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Nigeria Will Record 2.5% GDP Growth in 2021—Mabogunje

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Toki Mabogunje LCCI President 2.5% GDP Growth

By Adedapo Adesanya

The Lagos Chamber of Commerce and Industry (LCCI) has projected that the Nigerian economy, measured by the gross domestic product (GDP), will end the current year with a growth rate of 2.5 per cent, with inflation to close the year in double digits.

The outgoing president of the chamber, Mrs Toki Mabogunje, gave this projection at the Annual General Meeting (AGM) of the organisation on Thursday in Lagos.

She advised the fiscal and monetary sides of the economy to promote growth-enhancing and confidence-building policies that would encourage private capital flows to the economy to achieve growth.

Mrs Mabogunje added that fiscal and monetary authorities must develop a medium-term recovery plan anchored on local productivity, ease of business, attracting private investment, and developing physical and soft infrastructure.

The LCCI president, however, anticipated the country’s inflation figure to be sustained at its double-digit level in the short to medium term.

This, she said, was largely driven by persistent food supply shocks, foreign exchange illiquidity, higher energy cost, potential removal of fuel subsidy, insecurity and social unrest in the Northern region.

“These structural factors will continue to mount pressure on domestic consumer prices,” she said.

Mrs Mabogunje, noting the non-oil economy growth by 5.4 per cent, said the worsening security challenges in some parts of the country, may cause production to shrink and the supply chain to be disrupted.

“Key drivers of the non-oil sector growth were finance and insurance with 23.2 per cent, transport and storage 20.6 per cent, trade with 11.9 per cent, telecommunications 10.9 per cent.

“Others are manufacturing 4.3 per cent, construction 4.1 per cent, real estate 2.3 per cent as well as agriculture 1.2 per cent all year round.

“However, with the worsening security perception about the country, foreign investors are not interested in bringing in Foreign Direct Investments to Nigeria,” she said.

On the decision of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to retain policy parameters, Mrs Mabogunje said its credit provision might not yield the desired outcome.

She said this desired outcome was if the structural challenges stifling domestic productivity remained unaddressed.

“While the CBN has been keen to extend credit to the real economy as a way of supporting the economy.

“The fact remains that credit provision in recent times has proved ineffective in boosting output growth and stabilising consumer prices.

“This is given the weak pass-through effect of traditional monetary policy instruments on the broader economy.

“A broad-based combination of fiscal and monetary policies is imperative to achieving the twin objective of economic growth and price stability.

“Looking forward, factors such as oil prices, oil production, output growth, inflation, foreign exchange stability, foreign capital inflows, credit to the private sector are expected to influence monetary policy.

“These decisions are decisions in the short to medium term.

“On the fiscal side, we expect to see clear communications and actions on the proposed fuel subsidy removal and how this will ease government’s revenue and boost investment in infrastructure,” she explained.

Business Post had earlier reported that Mrs Mabogunje will be replaced by Mr Michael Olawale-Cole as the chamber’s new president following the expiry of the former’s two-year tenure.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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Economy

SERAP Tasks FG to Recover Missing N105.7bn to Fund Universities

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SERAP

By Adedapo Adesanya

The federal government has been tasked to urgently recover the missing N105.7 billion of public funds from ministries, departments and agencies (MDAs) to fund the country’s public tertiary institutions.

The charge was given by the Socio-Economic Rights and Accountability Project (SERAP) in a letter to President Muhammadu Buhari dated July 2, 2022.

The group, in the letter signed its deputy director, Mr Kolawole Oluwadare, noted that the money could be used to improve the welfare of members of the striking Academic Staff Union of Universities (ASUU).

“Pending the recovery of the missing public funds, we urge you to redirect some of the presidency’s budget of N3.6 billion on feeding and travels, and the N134 billion allocated to the National Assembly in the 2022 budget to meet the demands by ASUU,” it stated, urging the President to “send to the National Assembly a fresh supplementary appropriation bill, which reflects the proposed redirected budget, for its approval.”

“Meeting the demands by ASUU would confront the persistent and widening inequality in educational opportunity, and promote equal protection for poor Nigerian children,” the association said, adding that, “The apparent failure by your government to agree with the reasonable demands by ASUU, implement the good faith agreement with the union and to satisfactorily resolve the issues has kept poor Nigerian children at home while the children of the country’s politicians attend private schools.”

The ASUU accused the government of poor commitment to the payment of academic earned allowance (EAA); poor funding, the continued use of the Integrated Personnel Payroll Information System and refusal to adopt the Universities Transparency and Accountability Solution (UTAS), among others.

SERAP lamented, “The poor treatment of Nigerian children in the country’s public tertiary institutions,” saying it is “inconsistent and incompatible with the Nigerian Constitution and the country’s international human rights obligations.”

