Economy

Base Effects Dictate Inflation Trajectory

Published

9 years ago

20/04/2017

By ARM Securities

Nigeria’s headline inflation decelerated for the second consecutive month (-50bps) to 17.3% in March – though lagging the scale of moderation in prior month’s reading (-92bps).

Instructively, the reading was significantly behind Bloomberg consensus estimate of 16.7% as changes in food inflation (-10bps to 18.4% YoY) failed to keep pace with expected impact of naira gains at the parallel market in the review month.

That said, high base effect from 2016 electricity and PMS price hikes saw core inflation decelerate a further 60bps to 15.4% to dictate overall YoY headline trajectory. On a MoM basis, headline inflation increased by 1.72% (vs. 1.49% in prior month’s reading) largely reflecting unyielding food pressures (MoM: 2.21%).

Focusing on core inflationary movements, breakdowns indicate a 1.32% MoM increase in the core basket buoyed by increases in prices of miscellaneous services related to dwelling, solid fuels, clothing materials, spirits, lubricants, and personal transport.

Also, despite moderation in prices of some known energy components (PMS (-0.3% MoM), Kerosene (-14.2% MoM) and Diesel (-5.4% MoM)), pressures from other sources (e.g. solid energy) drove energy inflation higher to 1.4% MoM.

The foregoing combined with the pressures on miscellaneous services front drove core inflation higher in the review month.

Overall, despite core inflationary pressures suggested by the MoM readings, the impact of high base remained evident on YoY numbers as increases in PMS (+10% YoY), kerosene (+54% YoY), and diesel (+60% YoY) in March failed to stall YoY core deceleration.

In line with the trend recorded over the prior months, MoM food inflation increased sharply by 2.2% (vs. February reading of 1.99%) despite naira gains at the parallel market in March.

According to FEWSNET, pressures on Nigeria’s farm produce prices persisted despite recent gains in foreign reserve (+0.4% to $30.4 billion) and direct government intervention due to structural challenges, restriction on use of forex reserve for food imports as well as higher transactions and transportation cost (March transport inflation: +1.2% MoM, +15% YoY) in the review period.

Specifically, while government’s interventions—including Anchor Borrowers programme—slightly increased areas cultivated, initiatives to curb transport challenges (i.e. grain by rail) were yet to kick-in to stem the major transport setback in the review month.

Importantly, MoM transportation inflation have steadily increased in the last three months, with the March reading (1.2% MoM) printing at the highest level since July 2016, following price hikes by major transport associations across the country in response to the sharp jump in Diesel prices in December.

For context, we note that the cost of transportation between assembly markets in North Central and other Northwest states of Nigeria, particularly to Dawanau market in Kano, increased by about 70% compared to last year.

Going forward, we expect impact of high base effect to continue to dictate core inflation and overall headline trajectory despite concerns on the food inflation front. Precisely, high base effect from the 45% and 68% increases in electricity and PMS prices in 2016 should leave YoY core reading subdued with recent gains in PMS, kerosene, and diesel prices leaving sizable scope for sustained decelerations.

However, we are less sanguine on the food side of things over the near term owing to recent pressures from higher transactions and transportation costs.

That said, the more recent retrace in diesel prices suggests that pressures from the transport front would be less impacting in coming reading. In addition to this, the incentive of higher prices and FG’s continued push on the Anchor Borrowers Program front are notable signposts of gradual near and medium term gains relating to domestic food availability respectively.

On the former, we expect farmers to sustain their ramp up of output in April offseason harvest as higher prices continue to provide the needed incentive.

Thus, with lagged impact of naira gains at the parallel market also raising scope for temperance in demand pressures from neighbouring West Africa, pressures on food inflation should be relatively contained in the coming reading compared to that of the prior month.

On balance, we expect moderation in core inflation to offset pressures from food inflation.

Against this backdrop, we now look for headline reading of 16.7% YoY for April with 2017 mean now printing at 15.4% YoY (2016: 15.6% YoY).

In terms of market impact, elevated MoM inflation reading provide another justification for CBN to leave its hawkish monetary policy intact over the near term.

That said, given the impact of contractionary monetary policy on FG’s borrowing cost with April 2017 subscription (N111 billion) significantly below amount on offer (N135 billion), we think pressures from the fiscal authorities could compel some form of monetary easing over H2 17.

Source: www.armsecurities.com.ng.

Economy

NNPC Gets Approval for $20bn Final Investment Decision on Bonga Deepwater Project

Published

12 minutes ago

11/03/2026

Modupe Gbadeyanka

By Modupe Gbadeyanka

A targeted fiscal incentive designed to unlock the long-awaited Final Investment Decision (FID) on the Bonga Southwest Aparo (BSWA) deepwater project has been approved by President Bola Tinubu.

The approval followed months of intensive technical and commercial negotiations involving the Nigerian National Petroleum Company (NNPC) Limited as the concessionaire, the Nigeria Revenue Service (NRS), the Special Adviser to the President on Energy, Olu Verheijen, and the chief executive of Shell, Mr Wael Sawan.

In a statement signed on Tuesday by the Chief Corporate Communications Officer of NNPC, Mr Andy Odeh, it was disclosed that the project is estimated to attract about $20 billion in Foreign Direct Investment and position Nigeria for a new era of deepwater production.

It was said that it has the potential to attract strategic investments and accelerate sustainable economic growth, adding that it signals renewed confidence in Nigeria’s policy direction and its resolve to translate reform momentum into tangible investment outcomes.

The chief executive of NNPC, Mr Bashir Bayo Ojulari, said, “This approval is a testament to the President’s leadership, NNPC’s disciplined execution and our ability to structure complex, bankable transactions that deliver value for Nigeria.

