustained.

The statement reads in full:

“The recently released data from the National Bureau of Statistics showed that Gross Domestic Product (GDP) contracted by -1.30% in the fourth quarter of 2016. This translated into an estimated growth rate of -1.51% for the full year 2016. These figures reflect the slow-down in the economy for most of 2016 but also show that the recession may have bottomed out because of an improving trend in several key sectors.

Although the oil sector declined by -12.38% on a year on year basis, this was a relative improvement compared to the third quarter when the decline amounted to -22.01%.  This outcome was due mainly to increases in production such that the quarter on quarter growth for the oil sector between the third and fourth quarters was 8.07%.  The non-oil sector however declined by 0.33% after showing some resilience in the third quarter when it grew by 0.03% at the height of the recession.

Agriculture grew at 4.03% in the fourth quarter of 2016 which was a marginal decrease from the 4.54% growth in the third quarter.  This is mainly because agriculture (especially crop production, which accounts for the bulk of agricultural production) is highly seasonal, with growth in the third quarter of the year usually higher than the others.  Nevertheless, the overall outcome for the year was that the agricultural sector grew by 4.11% for the whole of 2016 which was higher than the figure of 3.72% for 2015.

The manufacturing sector actually grew on a quarter on quarter basis by 1.89% but declined over the year by 4.32% reflecting the problems that the sector faced in the course of the year due to a combination of factors including the depreciation in the exchange rate and higher energy costs.  The metal ores sub-sector grew by 7.03% in Q4 of 2016 as compared to 6.93% in the last quarter of 2015, thus justifying the priority that the Federal Government continues to give to solid minerals.

The services sector, which accounted for 53.55% of GDP in 2016, experienced a decline in growth by -0.82% over the year as compared to a growth of 4.78% in 2015.  This slowdown in the services sector arose from generally fragile economic conditions.  This is because its fortunes depend to a large extent on consumer spending and government expenditure which were both adversely affected by difficult economic conditions.

Nevertheless, the Social Investment Programme of the Federal Government and the relatively high level of infrastructural spending in late 2016 as well as 2017 capital spending plans should begin to have a multiplier effect on the economy.

The trend in nearly all the sectors showed a growth improvement in nominal terms although such effects were outweighed by inflationary factors.  The expectation is that this trend and the slowing down of month-on-month inflation will enable an early return to positive growth in the economy.  This positive trajectory will also receive a boost from the positive news emerging from other parts of the economy.

Notable in this regard is the release of the Economic Recovery and Growth Plan by the Federal Executive Council which sets the stage for further fast-tracking of recovery and economic diversification.

In the same vein, the likely early passage of the 2017 budget estimates would also lend further momentum to economic growth.  Similarly, the recent bond issue of US$1 billion which was subscribed by almost 8 times will reinforce the trend of increasing reserves. Indeed, foreign reserves rose from $23.9 billion in October 2016 to $27.8 billion in January 2017.

Furthermore, there is a better outlook for revenues from the petroleum sector with revenues set to increase with oil production now over 2m barrels per day while oil prices holding relatively steady at an average of about $55 per barrel.

This improved outlook for the oil and gas sector is closely linked to the on-going engagement and dialogue between the Federal Government and various communities in the Niger Delta.

Overall, the Nigerian economy performed better than expected even though we are still in the early stages of recovery. It is indeed noteworthy
that overall 2016 growth was higher with a contraction at -1.5% than the -1.8% predicted by the IMF.”

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Dr Yemi Kale, Statistician General of the Federation

Nigeria is still stuck in economic recession, according to recent data released by the National Bureau of Statistics.

Nigeria’s Statistician-General, Dr Yemi Kale, published the figures for last quarter 2016 early Tuesday. In the data released, the country’s GDP contracted by -1.30% in the last quarter of 2016, bring the year’s overall GDP to -1.51%.

Reporting on the indices for the quarter, the National Bureau of Statistics noted that; the GDP  contraction  “reflects  a  difficult  year  for Nigeria,  which  included  weaker  inflationinduced  consumption  demand,  an increase  in  pipeline  vandalism,   significantly  reduced  foreign  reserves  and  a concomitantly weaker currency, and problems in the energy sector such as fuel shortages and lower electricity generation.”

Nigeria officially slipped into recession in April 2016, casting in doubt the capacity of the ruling All Progressives Congress (APC) to effectively govern the country burdened by official corruption.

The recent economic indices will hand over talking points to opposition Peoples Democratic Party (PDP) against ruling All Progressives Congress (APC) about an economic that is not working for millions of citizens. But that is if the PDP, fractured and in total disarray, has the presence of mind to look at the indices.

 

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The federal government is yet to pay over N300 billion subsidy claims of major oil marketers for fuel imports between 2014-2015, says Akin Akinfemiwa, group chief executive officer of Forte Oil Nigeria.

