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Manufacturers Back Finance Minister’s Call For Interest Rate Cut

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The Minister of Finance, Mrs. Kemi Adeosun, has called on the Central Bank of Nigeria to lower interest rate so that the government can borrow domestically to boost the economy without increasing debt servicing costs.

While reacting to the minister’s call, the President, Manufacturers Association of Nigeria, Dr. Frank Jacobs, said that a cut in interest rate would be the best thing to happen to the economy.

“He said, “It will be the best thing that has ever happened to the economy, particularly the manufacturing sector.

“It is what we have been agitating for since and if the interest rate is brought down, it will be the best decision in the current economic dispensation.”

The government is also planning an “immediate large injection of funds” through asset sales, advance payments for licence renewals and infrastructure concessions, the Minister of Budget and Economic Planning, Senator Udo Udoma, said.

Adeosun said she was working with the Debt Management Office, Nigeria Sovereign Investment Authority and the pension industry to issue an infrastructure bond to raise money for road and housing projects.

She urged the central bank to reconsider its July interest rate increase, which it implemented to help support the naira and attract foreign investment.

The central bank is due to announce its next rate decision today (Tuesday) after the conclusion of its Monetary Policy Committee meeting, with some economists predicting that it will keep the key interest rate at 14 per cent, while others maintain that a cut is inevitable.

Adeosun told CNBC Africa, “We need lower interest rates, because when we are borrowing and interest rates go up, it increases our cost of debt service and it reduces the amount of money that is available to spend on capital projects.

“The attempt was to manage inflation and the trade-off for the economy right now is what is a bigger problem: Is it growth or inflation? For me it is growth. I would rather seek growth. We can manage inflation. I think for us, at the moment in the Nigerian economy, growth is the most important thing.”

Udoma told a business conference that the government planned asset sales to inject more funds into the economy but gave no details. The government has spent almost N800bn on capital expenditures since the budget was approved in May, officials told Reuters.

The minister also said the government had almost finished preparing a bill for the National Assembly to approve emergency powers for President Muhammadu Buhari to improve the business climate.

Adeosun said some adjustment was needed to narrow the spread between the official and black market currency rates, which is running at 25 per cent since the central bank floated the naira.

“We still need to make some necessary adjustments to ensure that the spread is narrow, so that we have true price discovery,” she said.

Meanwhile, the Finance minister said the country had received commitments to its planned $1bn Eurobond from international investors, which it aims to issue before the end of the year, but insisted that pricing would be key.

The government is currently seeking advisers and book runners and is currently accepting proposals from international and local banks for the bond sale, according to Bloomberg.

“We already have quite strong indications and indeed we had some commitments. Even though we weren’t doing a deal, we already have commitments to our bond offer; so, we are very confident that it is just a question of pricing,” Adeosun said.

The minister also said the regulators had approved plans to enable the investment of as much as $20bn of pension funds in the development of infrastructure.

The Securities and Exchange Commission and the National Pension Commission have approved “a new instrument that will allow pension funds to invest in infrastructure bonds,” Adeosun said at a meeting of business leaders in Abuja on Monday.

“That’s what will drive, for example, our social housing and our roads programme outside the budget,” she added.

Renowned economist and Chief Executive Officer, Financial Derivatives Limited, Mr. Bismarck Rewane, said in a telephone interview with one of our correspondents that he and other experts had before now stressed the need to reduce the interest rate.

He said, “There is no other way but to reduce the interest rate. During recession, Britain brought down interest rate; and in the US during the recession, what did they do? They brought down interest rate as well. So, we need to bring down the interest rate.”

The Director-General, West African Institute for Financial and Economic Management, Prof. Akpan Ekpo, who lent his voice to the call for a cut in interest rate, said, “That is the only way to fast-track the recovery of the economy. The interest rate must be reduced to close to single digit, if not single digit, in order to stimulate the real sector. Now, it is an average of 25 per cent and that is too high.

“The real sector is dead now; when you are in a recession and the real sector is dead, then the recession will last for long.”

Ekpo said the Monetary Policy Rate, which is the benchmark interest rate, should be reduced to 10 per cent from the current 14 per cent so that the lending rate would be around 13 to 14 per cent.

The Monetary Policy Committee of the CBN had at the end of its meeting in July raised the MPR to 14 per cent from 12 per cent.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Ogun Govt Begins Sale Of ₦40,000 Rice, vows to Take Subsidized Foods to LGAs

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The Ogun State government under the leadership of Dapo Abiodun has commenced the sale of 50kg bags of rice for 40,000 Naira in the state.

Investors King reported that the subsidized rice program is part of the strategies by President Bola Tinubu’s government to address the economic hardship in the country.

Governor Dapo Abiodun, during the launching ceremony of the initiative held at the Arcade ground, Abeokuta, the Ogun State capital, revealed plans by his administration to extend the subsidized food initiative to the twenty local government areas of the state.

He noted that the subsidized food initiative would not be limited to rice only, other items including garri, rice, and beans would be available for purchase at significantly reduced prices.

The governor said, “We will soon be implementing our own version of this scheme from each local government, meaning we will implement this across the twenty local government areas of the state to deepen the reach into our grassroots.

“We will be selling food items like garri, rice, and beans at heavily subsidized prices.”

“The distribution will include various groups such as federal and state civil servants, private sector organizations, craftsmen, trade unions, NGOs, student groups, market vendors, community development groups, and religious and traditional groups,” he added.

