Economy
CBN 11% Inflation Target in 2017 “Largely Optimistic”—Report
By Modupe Gbadeyanka
Analysts at WSTC Financial Services Limited have described the 11 percent inflation rate target set by the Central Bank of Nigeria (CBN) as “largely optimistic.”
On Tuesday, CBN Governor, Mr Godwin Emefiele, disclosed that the apex bank was targeting an inflation rate of between 10-11 percent at the end of this year.
He made this disclosure during a meeting in Abuja with the Senate Committee on Banking, which invited him to inform what the CBN was doing about the high interest rates in the Nigerian banking industry.
This week, the National Bureau of Statistics (NBS) said inflation dropped to 16.25 percent in May from 17.24 percent a month earlier.
Reacting to this, WSTC Financial Services Limited, in a report on Thursday, June 15, 2017, noted that “the downward trend in the general price level has further reinforced our outlook on inflation in the current year.”
“However, the MoM surge in the food sub-index is indicative of existing inflationary pressure on food prices, and signals a possible downside risk to inflation in the months ahead,” it further stated.
“Additionally, we believe the CBN’s inflation target of 10 percent-11 percent at the end of 2017, is largely optimistic, particularly considering mounting pressure on food inflation.
“We note that such a target implies an assumption of no adjustment in the official exchange rate of N305/$ and the retention of the price of PMS at the current level in H2 2017,” WSTC Financial Services Limited submitted.
In its analysis, the firm said core inflation emerged as the key source of moderation in the headline index in May, as was the case in the preceding month primarily due to high base effect.
“Note that the price of premium motor spirit (PMS) was increased in May 2016 from N87 to N145. The Core sub-index declined by 180bps to 13 percent in May 2017 from 14.80 percent in April 2017, representing the seventh consecutive month of decline. Also, core inflation continued on its Month-on-Month (MoM) downward trend for the fifth consecutive month, suggesting receding inflationary pressure from the impact of the hike in energy prices (the price of PMS & electricity tariff) implemented in H1’2016.
“Food inflation also declined marginally by 3bps to 19.27 percent YoY in May 2017, from 19.30 percent in April 2017.
We believe this was due to a moderation in imported food inflation by 121bps, given the improved liquidity in the FX market and appreciation of the Naira in the parallel market segment.
“However, food inflation spiked MoM by 50bps to a high of 2.54%, indicating continued pressure from locally produced food items,” the report said.
By Dipo Olowookere
The International Monetary Fund (IMF) has advised the Nigerian government to give priority to supporting vulnerable households in the country suffering the impact of its economic reforms, Business Post reports.
The administration of President Bola Tinubu since assuming power on May 29, 2023, has introduced reforms that have put some citizens into untold hardship.
While delivering his inaugural speech almost two years ago, Mr Tinubu announced an end to the payment of subsidies on premium motor spirit (PMS), otherwise known as petrol.
His announcement pushed the price of the product from less than N200 per litre to almost N600 per litre.
PMS later reached over N1,000 per litre but the price war between Dangote Refinery and the Nigerian National Petroleum Company (NNPC) Limited has made it to be at N860 per litre at the moment, though there are speculations that it could move higher to over N900 per litre in the coming weeks due to the suspension of the Naira-for-crude deals with local refiners, including the Lagos-based Dangote Refinery.
Another reform introduced by President Tinubu is the liberalisation of the foreign exchange (FX) market, devaluing the value of the local currency to over N1,500 per Dollar at the moment. It was almost reaching N2,000 per Dollar until the Central Bank of Nigeria (CBN) made some moves, including clearing forex backlogs and putting in place an transparent system for trading called the Electronic Foreign Exchange Matching System (EFEMS).
At the IMF Press Briefing on Thursday, the Director of Communications Department of the IMF, Ms Julie Kozack, said to alleviate the sufferings of Nigerians, the federal government must quickly rollout cash transfers.
“The authorities’ policies to stabilize the economy and to promote growth are welcome, and they will, of course, need to be accompanied by targeted social transfers to support the most vulnerable populations.
