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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

Nigerian Breweries Lists Additional Shares on Stock Exchange

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Nigerian Breweries shares

By Dipo Olowookere

The Nigerian Exchange (NGX) Limited has admitted additional shares of Nigerian Breweries Plc on its trading platform, a notice from the exchange has confirmed.

The new stocks were issued to shareholders of the brewery giant as part of their dividend payment. They are those who opted to exchange their cash payment for shares of the firm.

According to the disclosure from the NGX on Monday, Nigerian Breweries listed a total of 78,929,849 ordinary shares of 50 kobo on the platform, increasing its total issued and fully paid-up equities to 8,075,831,900 ordinary shares from 7,996,902,051 ordinary shares.

“Additional 78,929,849 ordinary shares of 50 kobo each of Nigerian Breweries Plc were today, Monday, January 24, 2022, listed on the daily official list of the Nigerian Exchange Limited.

“The additional shares listed on NGX arose from Nigerian Breweries scrip dividend election scheme.

“With this listing of the additional 78,929,849 ordinary shares, the total issued and fully paid-up shares of Nigerian Breweries Plc has now increased from 7,996,902,051 to 8,075,831,900 ordinary shares of 50 kobo each,” the statement noted.

Shares of Nigerian Breweries depreciated by 1.46 per cent or 70 kobo today at the stock exchange to close at N47.30, according to data obtained by Business Post.

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Economy

FG Suspends Fuel Subsidy Removal, to Amend 2022 Budget

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fuel subsidy

By Modupe Gbadeyanka

The federal government has suspended fuel subsidy removal, which was earlier meant to be from July 1, 2022, and will now amend the 2022 Appropriation Act to accommodate the new change.

This action followed the pressure mounted by the Nigeria Labour Congress (NLC), which threatened to embark on a nationwide protest from January 27, 2022.

In the 2022 budget signed into law by President Muhammadu Buhari last month, the provision of petrol subsidy was till June 30, but the labour said fuel subsidy removal at this period of high inflation would be resisted.

On Monday, January 24, 2022, the Minister of Finance, Budget and National Planning, Ms Zainab Ahmed, was at the National Assembly for a meeting with lawmakers.

She explained that due to ongoing consultations, it was agreed that the planned removal of fuel subsidy should be shelved for now.

“Provision was made in the 2022 budget for subsidy payment from January till June. That suggested that from July, there would be no subsidy.

”The provision was made sequel to the passage of the Petroleum Industry Act which indicated that all petroleum products would be deregulated.

“Sequel to the passage of the PIA, we went back to amend the fiscal framework to incorporate the subsidy removal.

“However, after the budget was passed, we had consultations with a number of stakeholders and it became clear that the timing was problematic.

“We discovered that practically, there is still heightened inflation and that the removal of subsidy would further worsen the situation and impose more difficulties on the citizenry.

“Mr President does not want to do that. What we are now doing is to continue with the ongoing discussions and consultations in terms of putting in place a number of measures.

“One of these includes the rollout of the refining capacities of the existing refineries and the new ones which would reduce the amount of products that would be imported into the country.

“We, therefore, need to return to the National Assembly to now amend the budget and make additional provision for the subsidy from July 22 to whatever period that we agreed was suitable for the commencement of the total removal,” the Minister informed the lawmakers.

The Senate President, Mr Ahmad Lawan, who conveyed the meeting, commended the federal government for the bold step, urging the labour unions to suspend their action.

Also present at the gathering were the Minister of State for Petroleum Resources, Mr Timipre Sylva; the Group Managing Director of the Nigerian National Petroleum Company (NNPC) Limited, Mr Mele Kyari; among others.

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Economy

Stanbic IBTC Finances Ardova LPG Storage Terminal

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LPG Storage Terminal

By Aduragbemi Omiyale

The 20,000 metric tonnes Liquefied Petroleum Gas (LPG) storage terminal being constructed in Ijora, Lagos, by AP LPG terminal, a fully owned subsidiary of Ardova Plc, is being financed by the Stanbic IBTC Infrastructure Fund, Business Post has learned.

In August 2021, Stanbic IBTC closed the first tranche of its N100 billion Stanbic IBTC Infrastructure Fund aimed to support the funding of critical projects in the country with competitive return profiles, sustainable environmental practices, and the potential to positively impact the economy.

Ardova, one of the leading players in the energy sector in Nigeria, keyed into the initiative and on Wednesday, January 19, 2022, the firm performed the groundbreaking ceremony for the construction of the LPG storage terminal, which is expected to be completed in December 2022.

Upon completion, the project will be the largest LPG storage facility in the nation and will ease some of the existing bottlenecks in the value chain for the supply of cleaner and more efficient energy for domestic use (cooking gas) in Nigeria, amongst other strategic benefits.

Speaking at the event, the Group Chief Executive Officer of Ardova, Mr Olumide Adeosun, commended Stanbic IBTC for its commitment to the project, noting that the importance of having formidable partners for project development, planning, execution, and investment support cannot be overemphasised.

“We are pleased to have the support of the Stanbic IBTC Infrastructure Fund for its pioneering role in a transformational project within the LPG value chain, which will undoubtedly accelerate the various energy transition initiatives currently underway at Ardova Plc.

“This support has helped us commence construction of this 20,000 metric tonne LPG storage terminal, which is expected to bring efficiency and reliability of LPG supply to Nigerian consumers as well as create long term value for our shareholders; and for this, we are thankful,” he said.

Mr Adeosun further that, “Beyond the cleaner energy premise, approximately 600 direct jobs will be created during the construction of the project and there is a multiplier effect of about additional 1,400 indirect jobs that will be created during the construction period after which it settles to about 250-300 jobs once the project becomes operational.”

On his part, the CEO of Stanbic IBTC Asset Management, Mr Oladele Sotubo, noted that, “Across the globe, cleaner energy investments have continued to be the focus.”

“Given the environmental sustainability benefits of this project, Stanbic IBTC Infrastructure Fund’s investment philosophy is properly aligned, hence the support for the 20,000 metric tonne LPG storage facility terminal,” he added.

Mr Sotubo applauded Ardova for partnering with Stanbic IBTC Infrastructure Fund and used the opportunity to also commend all the Tranche 1 investors, including institutional investors such as Trustfund Pensions, Veritas Glanvills Pensions, NPF Pensions, Fidelity Pensions, Crusader Sterling Pensions, Agip CPFA, Progress Trust CPFA, AIICO Insurance, and other High Networth Individuals (HNIs), for the confidence reposed in the fund.

He pointed out the impact their investment is making in terms of solving some of Nigeria’s infrastructure bottlenecks, creating jobs while earning returns. “As an organisation, we remain committed to bridging Nigeria’s infrastructure deficit through the provision of investment capital needed to develop projects”, he added”.

The Stanbic IBTC Asset Management Chief Executive highlighted that the Stanbic IBTC Infrastructure Fund remains dedicated to meeting the investment needs of its clients, providing them with the right investment vehicles, opportunities and professional investment services needed to achieve their financial objectives.

He urged institutional investors such as pension fund administrators, insurance companies and asset managers to explore the unique opportunities of the Stanbic IBTC Infrastructure Fund in meeting their long-term financial goals.

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