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News Economy (45)

Zainab Ahmed, who is acting minister of finance, said Monday that Nigeria’s economy faced “challenging times” as she formally assumed duty.

President Muhammadu Buhari appointed her to oversee the finance ministry following the the resignation of Kemi Adeosun who resigned over forged certificate of the National Youth Service Corps (NYSC).

Ahmed, who is the Minister of State, Budget and National Planning, said the new task would require collaboration with minister officials to achieve success.

Mahmoud Isa-Dutse, permanent secretary and some directors in the ministry, welcomed her.

“These are very challenging times for our country. It means we are part of the economic team that has been charged with making sure there is economic stability in our country,” she said.

“We have very serious revenue challenges and it is up to us to shore up the revenues of this country.

“Mr President has a lot of confidence that we can do this very well together. We are working for Mr President, but at the end of the day we are working for the benefit of the citizens of our country.

“There are a lot of sacrifices that I know that you have done, and we are going to push ourselves to still do more so that at the end of the day we will say Alhamdulillah– glory be to God!

“The finance ministry has overtime been known to have very skilled personnel; from interacting with some of you, I know that there is a lot of skill set within the ministry, and that I am in good hands.

“I plan to work very closely with the whole of the directors, most especially with the permanent secretary.

“I want to declare that today the permanent secretary is my new next-of-kin. What that means is that I am going to work hand-in-gloves with him, and I expect everybody to do the same thing.

“There are some things I know about finance, but there is a lot that I don’t know; and the knowledge resides in you.”

 

Vanguard.

The Nigeria’s inflation rate has rebounded in August for the first time since January 2017 after recording 18 consecutive months of downward trend, according to the National Bureau of Statistics (NBS).

In the August inflation report by the statistics bureau on Friday, the nation’s Consumer Price Index (CPI), which measures inflation, rose by 0.09 percent points to 11.23 percent in August.

This implies the prices of goods and services rose at a faster rate in review month – just like June 2018 – when compared with July 2018.

The headline inflation had been on steady decline from 18.72 percent since January 2017 to 11.14 percent in July 2018, this was after it fell to 18.55 percent in December 2016.

In spite of the persistent decline during the period, the macroeconomic variable remained above the Central Bank of Nigeria’s (CBN) acceptable band of 6 percent to 9 percent.

The CPI measures the composite changes in the prices of consumer goods and services, such as food, transportation, and medical care, purchased by households, over a period.

The NBS said food inflation also surged to 13.16 percent YoY in August up from 12.85 percent recorded in previous month, while core inflation, which excludes agricultural produce, dropped from 10.2 percent in July to 10.0 percent in August.

The CBN had expressed fear over the possibility of a rebound in the macroeconomic indicator in the second half of 2018 as a result of increased spending ahead of the 2019 general elections.

In August, the CBN said it may consider raising its key lending rate for the first time in two years if the inflation rate worsens.

The Monetary Policy Committee (MPC) of the CBN in its July meeting had retained the Monetary Policy Rate (MPR) at record-high of 14 percent for the 11th consecutive time since 2016 to monitor the magnitude of the liquidity impact of the fiscal injection and election related expenditure.

 

The Ripples.

The free fall of equities persisted on the Nigerian Stock Exchange (NSE) in the month of August with investors net worth depreciating further by 5.86 per cent.
 
Data obtained from the exchange showed that the All-Share Index during the period shed 2,169.33 points or 5.86 per cent to close at 34,848.45 against 37,017.78 in July.
 
Also, the market capitalisation, in spite of the listing of Notore Chemical Industries, lost N687 billion or 5.12 per cent to close at N12.722 trillion compared with N13.409 trillion achieved in July.
 
Speaking on the market performance, Prof. Sheriffdeen Tella, Professor of Economics, Olabisi Onabanjo University Ago-Iwoye, said the capital market performed poorly in the month of August.
 
Tella said the poor performance was caused by both local and international activities.
 
“Locally, the economy was not performing due to late budget passage and late implementation in an economy that is public sector driven.
 
“On the international scene, there were large capital outflow from the markets as foreign investors were moving money out for investment elsewhere,” Tella said.
 