Akinfemiwa made the disclosure on Thursday when he appeared before the house of representatives ad hoc committee investigating debts owed to the Petroleum Pipeline Marketing Company (PPMC) by oil marketers.

According to the oil chief, his company owes N5.9 billion to the PPMC but was also being owed N13.8 billion in subsidy claims.

He informed the Abdullahi Mahmud Gaya-led committee that steps were being taken to settle the subsidy arrears by the federal government.

“So far, the government, led by the Chief of Staff to the President invited us to a meeting with other stakeholders to address two issues. One was to continue petrol supply, and two was for Federal Government to pay its debts. For the debts, a committee was set up to settle them.

“The total stands at over N300 billion. Right now, we cannot even do much, but we do not want a situation where there will be queues in the country,” Akinfemiwa said.

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Dr Yemi Kale, Statistician General of the Federation

Nigerians are in for more pain and hunger as inflation appears unabated with sharp increase in the prices of major food items across the country.

A report from the National Bureau of Statistics (NBS), yesterday, indicated that the inflation rate, which stood at 18.55 percent in December 2016, climbed to 18.72 percent in January 2017.

The NBS report showed that the Consumer Price Index (CPI), which measures inflation, increased in January by 0.17 percent from the rate recorded in December, just as increases were recorded in all divisions that yield the Headline Index.

Yesterday’s report stated that communication, restaurants and hotels, again, recorded the slowest pace of growth in January, growing at 5.1 per cent and 8.4 per cent (year-on-year), respectively.

“The faster pace of growth in headline inflation, year on year, were bread and cereals; meat, fish, oils and fats; potatoes, yams and other tubers; wine and spirits; clothing materials and accessories.

“Others are electricity, cooking gas, liquid and solid fuels; motor cars and maintenance; vehicle spare parts and fuels; and lubricants for personal transport equipment as well as passenger transport by road,” the report said.

The report also showed that, on a monthly basis, headline inflation was driven by passenger transport by air, fuels and lubricants for personal transport equipment; liquid fuels, cooking gas, oils and fats; fruits, cheese and eggs; fish, meat and bread; as well as cereals.

The bureau noted that the food index increased by 17.82 per cent (year-on-year) in January,  by 0.43 percent from the rate recorded in December, 2016, (17.39 percent).

“During the month, all major food sub-indexes increased, with soft drinks recording the slowest pace of increase at 7.8 per cent(year on year).

“The highest increases were seen in housing, water, electricity, gas and other fuels, with education and transport growing at 27.2, 21.0 and 17.2 per cent, respectively,” NBS said.

The report further showed that on a month-on-month basis, the headline index increased, although at a slower pace last month. It stated that index increased by 1.01 percent point in January, 0.05 percent from 1.06 percent rate recorded in December 2016.

“The urban index rose by 20.31 percent (year-on-year) in January from 20.12 percent recorded in December, and the rural index increased by 17.34 percent in January from 17.20 percent in December.

“On month-on-month basis, the urban index rose by 1.03 per cent in January from 1.08 per cent recorded in December, while the rural index rose by 1.00 per cent in January from 1.04 per cent in December.

The bureau said the corresponding 12-month year-on-year average percentage change for the urban index increased from 17.05 percent, in December, to 17.91 percent in January, while the corresponding rural index also increased from 14.54 percent, in December, to 15.18 percent in January.

According to the NBS, the Composite Food Index rose by 17.82 per cent in January, 2017. It attributed the rise in the index to increase in prices of bread and cereals, meat, fish, oil and fats.

“On a month-on-month basis, the food sub-index increased by 1.29 percent in January and reduced by 0.04 percent points from 1.33 percent recorded in December.”

Meanwhile, the “All Items Less Farm Produce” or Core sub-index, which excludes the prices of volatile agricultural produce eased by 17.9 percent during the month, 0.20 per cent points from 18.1 percent recorded in December, as all key divisions which contribute to the index increased.

The report further showed that the core sub-index increased by 0.68 percent in January, 0.06 percent points higher from 0.62 percent recorded in December. The highest increases were recorded in electricity, gas, passenger transport by air, liquid fuel and lubricants for personal transport equipment and solid fuels.

“Nigeria’s inflation rate increased from 9.6 percent recorded in December, 2015, to 18.55 percent in December, 2016, as a result of sharp increase in the prices of meat, bread, fish, vegetable, and other products,” the NBS said.

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CBN Governor Godwin Emefiele, and Finance Minister Kemi Adeosun

The World Bank has agreed to give Nigeria $2.5bn loan.

One of the conditions for the release of the initial tranche of $1.5bn is a reform of Nigeria’s Forex market.

Business Day, a leading newspaper, tweeted this on Wednesday.

 

Since January 2016, the federal government has been in talks with the bank on the loan.

After a meeting with the executive of bank in Washington DC in May, Kemi Adeosun, minister of finance, said the loan was required to bridge the N1.8trn  deficit in the budget, and also to fund infrastructural projects.