“Widening inequalities in the area of education bear all the more dramatic consequences given the importance of education, as an empowering right, in giving the possibility to all to explore and realise their potential.

“Inequalities in education have a rolling effect, leading to even more and continued inequalities in the future.”

“Apart from being a right in itself, the right to education is also an enabling right. Education creates the ‘voice’ through which rights can be claimed and protected, and without education, people lack the capacity to achieve valuable functioning as part of living.

“If people have access to the education they can develop the skills, capacity and confidence to secure other rights. Education gives people the ability to access information detailing the range of rights that they hold, and government’s obligations.”

“We would be grateful if the recommended measures are taken within seven days of the receipt and/or publication of this letter. If we have not heard from you by then, SERAP shall take all appropriate legal actions to compel your government to comply with our request in the public interest,” it stated.

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Economy

Nigeria Loses $1bn to Crude Oil Theft in Q1 2022

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crude oil distillation

By Adedapo Adesanya

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has disclosed that Nigeria lost $1 billion in revenue during the first quarter of this year due to crude oil theft.

According to Mr Gbenga Komolafe, the head of the commission, out of the 141 million barrels of oil produced in the first quarter of 2022, only about 132 million barrels of oil were received at export terminals.

“This indicates that over nine million barrels of oil were lost to crude oil theft… this amounts to a loss in government revenue of about $1 billion… in just one quarter,” Mr Komolafe said.

“This trend poses an existential threat to the oil and gas sector and by extension, the Nigerian economy if not curbed,” he added.

The petroleum industry regulator said that crude oil theft has increased to a daily average of 108,000 barrels in the first quarter of 2022 from 103,000 barrels in 2021.

The theft has resulted in the declaration of force majeure at Bonny Oil & Gas Terminal, a pipeline transporting crude from the oil-rich Niger Delta to export vessels, among others, creating a hostile environment and disincentive to investors.

Nigeria loses millions of barrels of crude oil a year because of theft and vandalism including the tapping of crude from a maze of pipelines owned by oil majors.

This has restricted the country from meeting the 1.799 million barrels per day of crude oil production allocated to it by the Organisation of the Petroleum Exporting Countries and allies (OPEC+) for consecutive months.

Recently, the country for yet another month failed to meet its crude oil production output as it recorded a decline of 80,000 barrels per day in June.

Earlier in May, Nigeria lost 45,000 barrels per day, making it the largest laggard among the countries not exempted from the 2020 output deal.

According to a Reuters survey, secondary data from sources showed that this decline occurred as a result of outages and maintenance curbed output.

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Economy

FX Shortage at Official Window Weakens Naira to N619/$1 at P2P

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Domiciliary Accounts to Naira

By Adedapo Adesanya

The difficulty in getting foreign exchange (FX) for transactions at the official forex window, the Importers and Exporters (I&E) segment, has deepened the woes of the Naira at the Peer-2-Peer (P2P) window.

On Friday, the value of the Nigerian currency to its American counterpart depreciated by N6 or 0.98 per cent as it was traded at N619/$1 compared with the preceding day’s N613/$1.

Business Post reports that at the spot market, the value of transactions stood at $78.86 million last Friday, just 2.9 per cent or $2.22 million higher than the $76.64 million reported a day earlier.

The low trades eased the pressure on the domestic currency during the trading session as it appreciated by a marginal 5 kobo or 0.01 per cent to N425.00/$1 from the previous day’s N425.05/$1.

Also, at the interbank segment, the local currency strengthened against the Pound Sterling by N5.26 to N500.65/£1 from N505.91/£1 and against the Euro, it gained N3.56 to sell at N434.03/€1 compared with Thursday’s rate of N437.59/€1.

At the parallel market, the Naira gained N5 or 0.82 per cent on the greenback to trade at N607/$1 compared with the previous day’s rate of N612/$1.

A look at the digital currency market revealed that the bears were dominant on Friday as seven of the key coins tracked by this newspaper shed weight, with Binance Coin (BNB) falling by 3.6 per cent to trade at $214.77.

Ethereum (ETH) went down by 3.3 per cent to trade at $1,034.82, Cardano (ADA) declined by 3.2 per cent to $0.4423, Solana (SOL) recorded a 3.1 per cent slump to quote at $32.04, Litecoin (LTC) depreciated by 2.7 per cent to $50.08, Bitcoin (BTC) crashed by 2.5 per cent to $19,034.61, while Ripple (XRP) depreciated 1.6 per cent to trade at $0.3105.

Conversely, TerraClassicUSD (USTC) continued its stellar growth as it rose by 26.3 per cent to $0.0565, Dogecoin (DOGE) went up by 1.2 per cent to sell at $0.0664, the US Dollar Tether (USDT) recorded a 0.02 per cent rise to $0.999.

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