He said the implementation of the budget in this quarter would likely assist in stabilising the market.
 
Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd. attributed the poor performance to the political environment ahead of the next year’s general elections in the midst of dwindling macro- economic indices.
 
All share index-Aug
 
Omordion said the delayed implementation of the 2018 budget impacted negatively on the capital market and the economy in general.
 
He said the volatility experienced so far in the second half of the year was a reflection of the negative factors against the market, amidst capital flight.
 
According to him, the exit of foreign investors resulted to dwindling foreign reserve.
 
Omordion urged investors and analysts to interpret the recent scorecards from first-tier banking stocks and other stocks to reposition their portfolios ahead of third quarter.
 
He advised the Federal Government to evolve policies that would drive recovery and influence the market positively.
 
An analysis of the price movement table during the period showed that Ikeja Hotel emerged the worst performing stock in percentage terms.
 
The stock during the period lost 27.48 per cent to close at N2.27 per share against N3.13 achieved in July.
 
Other top losers’ were Law Union and Rock Insurance, GSK, Skye Bank, Forte Oil, Royal Exchange, Universal Insurance, CAP, Continental Reinsurance and Berger Paints.
 
Market Capitalisation for August
 
Conversely, Niger Insurance was the best performing stock in percentage terms with a growth of 69.23 per cent to close at 44k against 26k in July.
 
It was trailed by Portland Paints, Newest ASL, Neimeth Pharmaceuticals, AIICO Insurance, NEM Insurance, Eterna Oil, Hallmark Insurance, Transcorp and May & Baker.
 
A turnover of 5.40 billion shares valued at N66.92 billion were exchanged by investors in 68,906 deals during the period under review.
 
This represented a decrease of 19.52 per cent compared with a turnover of 6.71 billion shares worth N 73. 04 billion transacted in 84,963 deals in July.
 
An analysis of the activity chart indicated that the Financial Services Sector emerged the most active with an exchange 2.52 billion shares, valued N19.38 billion in 21,121 deals.
 
It was trailed by the Services Sector with 209.97 million shares worth N1.31 billion in 2,157 deals.
Consumer Goods sector came third with a turnover of 258.95 million shares valued at N14.02 billion in 11,252 deals.
 
 
Source: Vanguard

The Nigerian Stock Exchange (NSE) is now ranked the worst performing equities market in the African continent as the Year-to-Date (YTD) return of the All-Share Index (ASI) worsened.

The YTD return is the amount of profit generated by an investment since the beginning of the current calendar year.

The latest development was occasioned by rising uncertainties in the Nigerian economy and the recent political developments in the country which undermined investors’ sentiments.

According to the weekly pan-African stock market monitor by a Lagos-based investment house, United Capital Plc., the NSE was the worst performing stock market in Africa having recorded a YTD return of -11.3 percent as at September 3, 2018.

The Nigerian bourse was trailed by the Regional Securities Exchange (BRVM) to emerge the second worst performing stock market in the continent after recording a YTD return of -11.1 percent.

The BRVM, which covers francophone nations in the West African sub-region like Benin, Guinea Bissau, Mali, Togo, Niger, Cote d’lvoire, Burkina Faso and Senegal, offers stock trading services from its headquarters in Abidjan, while its market offices are maintained in each country.

In 2017, the NSE was ranked among the top performing stock markets in Africa, and the exchange was ranked among the five top performers in the year after Argentina, Turkey, Hong Kong and the United States, according to S&P Dow Jones Indices. The NSE-ASI grew by 42.30 percent year-on-year in 2017.

Analysts at United Capital listed Morocco Stock Exchange as the third performing capital market with -7.1 percent YTD return.

The YTD return of the Kenya’s stock market, Nairobi Securities Exchange, dropped to -2.1 percent to emerged the fourth performing bourse in the continent, while South Africa’s stock market, Johannesburg Stock Exchange (JSE), went southwards to -1.3 percent.

Conversely, the Tunis Stock Exchange (TSE) led other exchanges in the continent as its ASI rose by 33.4 percent from the beginning of the year, while Zimbabwe Stock Exchange (ZSE) and Ghana Stock Exchange (GSE) trailed with YTD returns of 21.8 percent and 7.9 percent, respectively.

