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Economy

Inflation to Drop Further to 11.50% in May from 12.48% in April—FSDH

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inflation rate Nigeria

By Dipo Olowookere

Analysts at FSDH Research have predicted that inflation rate in Nigeria for the month of May 2018 would moderate to 11.50 percent from 12.48 percent recorded in April 2018.

In its Inflation Watch report, the firm explained that this drop would be influenced by base effect in the Composite Consumer Price Index (CCPI) from the previous year.

The National Bureau of Statistics (NBS), according to its calendar, is expected to release the inflation figures on Wednesday, June 13, 2018.

The headline inflation has been on downward trend since last year and the Nigerian government is targeting a single digit inflation rate before the end of this year.

In its report released yesterday, FSDH said in the month of May, most consumer prices recorded elevated prices.

For example, the Food Price Index (FPI) from the Food and Agriculture Organization (FAO) for the month of May 2018 showed that the Index averaged 176.2 points, 1.24 percent higher than the revised value for April 2018, and 1.90 percent higher than the May 2017 figure.

According to the FAO, prices of dairy products and cereals rose during the month while vegetable oils and sugar prices remained under downward pressure.

The FAO Dairy Price Index was up for the fourth consecutive month, recording an increase of 5.45 percent between April and May.

Increased demand for products such as cheese, skimmed milk powder and butter contributed to the rise in the value of the Index. The FAO Cereal Price Index was up by 2.44 percent, largely due to the increase in the prices of wheat, coarse grains and rice.

However, the FAO Vegetable Oil Price Index was down by 2.58 percent, primarily driven by a decline in the prices of palm, soy and sunflower oils occasioned by slow global imports demand and large inventories.

The FAO Sugar Index fell for the sixth consecutive month as a result of increased supply conditions in the main sugar producing region of Brazil. The FAO Meat Index was marginally down by 0.48 percent driven by the decrease in the prices for ovine and pig meat.

FSDH’s analysis indicated that the value of the Naira depreciated at both the Nigerian Autonomous Foreign Exchange (NAFEX) and parallel markets in May 2018.

The value of the Naira lost by 0.40 percent and 0.14 percent to close at $/N361.62 and $/N363.50 respectively at the NAFEX and parallel markets at the end of May.

The rise in the international prices of food coupled with the depreciation in the value of the Naira led to an increase in the prices of imported consumer goods in Nigeria between the two months under review.

In the report, FSDH Research noted that there is a potential increase in the local prices of imported food items because of the faster than expected increase in the international food prices.

The prices of most of the food items that FSDH Research monitored in May 2018 increased substantially, leading to a 1.20 percent increase in its Food and Non-Alcoholic Index.

This Index increased year-on-year by 13.29 percent, up from 240.30 points recorded in May 2017. The firm also observed an increase in the prices of Transport and Housing, Water, Electricity, Gas & Other Fuels divisions between April and May 2018.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Economy

NGX All-Share Index Outperforms Inflation Over Three Years

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All-Share Index

The 3-year trailing performance of the All-Share Index (ASI) of the Nigerian Exchange (NGX) Limited surpasses the average inflation during the same period.

The annual inflation measured by the Consumer Price Index (CPI) released in September by the National Bureau of Statistics (NBS) was 20.52 per cent in August 2022.

Meanwhile, the NGX ASI, a market capitalisation weighted index of all companies listed on the NGX’s platform, had a year-to-date performance of 15.68 per cent during the same period. This could be misleading about the market performance until you view it through a longer-term lens.

British Economist, Benjamin Graham, made a quote popularly used by Warren Buffett, the Fund Manager of Berkshire Hathaway Inc and widely regarded as the best living investor: “Markets are a voting machine in the short term, and a weighing machine in the long run.” On a 3-year trailing basis, the NGX ASI has outperformed the CPI average in the same period, ensuring that investors with a longer-term hold on their investments remain in the positive region.

Analysis of data of closing prices gathered from the NGX’s website showed that the index has a 3-year moving average of 22.97 per cent, compared to an inflation average of 15.72 per cent.