“We had discussions with the World Bank around our budget support request and we have been able to have very productive meetings to understand what the next steps are in the process and we are very positive of a good outcome,” she had said.

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EFCC Acting Chairman, Ibrahim Magu

The Economic and Financial Crimes Commission, EFCC has debunked a report that it has indicted all the governors of the 36 states of the Federation and the Senate President, Bukola Saraki over the uses and abuses of the Paris Loan refund.

The anti-graft agency said there was no truth in the story and that it is premature to jump to such conclusions.
“The Commission wishes to state unequivocally, that no state governor or Senate President has been indicted so far by the investigation which is still at a preliminary stage.
“Also, insinuations about cover up by some officials of the Commission are untrue as there is no incentive to do so.
In recent times, the media reported about an unidentified governor in the Niger Delta who diverted $10million out of the bail out fund given to his state.
On Sunday, Saharareporters  reported that Nigerian State Governors, Senate President Saraki Pocketed Billions of Naira from Paris Loan Refund.
The EFCC has now cleared the air that investigation about the fund has just begun,

“The Commission implores the Media to be circumspect in the reportage of this delicate issue in order not to jeopardize ongoing investigation, and be assured that they would be fully briefed of developments as soon as breakthrough is achieved”, said Wilson Uwujaren, the spokesman of the commission.

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The House of Representatives will on Tuesday inaugurate a tactical committee to arrest the country’s current economic recession.

The committee would liaise with relevant stakeholders in the sector to achieve the goal of taking Nigeria out of recession.

The committee is expected to monitor various steps and policies initiated by the Federal Government toward returning the country’s economy to the path of growth.

The committee will interface with government Ministries, Departments and Agencies (MDAs) and interact with Manufacturers Association of Nigeria (MAN), the Nigeria Labour Congress (NLC) and civil society organisations in a bid to arrest the recession.

 

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Gov. Akinwunmi Ambode of Lagos State has made a firm commitment to partner with the Federal Government for the renovation of the National Theatre, saying it is necessary to join hands to uplift national monuments.

 

The Governor made the commitment when he paid a join inspection visit to the National Theatre with the Minister of Information and Culture, Alhaji Lai Mohammed, in Lagos on Sunday.

 

”I am going to support the whole concept of bringing this National Theatre back to life. This is not an investment for Lagos state, but a support for the rebirth of national heritage,” he said after the inspection.

 

The Governor said if the National Theatre becomes functional, Lagos

State, Nigeria and indeed the international community will benefit from it, adding that helping to revive the National Theatre is also part of his Administration’s vision to to use arts and culture to promote national heritage.

 

In his remarks, the Minister said he is excited and fulfilled at the

Governor’s expression of his firm commitment to the resuscitation of the National Theatre

 

”Frankly speaking, I cannot be happier than I am today that I have got the firm commitment of the Governor that he is going to partner with the Federal Government to bring back the National Theatre to what it used to be.

 

”I see this as a hand of friendship between the State and the Federal

Government in the area of reviving the creative industry and actually, this is the first major step in transforming the creative industry to a creative economy,” he added.

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President Muhammadu Buhari

The Federal Government has so far recovered N15 billion and another $10.5 million US Dollar from looters, Attorney General of the Federation (AGF) and minister of Justice, Alhaji Abubakar Malami (SAN) said.

Speaking yesterday when the Senate committee on judiciary, human rights and legal matters visited his ministry during oversight functions, Malami said the broad policy objectives of government was in four major priority areas.

He listed the areas as; anti-corruption campaign, recovery of stolen national assets, the rule of law component of the anti-terrorism war and the institutionalization of law and order in all aspects of national life.

The minister said the total revenue profile of the ministry as at 31st December , 2016 was N12, 405, 540:00 while the total expenditure profile during the same period was N3, 672, 730, 661.

Chairman of the Senate committee, Senator David Umaru  said the 2016 budget ran into difficulties, hence the committee was preparing for the current economic realities adding that the National Assembly was ready to work with the ministry of justice to ensure that budget was passed.

In his contribution, chairman Senate committee on anti- corruption and financial crimes, Senator Utazi Chukwuka said Nigeria was yet to become a member of Financial Asset Taskforce, Paris adding that past administrations were only able to submit forms without moving further.

He commended government for the recovery of funds and the revenue generation of N12.4 million but added that the minister did not honour the invitation of the Senate committee that was mandated to look into the recent raids on Judges’ homes.

In his swift reaction, the minister apologized for not attending the Senate session adding that he never got their invitation. The minister added that he appeared before the House of Representatives when he got an invitation on the same matter.

On Nigeria’s membership of the Financial Asset Taskforce, Paris, the minister said that it was the NASS’s non passage of certain laws such as the Money laundering Act that has prevented Nigeria’s membership.