Analysts at Cordros Capital advised investors in Nigeria’s stock market to trade cautiously in the short to medium term, noting that selloffs were likely to persists.

The analysts attributed the poor performance at the NSE to negative sentiments of investors, particularly the foreign portfolio investors, as a result of “contagion effect of emerging market selloffs and political concerns ahead of the 2019 elections.”

  

Source: The Ripples

China has agreed to restructure some of Ethiopia’s loans, including a loan for a four billion dollars railway linking its capital Addis Ababa with neighbouring Djibouti, Ethiopia’s Prime Minister Abiy Ahmed said on Thursday.
 
“`During our stay, we had the opportunity to enact limited restructuring of some of our loans.
 
“In particular, the loan for the Addis Ababa-Djibouti railway which was meant to be paid over 10 years has now been extended to 30 years.
 
“Its maturity period has also been extended,” Ahmed told newsmen in the Ethiopian capital Addis Ababa, upon return from a summit in China.
 
President Xi Jinping announced 60 billion dollars in aid and loans for Africa on Monday while hosting more than 40 of the continent’s leaders in Beijing, saying that the money came with no expectation of anything in return.
 
Beijing pushed back on criticism that it was shackling poorer countries with heavy debt burdens they will struggle to pay back, portraying the Chinese government as a magnanimous one motivated only to share its experience of rapid industrialization.
 
“China’s investment in Africa does not come with any political conditions attached and will neither interfere in internal politics nor make demands that people feel are difficult to fulfill,” Xi said during a keynote address to the Forum on China-Africa Cooperation on Monday.
 
Zi said the money will be focused on infrastructure to help speed African countries’ development, not on “vanity projects.”
 
The package outlined by Xi also includes medical aid, environmental protection, agricultural training and assistance, and government scholarships and vocational training for more than 100,000 young Africans.
 
At the last forum, held in Johannesburg three years ago, Xi also pledged $60 billion in investment.
 
He said Monday that this money had already been granted or earmarked, so the latest announcement represented a second round of 60 billion dollars.
 
The program is part of Xi’s broader Belt and Road Initiative, an ambitious $120-billion-plus project that aims to link 65 countries in Europe, Asia and Africa — together accounting for almost two-thirds of the world’s population — through infrastructure projects and trade.
 
At a time when President Trump is engaged in trade fights with the United States’ neighbors and allies, the Chinese leader seems to relish the opportunity to appear as a popular international statesman and champion of the liberal economic order.
 
For two days in a row, every headline on the front page of the state-run People’s Daily started with the words “Xi Jinping,” as the president met with the leaders of Angola, Gabon, Mauritius, Senegal and elsewhere.
 
He also hosted Sudanese President Omar al-Bashir, who has been charged by the International Criminal Court with war crimes and crimes against humanity.
 
Analysts have raised concerns about African countries, many of which are subject to the whims of commodity markets, not being able to repay Chinese loans.
 
The three countries most vulnerable because of large debts owed to China are Djibouti, Congo and Zambia, say academics at the China Africa Research Initiative at Johns Hopkins University.
 
Zambia, which has a gross domestic product of 19.5 billion dollars, according to the World Bank, had taken about 6.4 billion dollars in loans from China, the researchers wrote in a briefing paper last month.
 
But Rwandan President Paul Kagame, who chairs the African Union, said that rather than viewing the investment as a “debt trap,” other countries should be asking why they’re not giving Africa as much assistance as China.
 
“We have benefited a lot from China’s support in our social and economic programs, and that has continued to strengthen the partnership between China and Rwanda,” Kagame told the People’s Daily.

The Statistician-General of the National Bureau of Statistics (NBS), Yemi Kale, said the Nigerian economy could be regarded as a diversified economy based on the Q2 2018 Gross Domestic Product (GDP) figures released recently.

Kale made this disclosure while answering questions on the effectiveness of the Federal Government’s diversification policy in a tweet chat on Thursday.

The NBS boss said the services sector grew by over 50 percent in the second quarter of the year, adding that the performance was the first since the 2016 economic recession.