The year 2022 has been a slow year for global stocks due to volatility resulting from the hiking of interest rates by central banks in the United States and Europe amidst inflationary pressures.

The NGX ASI’s 15.62% YTD return is a significant positive performance compared to the US S&P 500, which has plunged by 22.46% or the FTSE 100, which has declined by 7.68%, according to Google Finance. The local bourse has exhibited resilience and insulated investors from negative return on investment over three years.

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Economy

Laolu Martins Was Minority Shareholder of Bukka Hut—Management

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By Modupe Gbadeyanka

The management of an online restaurant in Nigeria, Bukka Hut, has clarified that one of its late directors, Mr Laolu Martins, was a minority shareholder in the company.

On Wednesday, it was reported that the deceased breathed his last in Lagos. He was said to have co-founded the firm with Mr Rasheed Jaiyeola, who is the Chief Executive Officer.

The deceased was reportedly invited to join the firm by Mr Jaiyeola, who jointly owns majority shares of the company with his wife and sister.

Mr Jaiyeola and Mr Martins were co-owners of the Nigerian International Securities Limited (NISL) before the former resigned from his position as director to focus on Bukka Hut in 2016.

According to the statement from the organisation, Mr Jaiyeola established Bukka Hut but only invited the deceased and two others to invest in the eatery when it was established.

“To clarify, Rasheed Jaiyeola is the founder/CEO of Bukka Hut, a proudly Nigerian brand he built from inception in August 2011 from one outlet to 24 outlets comprising of restaurants, lounges and suya and grill spots, and a learning facility, BH Academy, as at today. He jointly owns the majority shares of the company with his wife and sister.

“Bukka Hut is not a one-man business as there are two other shareholders/directors, but they are not involved in the daily management of the business.

“Rasheed and the late Olaolu Martins were co-owners of Nigerian International Securities Lid (NISL), and naturally, Laolu was one of the three people he invited to invest in Bukka Hut when he founded it in 2011; Rasheed resigned from NISL as a director in 2016 to focus solely on building Bukka Hut while Olaolu remained the MD/CEO of NISL and its related businesses,” the statement explained.

Mr Martins was reported to have died from suicide, but fresh information revealed that he slumped at Lenox Mall after a cardiac arrest and was taken to a hospital in Lekki, where he passed on.

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Economy

Usman Laments Nigeria, Saudi Arabia Trade Volume of $5m

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trade volume of $5m

By Aduragbemi Omiyale

The president of the newly-establishment Nigeria-Saudi Arabia Chamber of Commerce, Industry, Mines and Agriculture, Mr Ibrahim Usman, has lamented the low trade volume between both countries despite their historical relationship.

Mr Usman expressed this frustration when he visited the Minister of Information and Culture, Mr Lai Mohammed, at his office in Abuja.

He said at the moment, the trade volume between Nigeria and Saudi Arabia is about $5 million, promising to deepen the relations between the two countries.

“And whereas many Saudi investors are looking out for profitable investment windows in friendly countries like Nigeria, our businesses have been unable to capitalise on such opportunities due to lack of an organised, reliable, safe and very secure private sector platform like a chamber of commerce,” he said.

Mr Usman said a 60-member inter-ministerial delegation from Saudi Arabia will be in Nigeria next week for the second session of the Nigeria-Saudi Arabia Joint Commission, which will further create opportunities for the chamber to set up trade missions.

On his part, Mr Mohammed praised his guest for his effort to establish the organisation after over 10 years of trial, saying he has proven himself as a man of vision and deep conviction.

“Clearly from your presentation, it’s clear that the major objective is to change the narrative and ensure that the relations between Saudi Arabia and Nigeria should not be seen just from the narrow prism of Hajj and Umrah pilgrimage, but from the prism of two very important nations of the world creating a bridge through better cooperation for the two countries and their citizens,” the Minister said.

Mr Mohammed described the chamber as a clearing house for proposals from business people from the two countries in order to open new vistas for trade opportunities.

He said the absence of such a chamber has led to the decline in the volume of trade and also bred trust deficit between business people from the two countries.

“The absence of this vehicle has led to loss of businesses between the two countries and it has also aggravated the trust deficit between them,” he said.

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