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FG Projects GDP Growth of 4.2% by 2017- Adeosun

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Nigeria oil rig

The Federal Government has projected rise in the country’s Gross Domestic Product, GDP, growth to 4.2 percent by 2017.

Minister of Finance, Mrs. Kemi Adeosun, made this projection when she addressed Chief Financial Officers, CFOs, at the just concluded KPMG Professional Services CFO Forum and Survey Launch in Lagos.

In her presentation on the theme; Outlook of the Nigerian Economy, she noted that the country’s GDP for 2015 was the lowest in the last 15 years, at an average of 4 percent.

“Nigeria GDP, growth from 2005 to 2010 was at an average of 9 percent, and everybody was trying to announce about Nigeria saying, how fantastically we have been doing with great money in the economy.

“But we are actually mastering some vulnerability because if you look at the drop from 2010 to 2011, it was an average of 5 percent while oil price was still high.

“There was vulnerability building up in the economy, and this situation has been breeding for quite a while, and then we have the drop in crude price at 2015 and our GDP drop to an average of 4 percent.”

“My administration plan basically is to stimulate the economy to achieve a real GDP growth rate of 4.2 percent by 2017, then reduce the cost of governance, extract efficiencies in the public service and enhance collection of internally generated revenues.

“Also, we want to increase government expenditure on infrastructure, and then we are going to try and fund this budget deficit in the most efficient manner possible.

“There was vulnerability building up in the economy, and this situation has been breeding for quite a while, and then we have the drop in crude price at 2015 and our GDP drop to an average of 4 percent.”

The Minister further lamented that, “the GDP growth, is consumption led, and basically what we are doing is pumping the oil out of the ground and then spending it on import. There is no good gross capital formation in the economy, and without gross capital formation we can’t build our system.

“If the economy is growing because we are buying mobile phone or private jet, it’s actually not good growth, its growth, but it’s not a sustainable growth for the country.”

We are carrying out expansionary on fiscal budget, what do we do, we have come up to 6 trillion, we did that for the following reason, we have two option, as you can see, where we are, we would slide into recession no doubt, if we continue with the size of budget we have.

Also speaking, Partner and Head of Audit, KPMG Professional Services, Mr. Tola Adeyemi added that, the objective of CFOs, “is to provide a platform for them to network and share leading practices, create an additional channel to interact with regulators and senior government officials.”

In attaining the ideal finance function, he stated that “there is need for increasing involvement beyond the traditional roles of measurement and reporting, clear requirements for evolving skills, finance function needs to “earn the respect” of the business and need for additional assurance in a number of areas.

“Also, on creating a sustainable cost advantage, only 6 percent of cost saving initiatives achieves their target and 44 percent achieve less than 50 percent of target savings,” he added.

He lamented that the biggest barriers are usually, inadequate processes to drive cost reduction, resistance from employees and insufficient incentives to reward prudent cost management responsibility for cost management is not always clear.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

No Plan to Increase Fuel Price; Says FG

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NNPC - Investors King

The Federal Government has stated that it has no plan to increase fuel price during the yuletide period.

This assurance is coming amid the nationwide fuel scarcity which has pushed the price of petrol above N250 in many retail stations.

Investors King learnt that fuel is being held for N250 per litre in Abuja and several other cities across the country while black marketers are charging between N400 and N450 per litre.

The scarcity and the high price of fuel are however becoming unbearable for many Nigerians, especially those who have reasons to embark on business travel for the December festivals.

According to the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria (IPMAN), Chief Ukadike Chinedu, most of the association members, who owned the bulk of the filling stations across the country, were now subjected to purchasing PMS at about N220/litre, which was why many outlets currently dispensed at about N250/litre and above.

He noted that the cost of the commodity has been on the rise due to its unavailability and other concerns in the sector. 

He added that the price of fuel could be sold from N350/litre to N400/litre before the end of the year. 

Meanwhile, a number of senior officials at the NNPC had stated that the subsidy was becoming too burdensome on the national oil company, as this was another reason for the scarcity of PMS.

