Economy
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.”
By Dipo Olowookere
Renewed buying interest raised the Nigerian Exchange (NGX) Limited by 0.33 per cent on Monday, with gains recorded in almost all the major sectors of the bourse at the close of transactions.
According to data harvested by Business Post, the insurance counter expanded by 0.62 per cent, the banking index grew by 0.59 per cent, the energy sector appreciated by 0.40 per cent, and the consumer goods space improved by 0.10 per cent, while the industrial goods segment closed flat.
When the closing gong was struck by 4 pm to signify the close of business on Customs Street, the All-Share Index (ASI) was up by 1,113.76 points to 243,707.07 points from 242,593.31 points, and the market capitalisation chalked up N714 billion to close at N156.308 trillion compared with the previous session’s N155.594 trillion.
Interest in Nigerian stocks yesterday resulted in a rise in the activity level, with the trading volume soaring by 17.86 per cent to 717.2 million units from 608.5 million units. The trading value advanced by 77.19 per cent to N56.7 billion from N32.0 billion, and the number of deals surged by 36.22 per cent to 73,321 deals from 53,826 deals.
FCMB was the busiest stock during the trading day, with a turnover of 152.3 million units worth N1.8 billion, Premier Paints exchanged 61.0 million units valued at N135.3 million, Dangote Cement traded 34.7 million units for N29.7 billion, The Initiates sold 32.8 million units worth N1.0 billion, and Jaiz Bank transacted 32.6 million units valued at N293.3 million.
Yesterday, the market breadth index was positive after the exchange closed with 37 price gainers and 28 price losers, representing strong investor sentiment.
International Energy Insurance gained 9.92 per cent to settle at N7.98, the Initiates added 9.91 per cent to its share price to quote at N32.15, ABC Transport garnered 9.68 per cent to trade at N6.80, Abbey Mortgage Bank grew by 9.63 per cent to close at N10.25, and Linkage Assurance soared by 9.36 per cent to N1.87.
On the flip side, Fidson Healthcare gave up 10.00 per cent to finish at N122.85, Academy Press crashed by 9.70 per cent to N7.45, RT Briscoe depreciated by 9.43 per cent to N13.45, SUNU Assurances tumbled by 9.37 per cent to N4.06, and Learn Africa decreased by 8.70 per cent to N10.50.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a marginal 0.05 per cent drop on Monday, June 8, depleting the market capitalisation by N1.27 billion to N2.606 trillion from N2.607 trillion, and cutting the Unlisted Security Index (NSI) by 2.12 points to 4,356.20 points from the previous 4,358.32 points.
The contraction witnessed during the session was triggered by a price loser, which overpowered that gains recorded by two securities on the trading platform.
Data indicated that MRS Oil Plc lost N6 at the close of business to settle at N165.00 per share compared with last Friday’s price of N171.00 per share.
Conversely, Lighthouse Financial Services Plc added 9 Kobo to sell at N1.03 per unit versus 94 Kobo per unit, and Central Securities Clearing System (CSCS) Plc appreciated by 8 Kobo to N78.48 per share from N78.40 per share.
The volume of securities traded by investors yesterday soared by 51.9 per cent to 213,188 units from 140,345 units, and the value of securities increased by 12.6 per cent to N20.2 million from N17.9 million, while the number of deals executed fell by 7.4 per cent to 25 deals from 27 deals.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units valued at N6.5 billion, and CSCS Plc with 64.8 million units exchanged for N4.4 billion.
GNI Plc also remained as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, trailed by Infracredit Plc with 2.3 billion units transacted for N6.5 billion, and Resourcery Plc with 1.1 billion units traded for N415.7 million.
By Adedapo Adesanya
The Naira opened the new trading week on a negative note on Monday at the Nigerian Autonomous Foreign Exchange Market (NAFEX) and the black market.
At the parallel market, the Nigerian currency weakened against the US Dollar by N5 to sell for N1,380/$1 compared with the preceding session’s rate of N1,375/$1, and at the GTBank FX desk, it shed N1 to trade at N1,373/$1 versus N1,372/$1.
At the official market, it lost 63 Kobo or 0.05 per cent against the Dollar during the session to close at N1,362.84/$1, in contrast to last Friday’s value of N1,362.21/$1.
However, the Nigerian Naira gained N2.30 against the Pound Sterling at the spot market yesterday, quoting at N1,821.29/£1 compared with the previous rate of N1,823.59/£1, and improved against the Euro by 23 Kobo to settle at N1,574.35/€1 versus N1,574.58/€1.
Data from the Central Bank of Nigeria (CBN) showed that interbank forex turnover increased to $92.248 million across 90 deals, from $73.565 million last Friday.
On the policy front, participants believed that the application of the fourth edition of the Foreign Exchange Manual of the central bank, which introduces updated guidelines for foreign exchange transactions and tightening compliance requirements for authorised dealers and market participants, will enhance market flexibility and ease previous restrictions.
Meanwhile, the cryptocurrency market snapped from recent declines, jolted by Strategy’s purchase of 1,550 Bitcoin for approximately $101 million, increasing its total holdings to 845,256 BTC. The company raised $181 million through common stock sales, using the proceeds to fund the bitcoin purchase and increase its cash reserves to $1 billion, pushing the price of the coin higher by 3.2 per cent to $63,731.69.
Cardano (ADA) appreciated by 8.4 per cent to $0.1738, Ethereum (ETH) rose by 5.2 per cent to $1,711.54, Solana (SOL) expanded by 5.1 per cent to $67.82, and Ripple (XRP) improved by 4.9 per cent to $1.18.
Further, Dogecoin (DOGE) jumped by 4.3 per cent to $0.0873, Binance Coin (BNB) soared by 2.7 per cent to $609.50, and TRON (TRX) increased by 0.7 per cent to $0.3274, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $0.9997 and $0.9998, respectively.
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