According to him, the 1.50 percent real GDP growth recorded in Q2 was largely driven by the services sector.

“The best assessment of any plan or policy of government is to look at the underlying statistics. If you look at the GDP numbers for Q2 2018 published early this week by our Office, you will observe that the economy is quite diversified.

“The services sector accounts for over 50% of our economy, and for the first time since the recession, the services sector posted positive numbers and was mainly responsible for the growth recorded during the quarter,” Kale said.

He, however, said the benefits of diversified growth would become more evident and impacting on the citizenry if the government could provide incentives to support domestic production and stimulate consumption.

The NBS had released the GDP report for Q2 2018 on Monday, the report noted that the rate at which the Nigerian economy grew in the quarter slowed to 1.50 percent when compare with 1.95 percent recorded in the previous quarter.

Despite the sluggish growth, the non-oil sector of the economy grew by 2.05 percent from 0.76 percent in Q1 2018, while the oil sector contracted by -3.95 percent from 14.77 percent in Q1 2018.

The Minister of Budget and National Planning, Sen. Udoma Undo Udoma, had said the growth in the non-oil sector was an evidence that the implementation of the targeted policies and programs of the Economic Recovery and Growth Plan (ERGP) by the Federal Government was yielding positive results.

The ERGP is a four-year medium term strategic blueprint of the Federal Government aimed at diversifying the economy away from dependence on the oil and gas sector.

The plan covers 2017 to 2020 and focuses on human capital investment, restoration of economic growth, and building a competitive economy.

The Ripples

The Nigerian Bureau of Statistics (NBS) has reported that for the first time since Nigeria’s exit from recession, the Gross Domestic Product (GDP) has recorded growth.
 
Driven by the non-oil sector, GDP which grew by 2.05 per cent in the second quarters of 2018 represented the strongest growth in non-oil GDP since fourth quarter of 2015.
 
“Non-oil GDP growth was -0.18% in Q1 2016, -0.38% in Q2 2016, 0.03% in Q3 2016, -0.33% in Q4 2016, 0.72% in Q1 2017, 0.45% in Q2 2017, -0.76% in Q3 2017, 1.45% in Q4 2017and 0.76% Q1 2018.
 
“GDP grew strongly in Q2 2018 by 2.05%. Non-oil growth was driven by transportation which grew by 21.76% supported by growth in construction which grew by 7.66% and electricity which grew by 7.59%.
 
“Other non-oil sectors that drove growth in Q2 2018 include telecommunication which grew by 11.51%, water supply and sewage which grew by 11.98% and broadcasting which grew by 21.92%.’’
 
The non-oil sector performance was however constrained by agriculture that grew by 1.3% compared to 3.00% in Q1 2018 and 3.01% in Q2 2017.
 
Q2 2018 GDP growth was also constrained by oil GDP with crude oil and gas production contracting by -3.95% compared to 14.77% in Q1 2018 and 3.53% in Q2 2017
 
Services GDP recorded its best performance in 9 quarters, growing by 2.12% in Q2 2018 compared to -0.47% in Q1 2018 and -0.85% in Q2 2017.
 
Statistician General and Chief Executive Officer of National Bureau of Statistics (NBS), Dr. Yemi Kale, last week denied reports quoting that Nigerian economy had yet to recover from recession.
 
Kale categorically said that Nigeria was out of recession and that at no time did he suggest otherwise.
 
His denial was contained in a statement released on Monday by the Bureau’s Public Relations Officer, Mr. J. Ichedi.
 
NBS said that it reported in the second quarter of 2017 that the country was out of recession as the country recorded the first positive growth in Gross Domestic Product (GDP) following five quarters of contradiction.
 
He said that economic growth as measured by GDP has remained positive ever since with 0.72% in second quarter of 2017; 1.17% in third quarter of 2017; 2.11% in fourth quarter; and 1.95% in first quarter of 2018.
 
Ichedi said that NBS had continued to explain that there would be economic recovery after the recession.
 
The economic after recession moves gradually towards sustainable strong growth which “is the stage we are now’’.
 
This is the position which the CEO told Arise Television in an interview, he said.
 