“For nearly two decades, the Bonga Southwest project remained stalled. Today, under President Tinubu’s reform-driven leadership and through NNPC’s sustained advocacy, we have broken that logjam. This is what partnership, persistence, and policy clarity can achieve.”

“This milestone further affirms NNPC’s commitment, under the President’s leadership, to unlocking Nigeria’s vast energy potential through partnerships, disciplined innovation and execution excellence,” he further stated.

The Bonga Southwest project will be the first FID on a Nigeria deepwater Production Sharing Contract asset since 2008, re-establishing Nigeria as a premier deepwater investment destination.

The fiscal package approved by President Tinubu includes an enhanced Production Tax Credit and resolution of the 2021 dispute settlement agreement, creating a competitive framework that balances national value with investor returns.

The Bonga Southwest Aparo project, operated by Shell with all IOCs in Nigeria as partners, will create over 5,000 direct and indirect jobs, and deliver 150,000 barrels per day of crude oil and 140 million standard cubic feet per day of gas upon completion.

NNPC Limited, as concessionaire, worked closely with SNEPCo and the broader contractor party to develop alternative fiscal solutions that address structural constraints while protecting Nigeria’s long-term interests.

Economy

Nigeria Posts N5.17trn Surplus as Trade Value Falls to N36.02trn in Q1 2025

Published

51 minutes ago

11/03/2026

Adedapo Adesanya

By Adedapo Adesanya

Nigeria recorded a trade surplus of N5.17 trillion in the first quarter of 2025, according to the National Bureau of Statistics (NBS) in its latest Foreign Trade in Goods Statistics report.

This affirmed that the country’s exports rose faster than imports for yet another quarter.

The report showed that the country’s total merchandise trade stood at N36.02 trillion in the period under review, higher than the N33.93 trillion recorded in the corresponding period of 2024 by 6.19 per cent, but lower than the N36.60 trillion achieved in the previous quarter by 1.58 per cent.

Total exports were valued at N20.60 trillion, accounting for 57.18 per cent of total trade. This represents a 7.42 per cent increase from ₦19.18 trillion recorded in the first quarter of 2024 and 2.92 per cent higher than the N20.01 trillion posted in the fourth quarter of 2024.

Meanwhile, imports came in at N15.43 trillion during the period, 4.59 per cent more than the N14.75 trillion recorded in the corresponding quarter of 2024, but 7.02 per cent lower than the N16.59 trillion of the preceding quarter.

The NBS report showed that Nigeria’s export trade continued to be dominated by crude oil, which was valued at N12.96 trillion and accounted for about 62.89 per cent of total exports, while non-crude oil exports were valued at N7.64 trillion, representing 37.11 per cent of total exports, and non-oil products contributed N3.17 trillion or 15.38 per cent of the export value.

The NBS noted that India, the Netherlands, the United States, France and Spain were Nigeria’s major export partners during the quarter.

On the import side, China remained Nigeria’s largest trading partner, followed by India, the United States, the Netherlands and the United Arab Emirates.

Major commodities exported during the period included crude oil, liquefied natural gas, petroleum gases, urea and cocoa beans, while key imports included gas oil, motor spirit, crude petroleum oils, cane sugar for refining and durum wheat.

The stats office added that the country’s positive trade balance rose by more than 50 per cent compared with the previous quarter, reflecting a stronger export performance

Economy

Tinubu Writes Senate to Confirm Oyedele as Minister, Magnus Abe as NUPRC Chair

Published

2 hours ago

11/03/2026

Adedapo Adesanya

By Adedapo Adesanya

President Bola Tinubu on Tuesday asked the Senate to screen and confirm Mr Taiwo Oyedele as the Minister of State for Finance, to replace Mrs Doris Uzoka-Anite.

The President made the request through a letter read on the floor of the Senate by the Senate President, Mr Godswill Akpabio, after a three-week recess for the budget defence exercise.

The request was subsequently referred to the Committee of the Whole for further legislative consideration.

President Tinubu also sought the confirmation of Mr Magnus Abe as Chairman of the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), alongside two commissioner nominees.

The Senate President also read another letter from the President seeking confirmation of Mr Mainasara Illo as Chief Executive Officer (CEO) of the Nigeria Anti-Doping Centre. The nomination was referred to the Senate committees on Narcotics and Drugs and Sports for joint screening.

Another letter from Mr Tinubu sought confirmation of Mr Francis Ifeanyi Asogwa as a commissioner representing the South-East in a federal commission. The nomination was referred to the Senate Committee on Judiciary, Human Rights, and Legal Matters for screening.

The Senate also received requests from the President to confirm two nominees as commissioners of the Revenue Mobilisation Allocation and Fiscal Commission: Mrs Amina Gamawa from Bauchi State and Mr Abdullahi Murktar from Kaduna State.

All nominations have been referred to the relevant committees for further legislative action and screening.

The nomination of the former fiscal policy partner and Africa tax leader at PriceWaterhouseCoopers (PwC) as minister was announced in a statement by presidential spokesperson, Mr Bayo Onanuga, last week.

Mrs Uzoka-Anite will now move to the Ministry of Budget and National Planning, as the Minister of State, her third portfolio in the administration, the presidential spokesman added.

The 50-year-old is a public policy expert, an accountant, and an economist.

He attended Yaba College of Technology and bagged a Higher National Diploma (HND) in accountancy and finance.

Mr Oyedele also earned a BSc in applied accounting from Oxford Brookes University.

The Senate also received the 2026 statutory budget of the Federal Capital Territory Administration (FCTA) from President Tinubu for consideration and approval.