Nigeria’s Non-Oil Economy Records Slight Growth
**As FG Policies Sustain Rising GDP Figures In Agric, Solid Minerals Sectors
By Modupe Gbadeyanka
Third Quarter GDP figures released by the National Bureau of Statistics (NBS) has revealed a consistent growth in Agric and Solid Mineral sectors, indicating the success of the Buhari administration’s economic policies even though overall economy is still in recession.
The over-riding impact of the oil and gas sector, where vandalism and sabotage of critical installations negatively affected production output, explains the persistence of the recession, as the non-oil economy posted a very slight growth.
However, efforts to resolve the Niger Delta situation are continuing as the Federal Government has opened several channels of communication with all relevant groups in the Niger Delta.
Also, urgent fiscal and monetary measures to spur the economy back to overall positive territory are certainly in the offing including those targeting manufacturing.
According to Special Adviser to the President on Economic Matters, Dr Adeyemi Dipeolu on the latest NBS reports, “The third quarter results just released by the National Bureau of Statistics show that the Nigerian economy is still in recession.
“Growth in Gross Domestic Product fell by -2.24% in the third quarter as compared to the decline of -2.07 percent experienced in the second quarter.
“The slight deterioration in national economic performance owes largely to the continued poor performance of the oil and gas sector which worsened to -22.01% in the third quarter as compared to -17.48% in the second quarter of 2016. The immediate cause of this, as is now generally recognised, is the steep decline in oil and gas production in the third quarter of 2016 due to acts of vandalism and sabotage of oil export facilities.”
He said remote causes include the continued outsized influence of the oil and gas sector on the rest of the economy as typified by its contribution to government revenue and foreign exchange earnings, which continue to be important motors of economic activity.
According to him, due to time lags, it is still too early for policy interventions of the Federal Government to begin to impact fully on economic activity.
There are however some ‘green shoots’ of economic recovery beginning to emerge.
To start with, on-going consultations to bring lasting peace to the Niger Delta have enabled an increase in oil and gas production which if sustained at current prices, will bring a measure of relief to the economy.
Other key sectors of the economy showed encouraging signs of improvement.
The growth in the non-oil economy although still weak at 0.03% showed a return to positive territory after two consecutive quarters of negative growth. This was partly due to the continued good performance of agriculture and the solid minerals, two sectors prioritised by the Federal Government.
Agriculture grew by 4.54% in the quarter under consideration of which growth in crop production at nearly 5% was at its highest since the first quarter of 2014. Growth in the solid mineral sector averaged about 7%.
The financial sector rebounded quite strongly in the period under review growing by 2.85% from a negative growth of -13.24% in the second quarter. The recently approved first tranche of $600m to be borrowed from the African Development Bank will also provide some relief in budgetary terms and supplement capital inflows. Indeed, there was a slight uptick of capital inflows into the economy in the third quarter of 2016. Overall capital inflows in the third quarter of 2016 increased by 74.84% over the second quarter.
The performance of the manufacturing sector continued to be of concern given its key role in value addition and job creation in the economy. It is expected however that with greater local sourcing of raw materials, expected improvements in infrastructure, especially power and reductions in the cost of doing business, this sector will soon experience a sustained improvement in its contribution to the national economy.
Similarly, while inflation is still high at 18.3% on a year-on-year basis it has begun to level out on a month-on-month basis and should enable the deployment of more policy tools to support growth and employment. Indeed, growth of headline inflation slowed down appreciably from 13.8% in May to as low as 1.70% in September.
The year to date growth is about -1.58% and is set to improve given some of the points mentioned earlier especially regarding agriculture, oil and gas, and power supply. In addition, there have also been reductions in the rate of contraction of household and government consumption expenditure. Household consumption expenditure fell for instance by -3.25% in the third quarter of 2016 as compared to -6.0% recorded in the second quarter.
The ratio of investment to GDP also showed a notable improvement rising by 7.6% in the third quarter of 2016 as compared to a contraction of -7.4% in the fourth quarter of 2015.
The Strategic Implementation Plan for the implementation of the 2016 Budget of Change prioritised capital expenditures for power, roads and rail as well as social investments. In addition to creating jobs and promoting social inclusion, these expenditures will also provide a stimulus by putting money in the hands of people. The usual economic activity that takes place in the Yuletide season will also likely have a positive impact on the wholesale and retail trade sector.
Overall therefore, it is expected that these factors which will be underpinned by the policies to be unveiled in the Economic Recovery and Growth Plan, ERGP, to be adopted before the end of the year, will lend further momentum to on-going efforts to revitalise and reposition the economy.”
FAAC Allocation to FG, States, LGs in March Shrinks to N722.7bn
By Aduragbemi Omiyale
The amount shared to the three tiers of government, the federal government, state governments, and local governments, by the Federation Account Allocation Committee (FAAC), decreased in March 2023 from the money distributed in February.
A communique issued on Wednesday after the FAAC meeting in Abuja disclosed that N722.7 billion was disbursed from the revenue generated by the country last month compared with the N750.2 billion shared in February.
A breakdown showed that the total distributable revenue of N722.677 billion comprised distributable statutory revenue of N366.800 billion, distributable Value Added Tax (VAT) revenue of N224.232 billion, Electronic Money Transfer Levy (EMTL) of N11.645 billion and N120.000 billion Augmentation from Forex Equalisation Account.
