Economy
Cash Scarcity: Former NBS Chief Yemi Kale Projects Reduction in Nigeria’s Q1 GDP
By Adedapo Adesanya
Nigeria’s former statistician general, Dr Yemi Kale, says the biting cash crunch in the country will lead to a reduction in the country’s nominal gross domestic product (GDP) numbers for the first quarter of 2023 by up to 15 trillion.
In a series of tweets, the new Partner/Chief Economist and Head of Research at KPMG Nigeria said this is because a large chunk of the country’s informal sector is cash dependent just as one-third of the formal sector is.
“I am estimating a reduction in Q1 2023 nominal GDP by between N10-15 trillion due to challenges sourcing cash in Q1 2023.
“This is because about 40% of Nigeria’s N198tn GDP in 2022 is informal of which about 90% is cash-based. Further 30% of formal sector GDP is cash-based. This means N106.9tn of total GDP is cash-based,” he wrote.
He added that “Of the 46 economic activities, agriculture, some manufacturing activities (especially food & beverage, textiles, apparels), trade, arts entertainment & recreation, accommodation & food services, road, and water transport and other services expected to be the most affected.”
Speaking on the currency redesign, he noted that there is nothing new or wrong about currency redesign or cashless policy, “if done for the right reasons [and] at the right time,” putting forth that every policy will have pros and cons while benefiting some but not others.
“There is no policy that won’t affect someone negatively. Or that won’t have costs. The idea is to do a cost-benefit analysis looking at the overall impact of any policy & how and when it is to be implemented across the economy and not just in one or a few areas and deciding if overall, the benefits outweigh the costs.
“If yes, then the costs are acceptable. Then a policy maker can or should introduce palliatives to make the costs bearable to those that will be negatively affected by its implementation,” he advised.
Dr Kale said the government, after its analysis then decides to implement the policy and it turns out to be more detrimental to the entire system than beneficial even if it benefits a particular area or sector,” then it clearly isn’t a good idea to go ahead.”
He also projected a marginal drop in inflation for the month of February from the current 21.82 per cent based lack of cash to chase more of the same amount of goods that contribute to the price rise.
In his words, “Inflation though might slow down not because of an increase in output of goods & services above available cash to spend but because of lack of cash to chase more of the less same amount of goods. The CPI is about 50% food of which several are perishable in the absence of storage.”
“Assuming there is a decline in inflation rate which I anticipate (though marginal) when [NBS] publishes their inflation report, we can then compare if the gains in inflation in Q1 2023 outweighs the expected decline in GDP &possibly other macro & socio-economic variables.”
He also painted a dour picture of the country’s already high unemployment reality.
“Recall employment is also tied to GDP growth- a slowdown in growth will have a negative impact on employment. On the other hand, both a reduction in inflation and growth in GDP can improve poverty rates.
“So it will be interesting to see which dominates overall economic wellbeing,” he concluded.
However, in the inflation data released today, the National Bureau of Statistics (NBS) said the average price of goods and services in Nigeria rose by 21.91 per cent last month.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Wednesday, April 16, as the market capitalisation remained unchanged at N1.915 trillion as well as the NASD Unlisted Security Index (NSI) at 3,271.02 points.
At the trading session, there was no price gainer or decliner.
The bourse’s data showed a decrease of 95.0 per cent in the volume of securities transacted to 36,757 units from the 736,215 units recorded in the previous trading day, the value of transactions slid by 83.6 per cent to N1.99 million from N12.1 million transacted on Tuesday, and the number of deals fell by 19.2 per cent to 21 deals from the 26 deals recorded a day earlier.
Impresit Bakolori Plc remained the most active stock by volume on a year-to-date basis with 533.9 million units worth N520.9 million, trailed by Okitipupa Plc with 153.6 million units sold for N4.9 billion, and Industrial and General Insurance (IGI) Plc with 71.2 million units valued at N24.2 million.