The CEO, he said, told the television that the economy was in the second state of recovery and heading toward sustainable growth which is the last stage’’.
 
“This should not be wrongly interpreted as the economy is still in recession,’’ Ichedi said.
 
According to a report by a local newspaper on Monday, the Statistician-General was quoted to have lamented the performance of the nation’s economy in the second quarter of the year.
 
 
Source: NAN
Indications have emerged that the nation may soon begin to earn less from crude oil as the monthly volume of Nigerian oil imports into the United States dropped to 2.89 million barrels in May, the lowest since February 2016.
 
Crude oil accounts for over 70 percent of the Nigeria’s revenue and more than 95 percent of its foreign exchange earnings, while the United States (U.S) was the country’s fourth largest export destination, according to a recent Foreign Trade Statistics by the National Bureau of Statistics (NBS).
 
The latest data obtained by our correspondent from the US Energy Information Administration (EIA) during the weekend showed that the United States reduced its importation of Nigerian crude oil by 62.65 percent from 7.75 million barrels recorded in April.
 
Nigeria may start earning less as U.S slashes oil importation by 62%
 
The depreciation in the demand of the commodity, which was the largest monthly decline in more than three years, was occasioned by the increase in the production of the U.S crude.
 
Read Also: Nigeria earns $26bn from oil in 7 months as oil prices rise
 
An analysis of the data from the statistical arm of the U.S Energy Department revealed that, the country imported 10.03 million barrels of Nigerian crude in January.
 
It, however, reduced the importation of the commodity for the first time this year from 10.34 million barrels in February to 3.92 barrels in March, indicating 62.08 percent drop. In April, 2018, the U.S bought 7.7 million barrels of the commodity.
 
Within the first five months of 2018, the total Nigerian crude imports by the U.S stood at 34.93 million barrels, this is over 20 percent drop from 43.83 million barrels imported in the corresponding period last year.
 
The U.S crude imports from Nigeria was on a steady decline since it peaked 368.42 million barrels in 2010, it fell to 21.46 million barrels in 2014 and 19.86 million barrels in 2015 following the drop in the prices of crude oil in the international market.
 
However, the oil imports rose to 75.81 million barrels in 2016 and further increased to 112.92 million barrels in 2017.
 
But since crude oil production in the U.S began to boom in recent months, reaching 10.9 million barrels per day (mbpd) in June and 11 mbpd two weeks ago from 2.33 mbpd in April, the country has continued reduce its crude importation.
 
The EIA had reported last week that the U.S net import of the commodity fell by 1.05 mbpd to an average of 6.36 mbpd, with 10.7 mbpd and 1.7 mbpd as projections for the country’s crude oil production for 2018 and 2019, respectively.
 
 
Ripples news.
 

President Muhammadu Buhari on Monday signed an Instrument of Accession to the International Cocoa Agreement (ICA), 2010.

The pact was the seventh ICA adopted at the United Nations Cocoa Conference in 2010 following the contribution of ICA, 1972, 1975, 1980, 1986, 1993 and ICA, 2001 to the development of the world cocoa economy.

The ICA, 2010 was administered by the International Cocoa Organization, which was established by the ICA, 1972 and functions through the International Cocoa Council, the highest authority of the organization.

A statement signed by the Senior Special Assistant on Media and Publicity to the President, Garba Shehu, said that decision followed the approval by the Federal Executive Council (FEC) for Nigeria to accede to the agreement.

Following the execution of the instrument of accession, Nigeria undertakes “faithfully to abide by all the stipulations therein contained” in the agreement, according to the statement.

“Among other benefits, the agreement is expected to strengthen cooperation between exporting and importing member countries; improve their cocoa economies through active and better focused project development and strategies for capacity-building,” the statement read.

It is also expected to build on the successes of the 2001 Agreement by “implementing measures leading to an increase in the income of cocoa farmers and by supporting cocoa producers in improving the functioning of their cocoa economies.”

The statement added that the 2010 agreement would also “deliver cocoa of better quality, take effective account of food-safety issues and help establish social, economic and environmental sustainability, so that farmers are rewarded for producing cocoa that meets ethical and environmental considerations.”

