Economy
Infrastructural Deficit Slowing Nigeria’s Economic Growth—CBN
By Adedapo Adesanya
The Central Bank of Nigeria (CBN) has blamed the slow economic growth in Nigeria on the infrastructural deficit, noting that it was making efforts to address this issue.
The Governor of the CBN, Mr Godwin Emefiele, while speaking at the Finance Correspondents Association of Nigeria’s (FICAN) 30th-anniversary conference and awards, said part of the ways of tackling the issue was the release of N424.14 billion to improve the power and gas infrastructure in the country while reducing the nation’s estimated $100 billion annual infrastructure deficit.
At the event themed Financing Infrastructure & SMEs for inclusive growth in the post-COVID-19 economy, the apex bank chief, who was represented by the Director of Corporate Communications, Mr Osita Nwasinobi, said in Nigeria, the current level of infrastructure deficit was a major constraint to economic development and attainment of growth average rate of at least 5 to 7 per cent required to boost productivity and sustainable growth for businesses.
Quoting the World Development Indicators 2019 report, he said 56.20 per cent of Nigerians have access to electricity, while electric power consumption stood at 144.52 kWh per capita as of 2018, while the infrastructure deficit in Nigeria is estimated to be about 1.2 per cent of the gross domestic product (GDP).
To stem this gap, he said the CBN, in line with its developmental mandate to stimulate finance to infrastructure development in Nigeria, developed and introduced low interest and long-term finance interventions in tandem with the gestation periods of infrastructure projects.
He explained that “the design of the interventions was hinged on the need to develop enabling infrastructure in critical sectors to drive economic growth and development.
To support the resilience of the real sector, the Bank’s financing interventions include the Nigeria Electricity Market Stabilization Facility (NEMSF), which has disbursed N336.88 billion to support the development of enabling infrastructure in the energy sector by financing massive capital expenditure (Capex) in the sector.
“The intervention has also contributed to the increased electricity generation to 5,195 MW through the additional 1,403.3 MW of electricity generated, of which 944.3 MW new capacity was added from financed power projects.
“To provide liquidity support to electricity distribution companies (DisCos) and improve revenue collection efficiency, the CBN released N41.06 billion for the procurement and installation of 657,562 electricity meters across the country, under the National Mass Metering Programme (NMMP).
“Equally, N7 billion has been released under the Solar Connection Facility (SCF) to facilitate the procurement and installation of 100,000 solar home systems; and N39.20 billion to support the development of enabling infrastructure to optimize the domestic gas resources for economic development under the bank’s Intervention Facility for the National Gas Expansion Programme (IFNGEP).”
He, however, noted that, despite the efforts by the apex bank to address infrastructural challenges, “these are just a drop in the ocean, as the $100 billion annual investment required for infrastructure development cannot be solely financed by the CBN.”
“Bearing the importance of quality infrastructure to economic growth, the fiscal authorities and private sector have roles in the ecosystem, with innovative financing options explored.
“The Sukuk bond market has provided a substitute for the traditional interest-based financing options and has been used to finance critical infrastructural projects across the country.
“Public and Private Partnership (PPP) also provides an alternative to finance infrastructure projects, thereby easing budgetary constraints and improve operational efficiency by leveraging the private sector’s expertise and robust financing options.
“This PPP option is yet to be fully explored in Nigeria, despite its popularity in other emerging economies, particularly Brazil and India,” he pointed out at the programme held in Lagos.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Thursday, December 12 after it ended the trading session with no single price gainer or loser.
As a result, the market capitalisation remained unchanged at N1.055 trillion as the NASD Unlisted Security Index (NSI) followed the same route, remaining at 3,012.50 points like the previous trading session.
However, the activity chart witnessed changes as the volume of securities traded at the bourse went down by 92.5 per cent to 447,905 units from the 5.9 million units transacted a day earlier.
In the same vein, the value of securities bought and sold by investors declined by 86.6 per cent to N3.02 million from the N22.5 million recorded in the preceding trading day.
But the number of deals carried out during the session remained unchanged at 21 deals, according to data obtained by Business Post.
When trading activities ended for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, Okitipupa Plc came next with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc was in third place with 297.5 million units worth N5.3 million.
Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.
By Adedapo Adesanya
The Naira appreciated against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N14.79 or 0.9 per cent to trade at N1,534.50/$1 compared with the preceding day’s N1,549.29/$1 on Thursday, December 12.
The strengthening of the domestic currency during the trading session was influenced by the introduction of the Electronic Foreign Exchange Matching System (EFEMS) by the Central Bank of Nigeria (CBN).
The implementation of the forex system comes with diverse implications for all segments of the financial markets that deal with FX, including the rebound in the value of the Naira across markets.
The system instantly reflects data on all FX transactions conducted in the interbank market and approved by the CBN; publication of real-time prices and buy-sell orders data from this system has lent support to the Naira at the official market.
Equally, the local currency improved its value against the British Pound Sterling by N3.91 to wrap the session at N1,954.77/£1 compared with the previous day’s N1,958.65/£1 and against the Euro, the Nigerian currency gained N2.25 to sell for N1,610.41/€1 versus N1,612.66/€1.
However, in the black market, the Naira crashed further against the US Dollar on Thursday by N10 to quote at N1,680/$1 compared with Wednesday’s closing rate of N1,670/$1.
Meanwhile, the cryptocurrency market majorly corrected after earlier gains as US President-elect Donald Trump reiterated his ambition to embrace crypto assets, but a bond market rout dragged risk assets lower.
Mr Trump said, “We’re going to do something great with crypto” while ringing the opening bell at the New York Stock Exchange, reiterating his ambition to embrace digital assets in the world’s largest economy and create a strategic bitcoin reserve.
Alongside, the European Central Bank trimmed its benchmark interest rates by 25 basis points and in its dovish policy statement hinted that more rate cuts were likely to happen.
The biggest loss was made by Cardano (ADA), which fell by 4.9 per cent to trade at $1.10, followed by Ripple (XRP), which slid by 4.1 per cent to $2.33 and Dogecoin (DOGE) recorded a value depreciation of 2.9 per cent to sell at $0.4064.
Further, Solana (SOL) slumped by 1.8 per cent to $225.89, Binance Coin (BNB) slipped by 1.3 per cent to $746.92, Bitcoin (BTC) declined by 0.6 per cent to $99,998.18, Ethereum (ETH) crumbled by 0.5 per cent to $3,909.43, and Litecoin (LTC) dipped by 0.3 per cent to $121.52, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
The oil market slumped on Thursday, pressured by an expected increase in supply, supported by rising expectations of a Federal Reserve interest rate cut.
The International Energy Agency (EIA) made a slight upward revision to its demand outlook for next year but still expected the oil market to be comfortably supplied, with Brent crude futures losing 11 cents or 0.15 per cent to trade at $73.41 per barrel and the US West Texas Intermediate (WTI) crude futures declining by 27 cents or 0.38 per cent to finish at $70.02 per barrel.
The IEA in its monthly oil market report increased its 2025 global oil demand growth forecast to 1.1 million barrels per day from 990,000 barrels per day last month, largely in Asian countries due to the impact of China’s recent stimulus measures.
At the same time, the IEA expects nations not in the Organisation of the Petroleum Exporting Countries and Allies (OPEC+) group to boost supply by about 1.5 million barrels per day next year, driven by the US, Canada, Guyana, Brazil and Argentina – more than the rate of demand growth.
On Wednesday, OPEC cut its demand growth forecast for 2024 for the fifth straight month.
The IEA said that, even excluding the return to higher output quotas, its current outlook is to a 950,000 barrels per day supply overhang next year, which is almost 1 per cent of the world’s supply.
The Paris-based agency said this would rise to 1.4 million barrels per day if OPEC+ goes ahead with its plan to start unwinding cuts from the end of next March.
Next year’s surplus could make it harder for OPEC+ to bring back production. The hike was earlier due to start in October 2024, but OPEC+ has delayed it amid falling prices.
Meanwhile, inflation rose slightly in November increasing the possibility of a US Federal Reserve rates cut again as the data fed optimism about economic growth and energy demand.
Support also came as crude imports in China grew annually for the first time in seven months in November, up more than 14 per cent from a year earlier.
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