He reassured the state’s citizens that the Head of Service’s office, the Ministry of Agriculture, and the NSA’s office had created a comprehensive plan to ensure the fair distribution of the product throughout the state’s 20 local government areas.

The governor emphasized the need for accountability, noting that cash payments would not be accepted. 

However, he revealed that payments would be made via Point of Sales (PoS) machines.

Abiodun warned against double registration, adding that beneficiaries’ NIN will be verified after a physical screening at the point of sale.

According to the governor, the launch of the subsidized rice sale in Abeokuta for Ogun Central Senatorial District, Ilaro for Ogun West Senatorial District, and Ijebu-Ode for Ogun East Senatorial District will commence immediately.

“To ensure accountability, there will be no cash payments; payment will be made through Point of Sales (PoS) machines, and beneficiaries will undergo physical verification at the point of sale.

“No double registration will be allowed; NIN will be verified to ensure that we prevent any sharp practices.

“This distribution will be carried out transparently and fairly, ensuring that these palliatives reach those we have targeted,” he said.

Governor Abiodun concluded by describing the initiative as a sign of President Tinubu’s dedication to addressing the problem of rising food prices and cushioning the effect of the fuel subsidy removal.

On October 2, the Federal Government announced that Lagos, Kano, and Borno will be the next states that will benefit from its subsidized rice program.

According to a director at the Federal Ministry of Agriculture and Food Security, plans are already underway to roll out the food subsidy program in these states.

 

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High US Fuel Demand, Middle East Risk Buoy Oil Prices

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The price of major oil benchmarks jumped more than 3 percent on Thursday following increased fuel demand in the United States due to Hurricane Milton and Middle East supply risks.

Brent crude oil, against which Nigerian oil is priced, rose $2.82, or 3.7 percent to settle at $79.40 a barrel, while the US West Texas Intermediate (WTI) crude rose $2.61, or 3.6 percent, to settle at $75.85.

In the US, the world’s largest oil producer and consumer, Hurricane Milton hit Florida and knocked out power to more than 3.4 million homes and terminals.

Market analysts noted that the closures of several product terminals, delayed tanker truck deliveries and disrupted pipeline movement will likely be affecting supplies well into next week given broad based power outages.

This will serve as a positive news for the market as disruptions generally lend support.

Recall that crude benchmarks spiked earlier this month after Iran launched more than 180 missiles against Israel on October 1.

This raised the prospect of retaliation against Iranian oil facilities. Iran is backing several groups fighting Israel, including Hezbollah in Lebanon, Hamas in Gaza and the Houthis in Yemen.

However, since Israel is yet to respond, crude benchmarks have eased.

Despite this, investors remained wary, given that Israel has vowed to wait and strike at the best time.

Israel has continued to fight in Lebanon as it Reuters reported that a strike on central Beirut on Thursday night killed 11 people and wounded at least 48.

In Yemen, the Houthis said they targeted vessels in the Red Sea and Indian Ocean in solidarity with the Palestinians in the war between Israel and Hamas in the Gaza Strip.

Meanwhile, Gulf states are lobbying the US to stop Israel from attacking Iran’s oil sites because they are concerned their own oil facilities could come under fire from Iran’s allies if the conflict escalates.

Support came as investors express confidence that the Federal Reserve would cut interest rates in November after data showed an increase in weekly jobless claims and an annual rise in inflation that was the lowest since February 2021.

The US central bank started to lower interest rates in September after hiking rates aggressively in 2022 and 2023.

 

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Petrol

NLC Slams NNPC Price Hike, Warns of Increased Poverty and Job Losses

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The Nigeria Labour Congress (NLC) has reacted to the recent increase in the price of Premium Motor Spirit (PMS) popularly known as petrol by the Nigerian National Petroleum Company (NNPC).

The union, via a statement signed by its president, Joe Ajaero, on Wednesday, revealed that the increase will further deepen poverty in the country, reduce production capacities, and render many people jobless.

The NLC president asked why NNPC, a private company, is fixing the price of petrol, a move he described as ‘a hegemonic monopoly’.

Ajaero called for the intervention of the Federal Government, adding that the government should present a roadmap for inclusive economic growth and national development.

Furthermore, the NLC called for the immediate reversal of the price increase.

He said “Even following the logic of market forces, we find it an aberration that a private company (NNPCL) is the one fixing prices and projecting itself as a hegemonic monopoly.

“We challenge the government to go to the drawing board and present us with a blueprint for inclusive economic growth and national development instead of this spasmodic ad hocism and palliative policy.

“It needs no stating the fact that the latest wave of increase has grossly altered the calculations of Nigerians once again at a time they were reluctantly coming to terms with their new realities. It will further deepen poverty as production capacities dip and more jobs are lost with multidimensional negative effects.

“In light of this, we urge the government to immediately reverse this rate hike as previous increases did not produce any good results. People only got poorer. But more fundamentally, the government should be bold enough to tell Nigerians in advance the destination it wants to take the country.”

Investors King reported that the NNPC officially announced an increase in the ex-depot price of fuel.

This latest development was detailed in a new price list by the NNPC on Wednesday, October 9.

While the ex-depot price in Lagos stands at ₦1,010 per litre, marketers in Port Harcourt will buy at ₦1,045 and in Calabar is now set at ₦1,050 per litre.

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