Also, Okitipupa Plc remained the most active stock by value on a year-to-date basis with 153.6 million units valued at N4.9 billion, followed by FrieslandCampina Wamco Nigeria Plc with the sale of 14.7 million units worth N568.1 million, and Impresit Bakolori Plc with a turnover of 533.9 million units sold for N520.9 million.
By Adedapo Adesanya
The Naira witnessed a N1.76 or 0.11 per cent depreciation on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Wednesday, April 16.
During the trading session, the local currency was exchanged with the greenback at N1,603.16/$1, in contrast to the N1,601.40/$1 it was traded a day earlier, according to data from the Central Bank of Nigeria (CBN).
Also, the Nigerian currency weakened against the British Pound Sterling in the official market yesterday by N6.71 to quote at N2,121.97/£1 compared with the previous day’s value of N2,115.26/£1 and tumbled against the Euro by N9.28 to sell for N1,818.17/€1 versus Tuesday’s exchange rate of N1,808.89/€1.
In the parallel market, the Naira lost N5 against the Dollar to finish at N1,620/$1 compared with the preceding day’s N1,615/$1.
The pressure on the domestic currency came as the central bank sold over $30.00 million at rates between N1,590.00/$ and N1,601.50/$ this week to authorised forex dealers.
At the cryptocurrency market, things turned bullish as the US Federal Reserve Chairman, Mr Jerome Powell, dashed hopes for early rate cuts, citing the need to assess the impact of US tariffs on the global economy.
The Federal Reserve chair also mentioned that the US central bank needed more time to see the effects of tariffs play out in the global economy. The same is likely to be true of the economic effects, which will include higher inflation and slower growth.
Market analysts noted that the remarks disappointed rate cuts optimist by stressing focus on protecting against tariff-driven price hikes from driving a long-term rise in inflation expectations.
Solana (SOL) jumped by 7.2 per cent to trade at $134.28, Cardano (ADA) added 2.8 per cent to close at $0.6209, Dogecoin (DOGE) appreciated by 2.5 per cent to $0.1570, Ethereum (ETH) rose by 2.1 per cent to $1,602.70, Ripple (XRP) gained 1.9 per cent to close at $2.09, Bitcoin (BTC) increased by 1.5 per cent to $84,749.46, and Binance Coin (BNB) went up by 0.7 per cent to $583.08.
But Litecoin (LTC) declined by 0.7 per cent to finish at $75.38, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Aduragbemi Omiyale
The further reduction in the price of Premium Motor Spirit (PMS), commonly known as petrol, from N865 to N835, effective from Wednesday, April 16, 2025, by Dangote Petroleum Refinery has been applauded by Nigerians.
The price slash was the second by the company in a week and it was in reaction to the decline in the price of crude oil in the global market due to the trade war between the United States and China.
In a statement yesterday by the Group Chief Branding and Communications Officer of Dangote Group, Mr Anthony Chiejina, it was stated that key partners, including MRS, AP (Ardova), Heyden, Optima Energy, Hyde and Techno Oil, will sell petrol to customers at N890 per litre, down from N920 in Lagos, while in the other South-West states, the price will be N900 per litre versus the previous N930.
In addition, Nigerians living in the North-West and North-Central will get the high-quality Dangote petrol at N910 per litre compared with the former price of N940, and those in the South-East, South-South, and North-East will buy at N920 per litre, down from N950 per litre.
Dangote expressed hopes that this latest reduction in PMS prices would generate a positive ripple effect throughout various sectors of the economy, providing much-needed relief to consumers and contributing to broader economic growth, particularly during the Easter season.
It stated that the slash in price reaffirmed its “commitment to providing high-quality petrol at affordable rates, benefiting consumers across the nation. In addition, we are working collaboratively with our partners to ensure equitable reflection of this price reduction.”
Dangote Petroleum Refinery has consistently worked to reduce the prices of petrol and other refined petroleum products, ensuring the continued benefit of Nigerian consumers.
For example, in February, the refinery reduced prices twice by N125. In addition, products such as diesel and Liquefied Petroleum Gas (LPG) have also experienced significant price reductions due to the refinery’s sustained efforts.
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