According to the United Nations Conference on Trade and Development, the ICA, 2010 was agreed with a view to strengthening the global cocoa sector, supporting its sustainable development and increasing the benefits to all stakeholders.

It highlighted eleven objectives as rationales for the pact, they comprise to; promote international cooperation in the world cocoa economy; provide an appropriate framework for discussion on all cocoa matters among governments, and with the private sector; contribute to the strengthening of the national cocoa economies of Member countries; obtain fair prices leading to equitable economic returns to both producers and consumers in the cocoa value chain.

The objectives also include to; promote a sustainable cocoa economy; encourage research and the implementation of its findings; promote transparency in the world cocoa economy, and in particular in the cocoa trade, as well as to promote the elimination of trade barriers; promote and to encourage; consumption of chocolate and cocoa-based products in order to increase demand for cocoa.

Others include to; encourage Members to promote cocoa quality and to develop appropriate food safety procedures in the cocoa sector; encourage Members to develop and implement strategies to enhance the capacity of local communities and small-scale farmers to benefit from cocoa production and thereby contribute to poverty alleviation; facilitate the availability of information on financial tools and services that can assist cocoa producers, including access to credit and approaches to managing risk.

Currently, Nigeria rely on crude oil as its major source of revenue, accounting for about 70 percent of its total revenue and over 90 percent for its export earnings. The nation’s economy recorded its worst decline since 1987 in 2016 on the back of drop in the prices of crude oil in the international market in 2014.

Nigeria recorded five consecutive negative Gross Domestic Product growth rates from -0.67 percent in Q1 2016 to -0.91 percent in Q1 2017. It officially emerged from recession in Q3 2017 after two consecutive positive GDP growth. A development which had prompted the Federal Government to devise other means to diversify the economy away from oil into solid minerals, agriculture, among others to forestall a recurrence of the 2016 economic distress.

With the latest agreement, Nigeria is now a cocoa exporting member of the International Cocoa Organization and the International Cocoa Council, implying cocoa could become another alternative source of revenue generation and foreign exchange earnings as global organizations renewed their efforts to develop the cocoa sector.

Nigeria’s revenue from oil export hit an estimated $26 billion between January and July this year as the price of global oil benchmark, Brent crude, rose to the highest level in two weeks on Wednesday.

According to the new OPEC Revenues Fact Sheet recently released by the Energy Information Administration (EIA), revenue from oil export rose by 30 percent to $34 billion in 2017 from $26 billion in 2016.

The oil price appreciation followed a sharp drop in the United States crude inventories and the country’s sanctions on Iran, the third-largest producer in the Organisation of the Petroleum Exporting Countries (OPEC), causing tighter supply of the commodity.

The price of Brent crude, against which Nigeria’s oil is priced, rose by $1.38 to $74.19 per barrel, the highest since August 8, while US West Texas Intermediate (WTI) gained $1.28 to $67.12 per barrel.

Nigerian economy was battered due to the fall in the prices of crude oil in the international market in 2014, at the end of 2017, a development which led the country into its worst economy crisis since 1987 in 2016.

However, the country officially emerged from recession in Q3 2017 after two consecutive positive GDP growth. The economy shock occasioned by the drop in crude price prompted the Federal Government to devise other means to diversify the economy away from oil into solid minerals, agriculture, among others to forestall a recurrence of the 2016 economic distress.

But while the Mining and Quarry sector of the economy grew by 14.85 percent (year-on-year) in Q1 2018, 30.25 percentage points and 4.14 percentage points higher than the same quarter of 2017 and Q4 2017, the agriculture sector grew by 3.00 percent (year-on-year) in real terms in the review quarter, a decrease by 0.38 percentage points from the corresponding period of 2017 also a decrease by 1.23 percentage points from the preceding quarter.

Currently, Nigeria still rely on crude oil as its major source of revenue, accounting for about 70 percent of its total revenue and over 90 percent for its export earnings.

The Brent crude price rose to $66.87 per barrel from around $53 per barrel at the beginning of the year.

In May 2018, Brent rose above $80 per barrel for the first time since November 2014 but dropped afterward amid rising US crude inventories.

 

Source: The Ripples

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