In the disclosure signed by the Director of Press and Public Relations of the Office of the Account-General of the Federation (OAGF), Mr Bawa Mokwa, it was disclosed that in February, Petroleum Profit Tax (PPT), Companies Income Tax (CIT), Oil and Gas Royalties, Import and Excise Duties all decreased significantly while Value Added Tax (VAT) and Electronic Money Transfer Levy (EMTL) decreased marginally.
Explaining how the money was disbursed, FAAC said from the N722.677 billion, the federal government received N269.063 billion, the state governments got N236.464 billion, and the local councils were given N173.936 billion, while N43.214 billion was shared to the oil-producing states as 13 per cent derivation revenue.
Further, from the N366.800 billion distributable statutory revenue, the federal government received N178.683 billion, the state governments received N90.630 billion, and the local government councils received N69.872 billion, with relevant states getting N27.614 billion as 13 per cent derivation revenue.
In addition, from the distributable N224.232 billion from VAT, the federal government received N33.635 billion, the state governments received N112.116 billion, and the local councils received N78.481 billion.
The statement also said N11.645 billion Electronic Money Transfer Levy (EMTL) was distributed as follows: the Federal Government received N1.747 billion, the State Governments received N5.822 billion, and the Local Government Councils received N4.076 billion.
From the N120.000 billion Augmentation, the Federal Government received N54.998 billion, the State Governments received N27.896 billion, the Local Government Councils received N21.506 billion, and a total sum of N15.600 billion was shared to the relevant States as 13 per cent of mineral revenue.
In February 2023, the total deductions for the cost of the collection were N27.449 billion, and total deductions for transfers, savings, recoveries and refunds were N109.909 billion, while the balance in the Excess Crude Account (ECA) was $473,754.57, the same amount it had remained since December 2022.
Local Stock Exchange Extends Growth by 0.06% Amid Weak Sentiment
By Dipo Olowookere
Investor sentiment at the Nigerian Exchange (NGX) Limited was weak on Wednesday as traders chew over the decision of the Central Bank of Nigeria (CBN) to raise the Monetary Policy Rate (MPR) by 0.50 per cent to 18.00 per cent.
However, the local stock exchange closed higher by 0.06 per cent, buoyed by the 0.08 per cent growth reported by the insurance sector.
Business Post reports that the consumer goods space lost 0.02 per cent, the banking and the industrial goods counters depreciated by 0.01 per cent each, as the energy index remained flat.
When the market closed for the session, the All-Share Index (ASI) improved by 31.43 points to 54,936.11 points from 54,904.68 points, while the market capitalisation went up by N19 billion to N29.928 trillion from N29.909 trillion.
Analysis of the market data showed that the growth posted yesterday was fragile as the highest price gainer, Coronation Insurance, appreciated by 2.44 per cent to 42 Kobo, GTCO also rose by 2.44 per cent to N25.20, Linkage Assurance grew by 2.22 per cent to 46 Kobo, Lasaco Assurance jumped by 2.04 per cent to N1.00, and Transcorp grew by 1.56 per cent to N1.30.
On the flip side, NCR Nigeria suffered the heaviest loss after its value went down by 9.69 per cent to N2.61, FTN Cocoa depreciated by 6.90 per cent to 27 Kobo, Japaul lost 6.67 per cent to quote at 28 Kobo, Cutix declined by 4.95 per cent to N2.11, and Consolidated Hallmark Insurance decreased by 4.62 per cent to 62 Kobo.
Yesterday, investors transacted 134.2 million stocks worth N1.3 billion in 2,479 deals compared with the 127.7 million stocks worth N1.6 billion traded in 2,987 deals, representing an increase in the trading volume by 5.09 per cent, a decline in the trading value by 18.75 per cent, and a shortfall in the number of deals by 17.01 per cent.
The most traded stock on Wednesday was Transcorp with the sale of 28.1 million units, UBA exchanged 21.2 million units, Courteville sold 19.1 million units, GTCO transacted 13.6 million units, and FBN Holdings traded 8.1 million units.
FrieslandCampina Lifts NASD OTC Market by 0.07% at Midweek
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange returned to positive territory after back-to-back losses, following a 0.07 per cent appreciation on Wednesday, March 22.
This was influenced by the 96 Kobo gain reported by FrieslandCampina Wamco Nigeria Plc during the session to settle at N75.41 per share compared with N75.01 per share of the preceding session.
The improvement in the share price of the milk maker pushed the value of the unlisted securities market by N710 million to N961.17 billion from N960.46 billion, while the NASD Unlisted Securities Index (NSI) grew by 0.54 points to wrap the session at 731.48 points compared with the 730.94 points of the previous session.
The level of activity witnessed a significant increase yesterday as the volume of securities closed higher by 274,515.6 per cent to 23.1 million units from the 8,408 units transacted in the previous trading day.
Equally, the value of shares traded at the session jumped to N10.1 million, which by evaluation is 814.0 per cent higher than the N1.1 million posted on Tuesday.
These transactions were carried out in 13 deals compared with the three deals executed in the previous trading day, indicating a 333.3 per cent appreciation.
At the close of business, Geo-Fluids Plc remained the most traded stock by volume on a year-to-date basis with the sale of 455.3 million units valued at N493.6 million, UBN Property Plc stood in second place with a turnover of 365.8 units worth N309.5 million, while IGI Plc was in third place with a turnover of 71.1 million units valued at N5.1 million.
On the flip side, VFD Group Plc was the most traded stock by value on a year-to-date basis with a turnover of 7.3 million units worth N1.7 billion, Geo-Fluids Plc followed with the sale of 455.3 million units worth N493.6 million, while UBN Property Plc was in third place with a turnover of 365.8 million units valued at N309.5 million.
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