Economy
Nigeria’s Exit from Recession Sweetens Presidency
By Modupe Gbadeyanka
The announcement today by the National Bureau of Statistics (NBS) that Nigeria has officially exited recession has gladdened the Presidency.
A statement issued today by Mr Laolu Akande, spokesperson to Vice President, Mr Yemi Osinbajo, said the Buhari administration welcomes news with cautious optimism.
Mr Akande promised that the present administration will continue to drive Nigeria’s economic growth by vigorously implementing the Economic Recovery & Growth Plan (ERGP) launched earlier this year by President Muhammadu Buhari.
He further said the overall economic plan and direction of the administration has resulted, among others, in sustained restoration of oil production levels, (occasioned by the enhanced security and stability in the Niger Delta) sustained growth in agriculture, mining and the first growth recorded in industry as a whole in the last nine quarters since fourth quarter of 2014.
Quoting the Special Adviser on Economic Affairs to the President, Mr Adeyemi Dipeolu, the statement noted that the GDP figures give grounds for cautious optimism especially as inflation has continued to fall from 18.72 percent in January 2017 to 16.05 percent in July 2017.
Mr Dipeolu added that, “Foreign exchange reserves have similarly improved from a low of $24.53 billion in September 2016 to about $31 billion in August 2017.
“In the same vein capital importation grew by 95 percent year-on-year driven by portfolio and other investments but also notably by foreign direct investment which increased by almost 30 percent over the previous quarter.
According to the President’s aide, “Overall, the end of the recession is welcome but economic growth remains fragile and vulnerable to exogenous shocks or policy slippages.
“Accordingly, it remains essential to intensify efforts going forward on the implementation of the ERGP to achieve desired outcomes including sustained inclusive growth, further diversification of the economy, creation of jobs and improved business conditions.”
Today, the stats office said in the second quarter of this year (Q2 2017), the economy grew in by 0.55 percent from -0.91 percent in Q1 2017 and -1.49 percent in Q2 2016.
This in effect means that the Nigerian economy has exited recession after five successive quarters of contraction.
Below is the full statement released by the Presidency on Tuesday in reaction to the news of the exit from recession.
The Buhari administration welcomes news of Nigeria’s exit from recession with cautious optimism and will continue to drive Nigeria’s economic growth by vigorously implementing the Economic Recovery & Growth Plan launched earlier this year by President Muhammadu Buhari.
The overall economic plan and direction of the administration has resulted, among others, in sustained restoration of oil production levels, (occasioned by the enhanced security and stability in the Niger Delta) sustained growth in agriculture, mining and the first growth recorded in industry as a whole in the last nine quarters since Q4 2014.
Below Is A Statement By Special Adviser On Economic Adviser To The President, Dr. Adeyemi Dipeolu On The 2nd Quarter 2017 Figures Just Released By The National Bureau Of Statistics
The figures released by the National Bureau of Statistics for the second quarter of this year (Q2 2017) show that the economy grew in Q2 2017 by 0.55% from -0.91% in Q1 2017 and -1.49% in Q2 2016. This in effect means that the Nigerian economy has exited recession after five successive quarters of contraction.
This positive growth is attributable to both the oil and non-oil sectors of the economy. Growth in the oil sector which has been negative since Q4 2015 was positive in Q2 2017. It rose by 1.64% as compared to -15.60 in Q1 2017, an increase of up to 17 percentage points. This improvement is partly due to the fact that oil prices which have improved slightly from the lows of last year have been relatively steady as well as the fact that production levels were being restored.
The non-oil sector grew by 0.45% in Q2 2017, a second successive quarterly growth after growing 0.72% in Q1 2017. This increase which was not quite as strong as it was in Q2 2016 reflects continuing fragility of economic conditions. However, given that nearly 60% of the non-oil sectors contribution to GDP is influenced by the oil sector, growth in the oil sector will help boost the rest of the economy.
The positive growth seen in agriculture when the rest of the economy was contracting was maintained at 3.01% which is encouraging especially if seasonal factors are taken into account. Manufacturing growth was also positive at 0.64% and although lower than the previous quarter’s growth of 1.36%, it was an a noticeable improvement over the -3.36% experienced in Q2 2016 and a continuation of the turnaround of the sector. Solid minerals which remain a priority of the Administration also continued to grow and in Q2 2016 by 2.24%.
Overall, industry as a whole grew by 1.45% in Q2 2017 after nine successive quarters of contraction starting in Q4 2014. This positive development was somewhat overshadowed by the continued decline in the services sector which accounts for 53.7% of GDP. Nevertheless, electricity and gas as well as financial institutions grew by 35.5% and 11.78% respectively in Q2 2017.