“We do recognize the extremely difficult situation that many Nigerians face. And for that reason, I just want to emphasize that completing the rollout of cash transfers to vulnerable households is an important priority for Nigeria, as is improving revenue mobilization domestically,” she said.
Ms Kozack disclosed that a team from the IMF would “travel to Nigeria next week in preparation for the 2025 Article IV Consultation.”
She said earlier this month, the Deputy Managing Director of the global lender, Ms Gita Gopinath, was in Abuja and Lagos, where she met with the Minister of Finance, Mr Wale Edun, and the Governor of the CBN, Mr Yemi Cardoso, as well as civil society groups and private sector leaders.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited sank deeper by 0.06 per cent on Thursday on the back of sustained profit-taking, particularly in the banking, energy and consumer goods sectors.
Business Post reports that the N4 per share dividend declared by Zenith Bank for the 2024 fiscal year yesterday could not trigger bargain-hunting as investor sentiment was weak.
It was observed that 22 stocks ended on the gainers’ chart and 28 stocks finished on the losers’ table, representing a negative market breadth index.
John Holt lost 10.00 per cent to trade at N7.74, Chams declined by 8.52 per cent to N2.04, Secure Electronic Technology shed 8.47 per cent to close at 54 Kobo, May and Baker slipped by 7.95 per cent to N8.10, and UPDC stumbled by 6.90 per cent to N2.70.
However, The Initiates gained 9.85 per cent to settle at N4.46, Mutual Benefits grew by 9.09 per cent to 96 Kobo, Universal Insurance climbed higher by 9.09 per cent to 60 Kobo, Royal Exchange rose by 8.99 per cent to 97 Kobo, and Learn Africa increased by 8.14 per cent to N3.32.
The insurance index was up during the session by 0.09 per cent, and the industrial goods counter marginally closed higher by 0.01 per cent, while the commodity sector was flat.
But, the banking space went down by 0.96 per cent, the energy industry depreciated by 0.35 per cent, and the consumer goods sector declined by 0.20 per cent.
As a result, the All-Share Index (ASI) contracted by 59.87 points to 105,426.12 points from 105,485.99 points, and the market capitalisation depleted by N38 billion to N66.110 trillion from N66.148 trillion.
A total of 423.6 million shares worth N9.2 billion were transacted in 11,393 deals on Thursday versus the 5.8 billion shares valued at N342.6 billion bought and sold in 10,908 deals on Wednesday, showing a rise in the number of deals by 4.45 per cent, and a fall in the trading volume and value by 92.65 per cent, and 97.32 per cent apiece.
The activity log was topped by Access Holdings with 65.0 million equities for N1.4 billion, Zenith Bank sold 41.5 million stocks for N2.0 billion, Fidelity Bank transacted 40.7 million shares worth N773.2 million, Secure Electronic Technology traded 38.4 million stocks valued at N20.8 million, and Tantalizers exchanged 31.5 million equities worth N89.9 million.
By Adedapo Adesanya
The Nigeria Customs Service (NCS) has launched a locally developed portal to enhance trade transparency, efficiency, and compliance.
The portal, called B-Odogwu, will provide a unified system for stakeholders, including shippers, terminal operators, and traders, to access and manage their information system.
According to a statement, the Comptroller Kano/Jigawa Command, Dalhat Abubakar, unveiled the program in Kano on Tuesday and described it as a safer, faster, and indigenous-owned system designed by the NCS for easy transactions.
He said the introduction of the B-Odogwu system was a significant step towards achieving a single National entry window and promoting transparency in trade facilitation.
According to him, “The new system is designed to ensure reliability, transparency, and compliance in trade facilitation.”
Mr Abubakar, however, stressed that the NCS has demonstrated competence and dedication in transitioning from service providers to the new system.
He added that the key features and benefits of the B-Odogwu system include faster processing and reduced downtime, enhanced reliability, and transparency.
Other benefits are improved compliance and reduced lack of compliance, a single national entry window with a single data movement, and trade facilitation and transparency.
He disclosed that “The NCS has commenced training for terminal operators, shippers, traders, and licensed agents to ensure a smooth transition to the new system.”
He further stated that “Over 16,000 declarations have been made on the B-Odogwu system since its introduction in January 2025.”
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