According to a source who is familiar with the development as reported by Punch News, “How can we continue to import 60 million litres of petrol daily and keep subsidising it, while millions of litres are either diverted or cannot be accounted for? The burden is too much, as you rightly captured in that story”. 

Investors King understands that NNPC is the sole importer of petroleum into the country and it pays billions of naira every month to subsidise the product to N147 per litre. 

Reuters News reported that in August 2022, NNPC paid more than $1 billion as fuel subsidy while the federal government earmarked N3.6 trillion as fuel subsidy in the 2023 budget proposal. 

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Fuel Scarcity: NNPC Declares 2billion Liters in Stock, Blames Scarcity on Road Construction

NNPC Claimed it as 2 billion litres of fuel despite scarcity

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Petrol - Investors King

The Nigerian National Petroleum Company (NNPC) has blamed the recent fuel scarcity on road construction around Apapa, noting that the corporation has about 2 billion litres of fuel in stock. 

According to a statement issued by NNPC Executive Vice President, Downstream, Mr Adeyemi Adetunji, the Nigeria National Petroleum Company has about 2 billion litres of fuel which can last the country conveniently for more than 30 days. 

The Executive Vice President further blamed the queues on the road construction around Apapa axis which has slowed down the movement of oil trucks to several parts of the country. 

“The recent queues in Lagos are largely due to ongoing road infrastructure projects around Apapa and access road challenges in Lagos” he said. 

He however noted that more filling stations should have Premium Motor Spirit (PMS) otherwise known as petrol with the ease in gridlock along the apapa axis. 

“The gridlock is easing out and NNPC Ltd has programmed vessels and trucks to unconstrained depots and massive load outs from depots to states are closely monitored,” he said.

Investors King gathered that several states including Abuja have been impacted by the supply chain difficulty caused by the construction around Apapa. 

The scarcity of fuel has therefore led to the hike in price. In most places across the country, fuel is sold as high as N250 per litre. Several fuel stations are already taking advantage of the situation coupled with the increase in the movement of people and goods owing to the December festivals.

Speaking further, Adeyemi noted that the situation will soon be back to normalcy as NNPC is taking measures to address the situation. 

“We want to reassure Nigerians that NNPC has sufficient products and we significantly increased product loading in selected depots and extended hours at strategic stations to ensure sufficiency nationwide.

“We are also working with industry stakeholders to ensure normalcy is returned as soon as possible,” he concluded. 

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Economy

Global Growth to Drop Below 2% in 2023, Says Citi

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GDP Growth- Investors King

Citigroup on Wednesday forecast global growth to slow to below 2% next year, echoing similar projections by major financial institutions such as Goldman Sachs, Barclays, and J.P. Morgan.

Strategists at the brokerage cited continued challenges from the COVID-19 pandemic and the Russia-Ukraine war — which skyrocketed inflation to decades-high levels and triggered aggressive policy tightening — as reasons behind the outlook.

“We see global performance as likely (being) plagued by ‘rolling’ country-level recessions through the year ahead,” said Citi strategists, led by Nathan Sheets.

While the Wall-Street investment bank expects the U.S. economy to grow 1.9% this year, it is seen more than halving to 0.7% in 2023.

It expects year-on-year U.S. inflation at 4.8% next year, with the U.S. Federal Reserve’s terminal rate seen between 5.25% and 5.5%.

Among other geographies, Citi sees the UK and euro area falling into recession by the end of this year, as both economies face the heat of energy constraints on supply and demand front, along with tighter monetary and fiscal policies.

For 2023, Citi projects UK and euro area to contract 1.5% and 0.4%, respectively.

In China, the brokerage expects the government to soften its zero-COVID policy, which is seen driving a 5.6% growth in gross domestic product next year.

Emerging markets, meanwhile, are seen growing 3.7%, with India’s 5.7% growth — slower than this year’s 6.7% prediction — seen leading among major economies.

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