The GDP figures give grounds for cautious optimism especially as inflation has continued to fall from 18.72% in January 2017 to 16.05% in July 2017. Foreign exchange reserves have similarly improved from a low of $24.53 in September 2016 to about $31 billion in August 2017. In the same vein capital importation grew by 95% year-on-year driven by portfolio and other investments but also notably by foreign direct investment which increased by almost 30% over the previous quarter.
Foreign trade has also contributed to improving economic conditions with exports amounting to N3.1 trillion in Q2 2017 while imports which increased by 13.5% amounted to N2.5 trillion in the same period. The overall trade balance thus remained positive at N0.60 trillion.
Unemployment however remains relatively high but job creation is expected to improve as businesses and employers increasingly respond more positively to the significantly improving business environment and favorable economic outlook.
Besides, as key sectoral reforms in both oil and non-oil sectors gain traction, the successful implementation of ERGP initiatives such as N-Power and the social housing scheme will boost job creation.
Food inflation also bears watching as it has remained quite high and volatile due mostly to high transport costs and seasonal factors such as the planting season. Investments in road and rail infrastructures, increased supply and availability of fertilizers and improvements in the business environment should contribute to the easing of food prices.
Overall, the end of the recession is welcome but economic growth remains fragile and vulnerable to exogenous shocks or policy slippages. Accordingly, it remains essential to intensify efforts going forward on the implementation of the ERGP to achieve desired outcomes including sustained inclusive growth, further diversification of the economy, creation of jobs and improved business conditions.”
By Dipo Olowookere
The first trading session of the week on the floor of the Nigerian Exchange (NGX) Limited ended in the green territory on Monday, with a 1.20 per cent rise.
This was buoyed by the gains recorded by Airtel Africa and other equities, according to analysis of data harvested from the Customs Street yesterday.
During the trading day, the consumer goods index grew by 0.76 per cent, enough to offset the losses recorded by the other sectors.
The insurance counter shrank by 1.64 per cent, the banking space lost 0.24 per cent, the energy sector contracted by 0.09 per cent, and the industrial goods segment retreated by 0.05 per cent.
When trading activities ended for the day, the All-Share Index (ASI) was up by 2,956.15 points to 248,529.75 points from 245,573.60 points, and the market capitalisation gained N1.909 trillion to finish at N160.422 trillion compared with the previous session’s N158.513 trillion.
Fortis Global Insurance expanded by 10.00 per cent to N2.86, Chams surged by 9.80 per cent to N4.48, NAHCO jumped by 9.29 per cent to N153.00, Airtel Africa soared by 8.59 per cent to N6,300.00, and Sovereign Trust Insurance rose by 6.59 per cent to N1.78.
Conversely, AVA Capital shed 10.00 per cent to N9.90, Ecobank decreased by 9.92 per cent to N64.95, Caverton crashed by 9.09 per cent to N5.00, Ikeja Hotel slipped by 8.41 per cent to N43.00, and FTN Cocoa dropped 8.37 per cent to trade at N8.10.
A total of 23 equities were on the gainers’ chart yesterday, while 37 equities ended on the losers’ table, indicating a negative market breadth index and weak investor sentiment.
As for the activity log, the trading volume remained elevated, though lower than the preceding session, as it receded by 26.67 per cent to 1.1 billion units from 1.5 billion units. The trading value, however, increased by 1.12 per cent to N27.0 billion from N26.7 billion, while the number of deals advanced by 39.00 per cent to 59,185 deals from 42,580 deals.
Consolidated Hallmark was the most active stock yesterday, with a turnover of 354.1 million units valued at N1.5 billion, Fortis Global Insurance traded 307.3 million units worth N818.3 million, Access Holdings exchanged 48.1 million units for N1.4 billion, Chams transacted 37.4 million units worth N163.3 million, and First Holdco sold 35.8 million units valued at N5.1 billion.
By Adedapo Adesanya
Oil prices traded 5 per cent higher on Monday after Iran and the United States argued about demands for compensation, further stalling a possible deal to reopen the Strait of Hormuz.
Brent crude futures chalked up $4.17 or 4.99 per cent to sell at $87.72 a barrel, while the US West Texas Intermediate (WTI) crude futures surged $3.95 or 5.05 per cent to $82.13 per barrel.
Iran said the US must lift sanctions on it and meet other conditions for reopening the vital waterway, which carried a fifth of the world’s oil and liquefied natural gas before the start of the Middle East conflict in late February.
Meanwhile, US President Donald Trump said Iran must pay compensation for “all of the people that they have killed and gravely wounded.”
This comes as the Middle East country said it was nearing a final pact with Oman to define new shipping lanes through the strait but repeated that the US must meet other conditions, including compensation and an end to sanctions and military threats before the strategic waterway is reopened.
