In 2012, when Nigeria was listed on JPMorgan emerging market Bond index, it was done based on a two way quote by the CBN and the then minister of finance, Okonjo Iweala, backing their decision on Nigeria growing economy of 7.4 percent annual GDP and 6.9 percent in 2011, substantiated with a blooming global oil price averaging between $90 to $100 a barrel as at the time, and Knowing fully well that cost of servicing foreign debts will reduce significantly and position she, Okonjo Iweala as the powerhouse of Africa largest economy on the international scene and the force behind the actualization of Nigeria dream to a more mainstream investment destination, they concluded it was the right thing to do without proper consideration for future consequences in the advent of global disaster like current drop in global energy prices and emerging market economic rout.
Here is the logic, Nigeria is a petrol-dollar economy, which means her economic growth is directly proportional to both petroleum (crude oil) and dollar strength. The former is regulated by global demand and supply while the latter is determined by the US economy, while Nigeria’s economy is being driven by non-oil sector (construction, telecoms, manufacturing and agriculture) mainly, it is normal to expect the economic team representing the nation to base their decisions on those sectors that are thriving and can be internally regulated even if it means not been listed as at the time but no, their decision was based on crude oil price.
In 2014, when oil price started falling after peaking at $105.64 in June, with fewer options left to curb the situation, Okonjo Iweala, the minister of finance took to the media, in her words “Nigeria should brace for tougher economic times ahead” insinuating she has no solution apart from her overzealous ambiguity to be at the realm of power and yet we were being chastised for not retaining her team in power.
The current Central Bank of Nigeria (CBN) administration came in without much time to curtail the situation, and with naira weakened to more than 200 per dollar for the first time, Godwin Emefiele, Chairman of Central Bank of Nigeria was forced to take a decisive decision which includes spending $380 million to stop the fall of the Naira, restricting 41 item’s importers from accessing FOREX official rate, overhauling foreign currency domicile accounts, restricting dollar withdrawal limit on locally issued credit cards and pegging naira to a fixed rate of 197 to a US dollar. Bear in mind that these might not be perfect economic measures as Nigeria is a heavy import-dependent economy but juxtaposing the danger of what would have happened without these measures with been delisted, an economist will agree it is an acceptable policy given the circumstances.
Here are the possible consequences if the CBN had succumbed to JPMorgan pressure and gone ahead with the devaluation using two-way forex market has suggested, naira value would be between 300 to 320 naira to a US dollar by now, inflation would have surged to double digit from 9.20 percent recorded in July, 2015. Cost of goods and services would jumped to a new height, followed by increase in unemployment as interest rate would have risen, making loan almost inaccessible for companies to finance capital projects. Overall, the decision would have created negative perceptions about Nigeria true economic growth (GDP), and subsequently, forced these same foreign investors backed by JPMorgan to safeguard their fund by withdrawing based on uncertainty and high risk after profiting from the decline.
Nigeria’s Real Estate Sector Shrinks by 8.06% in the Third Quarter -NBS
Economic uncertainty plunged Nigeria’s real estate sector by 8.06 percent in the third quarter of the year, according to the National Bureau of Statistics (NBS).
Nigeria’s statistics office said “In nominal terms, real estate services recorded a growth rate of –8.06 per cent in the third quarter of 2020, indicating a decline of –11.78 per cent points compared to the growth rate at the same period in 2019, and by 9.12 per cent points when compared to the preceding quarter.
“Quarter-on-quarter, the sector growth rate was 18.92 per cent.
“Real GDP growth recorded in the sector in Q3 2020 stood at -13.40 per cent, lower than the growth recorded in third quarter of 2019 by –11.09 per cent points, but higher relative to Q2 2020 by 8.59 per cent points.
“Quarter-on-quarter, the sector grew by 17.15 per cent in the third quarter of 2020.
“It contributed 5.58 per cent to real GDP in Q3, 2020, lower than the 6.21 per cent it recorded in the corresponding quarter of 2019.”
Nigeria’s economy contracted by 2.48 percent in the first nine months following a 6.10 percent and 3.62 percent contraction in the second and third quarters respectively.
Nigeria Requires N400 Billion Annually to Maintain Federal Roads -Senator Bassey
The Chairman of the Senate Committee on road maintenance, Senator Gersome Bassey, on Friday said Nigeria requires about N400 billion annually to maintain federal roads across the country.
The Senator, therefore, described the N38 billion budgeted for road repairs in the 2021 proposed Budget as grossly inadequate. According to him, nothing meaningful could be achieved by the Federal Roads Maintenance Agency (FERMA) with such an amount.
He said, “For the 35 kilometres federal roads in the country to be motorable at all times, the sum of N400bn is required on yearly basis for maintenance.”
Bassey “What the committee submitted to the Appropriation Committee in the 2021 fiscal year is the N38bn proposed for it by the executive which cannot cover up to one quarter of the entire length of deplorable roads in the country.
“Unfortunately, despite having the power of appropriation, we cannot as a committee jerk up the sum since we are not in a position to carry out the estimation of work to be done on each of the specific portion of the road.
“Doing that without proposals to that effect from the executive, may lead to project insertion or padding as often alleged in the media.”
Scarcity of Day-Old-Chicks Cripple Poultry Farmers in Akwa Ibom
Despite billions of Naira spent on Akwa Prime Hatchery and Poultry Limited by the Executive Governor of Akwa Ibom State, Udom Emmanuel, poultry farmers in the state said they had to order day-old-chicks from outside the state as the 200,000 capacity poultry farm developed specifically to make day-old-chicks and other poultry products available at affordable prices is almost empty at the moment.
The farmers expressed frustration over many challenges they face in the course of bringing day-old-chicks from outside the state. Usually, Ibadan, Enugu and sometimes as far as Kaduna, while the hatchery built and inaugurated in 2016 remains idle.
Mr Ekot Akpan, one of the poultry farmers who spoke with the pressmen said the state had not had it this bad.
Akpan said: “For the 12 years that I have been in poultry farming, this is the first time that poultry farmers have been so harshly affected by both economic and non-economic factors. And, quite unfortunately, nobody is available to offer any explanation.
“Farmers have been left at the whims and caprice of owners of the means of production.
“There seems to be no government regulation of the poultry industry. How, do you explain a situation where you wake up suddenly and the price of a day old chick is selling for N600, a bag of feed goes as high as N6,000.
“And, in a state that government claims to be pursuing agriculture as one of his cardinal programmes.
“For instance, in 2016, the state government said it has constructed an hatchery, and the intention according the government was to ensure availability of day old chicks at affordable price to farmers, but, quite, unfortunately, that effort has not yielded any tangible result.
“Farmers are still getting their day old chicks from Ibadan, Kaduna, and Enugu. So, the question now is where is the hatchery?
“One would have expected that farmers would be buying old chicks at humane prices, but, from all indications they acclaimed hatchery is a ruse. So, which one is the Akwa Prime Hatchery producing,” he said.
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