In a further threat to supply, the Iran-aligned Houthis said they had struck Saudi Aramco’s Jazan refinery on Sunday. Saudi Aramco has postponed the restart of the 400,000-barrel-per-day refinery to August 30 after two Houthi attacks in recent weeks.
ADNOC, a state-owned oil company in the United Arab Emirates, said on Friday that 15 of its vessels had been attacked while transiting the Strait of Hormuz since the beginning of the conflict.
Meanwhile, Ukraine’s military continued to attack Russia’s energy infrastructure, hitting the Taneco oil refinery in Tatarstan and the ZapSibNeftekhim petrochemical plant in Russia’s Tyumen region.
On the US supply side, stocks of crude oil in the Strategic Petroleum Reserve (SPR) fell by about 6.1 million barrels to 298.7 million barrels last week, the lowest level since January 1983.
Bank of America (BoFA) warned that oil prices could continue climbing into the winter if the US and Iran fail to reach an agreement reopening the Strait of Hormuz, with severe shortages already emerging in diesel, petrol, and global natural gas markets.
Mr Francisco Blanch, Bank of America’s head of commodities and derivatives research, told CNBC on Monday that only around 5 to 10 ships per day are currently passing through Hormuz, compared with roughly 140 before the war. With some crude now being rerouted through Saudi Arabia and the UAE, traffic would need to recover to around 80 to 100 ships per day just to stabilise energy markets.
By Adedapo Adesanya
The Senate Committee on Banking, Insurance and Other Financial Institutions has called for stronger collaboration among financial sector regulators and other stakeholders to strengthen Nigeria’s financial system and support sustainable economic growth.
The committee made the call during an expanded stakeholders’ engagement in Lagos, attended by the leadership of the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), Asset Management Corporation of Nigeria (AMCON), National Insurance Commission (NAICOM) and Nigeria Export-Import Bank (NEXIM), among other industry stakeholders and financial experts.
Chairman of the committee, Mr Adetokunbo Abiru (Lagos East), who was represented by Mr Osita Izunaso (Imo West), said stronger legislative reforms and regulatory collaboration were necessary to reposition Nigeria’s financial architecture for long-term economic prosperity.
Mr Abiru said the financial sector remained critical to investment, job creation, business expansion and macroeconomic stability, stressing that its ability to mobilise savings, channel credit to productive sectors, facilitate investment and manage risks was fundamental to sustainable economic growth.
He said the current economic realities required closer collaboration between the legislature and financial regulators, noting that challenges confronting the sector were interconnected and could not be effectively addressed through isolated interventions.
The lawmaker identified inflationary pressures, global economic uncertainties, cybersecurity threats, low insurance penetration and the need to diversify Nigeria’s export base as some of the challenges requiring coordinated policy responses.
He said the engagement was aimed at generating practical solutions to strengthen the country’s financial architecture and support sustainable economic growth.
According to him, monetary policy, financial safety nets, banking institutions, the insurance industry and export finance were interdependent components of a stable financial system and must therefore be strengthened collectively.
The Commissioner for Insurance and Chief Executive Officer of the National Insurance Commission (NAICOM), Mr Olusegun Ayo Omosehin, said the Nigeria Insurance Industry Reform Act (NIIRA) 2025 had contributed significantly to stabilising and repositioning the insurance sector.
Mr Omosehin disclosed that 43 insurance companies had successfully recapitalised, describing the development as a major milestone for the industry.
He commended Abiru and members of the committee for their role in advancing insurance sector reforms and urged the House of Representatives to expedite action on the relevant insurance reform bill to enable it to receive presidential assent and become operational.
Representatives of the CBN Governor and the Managing Directors of AMCON, NEXIM and NDIC also commended the Senate committee for its oversight and legislative support, saying its interventions had strengthened the agencies’ capacity to discharge their statutory mandates.
The engagement, held under the theme, Strengthening Financial System Architecture for Sustainable Economic Growth and Stability in Nigeria, also featured presentations by Professor Uche Uwaleke, President of Capital Market Academics of Nigeria (CMAN); Professor Biodun Adedipe, Chief Consultant, B. Adedipe Associates Limited; and Dr Tilewa Adebajo, Chief Executive Officer of CFG Advisory.
The experts presented policy recommendations on key issues affecting Nigeria’s financial system, with emphasis on financial stability, investment and sustainable economic growth.
Mr Abiru said the Senate would continue to engage financial regulators and other stakeholders to deepen financial inclusion, strengthen public confidence in financial institutions and improve regulatory effectiveness.
He said the broader objective was to position Nigeria’s financial system to compete more effectively in the global economy while remaining resilient and responsive to the country’s economic transformation agenda.
