- FG Targets 7% Growth With Economic Recovery Plan
The Federal Government, through the National Economic Recovery Growth Plan, is targeting a growth rate of seven per cent between 2017 and 2020.
The Minister of Budget and National Planning, Senator Udo Udoma, disclosed this at a meeting with select joint committees of the National Assembly as part of consultations towards packaging a strategic and all-inclusive economic policy document.
The minister, according to a statement from his Media Adviser, Mr. Akpandem James, pleaded that every effort must be made to ensure that the new plan eventually did not suffer the fate of those before it.
To ensure that the NERGP does not go the way of others, he stated that the government was putting in place a delivery unit that would drive its implementation through effective monitoring and evaluation.
Udoma explained that the plan was structured in such a way that it would be the basis for all subsequent budgets, which was why the contribution and support of the National Assembly was very critical to ensure the effective realisation of its objectives.
The NERGP focuses on five broad areas namely: macroeconomic policy, economic diversification and growth drivers, competitiveness, social inclusion and jobs, and governance and other enablers.
The minister said, “This plan builds on the previous development plans the country has developed, particularly the Vision 20-2020. The development of this plan is part of a process we have been working on since we came into government.
“However, the fact that we are in recession means that the plan is one that must also be designed to get us quickly out of recession. Our goal is to have an economy with low inflation, stable exchange rates and diversified inclusive growth.
“The proposed initiatives prescribed by the plan address the country’s poor competiveness, and are designed to improve the business environment and attract investment in infrastructure. Jobs and social inclusion are also key deliverables of the plan.”
In a related development, Udoma said during a meeting with the United Nations Development Programme Regional Director for Africa, Mr. Abdoulaye Mar Deiye, in Abuja, that although the country was focused on diversification of its economy, it needed oil to get out of the oil-propelled economy.
He said Nigeria’s immediate priority was to get oil production output back to the desired level to secure revenue needed to diversify the economy.
The minister explained that though the global slump in oil prices introduced some shocks that affected the country’s economy, the immediate reason for the slump into recession was the massive reduction in output caused by militancy in the oil-bearing Niger Delta region.
…to capitalise agriculture bank with N1tn
The Federal Government is planning to capitalise the Bank of Agriculture with N1tn and will allow the lender to take deposits as the country seeks to boost farming output and reduce food imports.
“We are looking at 25 million farmers as stakeholders or depositors,” the Minister of Agriculture and Rural Development, Chief Audu Ogbeh, said in an interview held in Abuja.
“We are probably going to take a major step by the end of this year, and by February or March, have a structure in place for the changes we want to carry out,” Ogbeh told Bloomberg.
The Nigerian economy contracted in the first nine months of the year as oil output, the government’s main source of revenue, dropped due to attacks by militant groups on pipelines in the Niger Delta, and prices remained low.
Farming, which mostly consists of crops, including cocoa, accounts for more than 25 per cent of Nigeria’s Gross Domestic Product, and has expanded every quarter of 2016, while factory output and mining, which includes the oil industry, shrank, according to the National Bureau of Statistics.
The BoA will start lending for farming projects at an interest rate of less than 10 per cent, or less than half of commercial market rates, Ogbeh said.
The bank, created in 1972 to provide credit and technical support to farming projects, lent at least N41bn to 600 businesses across Nigeria over 10 years, according to information on its website.
“It’s good to invest in the bank, but they should ensure they have proper management to improve its performance and efficiency,” the Division Head for Agriculture at Fidelity Bank Plc, Musa Tarimbuka, said by phone. “They have disbursed a lot of money over the past 40 years, and the non-performing loans are very high,” he added.
The Central Bank of Nigeria kept its benchmark rate unchanged at 14 per cent on November 24 as it seeks to support an economy forecast by the International Monetary Fund to contract by 1.7 per cent this year.
It’s also trying to curb inflation, which quickened to an 11-year high of 18.3 per cent in October. Food prices rose 17.1 per cent from a year earlier, partly due to the high price of imported food after the naira lost almost 40 per cent of its value against the dollar following the abandonment of a currency peg in June.
The government plans to distribute 110 rice mills across the country over the next two months at a subsidy of 40 per cent, Ogbeh said. These measures will help boost production and reduce food imports, which were worth about N1.2tn last year, according to statistics bureau data.
Nigeria’s Big Oil-Refining Revamp Gets Off To A Slow Start
A year after shutting down all of its dilapidated refineries to figure out how to fix them, Nigeria still can’t say how much it will cost to do the work or where the money will come from.
Nigerian National Petroleum Corp. said it has finished the appraisal of its largest facility, but hasn’t completed the process at two others. Refining experts said the extended halt means the plants are at risk of rotting away and unlikely to restart on time.
“Things haven’t been looking good lately,” with Nigeria’s plants probably “completely out of action for some 18 months,” said Elitsa Georgieva, Executive Director at Citac, a consultant that specializes in African refining.
The dysfunction of its domestic refineries has long put Africa’s biggest oil producer in an ironic situation. It exports large volumes of crude to plants overseas, then pays a premium to import the fuels its customers produce.
Pledges to fix the facilities have been made and broken again and again over the years. For at least a decade, NNPC’s 445,000 barrels a day of refining capacity barely processed 20% of that amount.
The latest effort to fix the refineries was supposed to be different to the failed attempts that came before. The company had totally shut all three plants down by January 2020 to do a comprehensive appraisal, and set the ambitious target of having them all back up and running at 90% of capacity by 2023.
“The refineries have been deliberately shut down to allow for a thorough diagnosis,” said Kennie Obateru, an Abuja-based NNPC spokesman. “They can be fixed based on what the diagnosis reveals.”
The appraisal of the 210,000-barrel-a day Port Harcourt refinery has been completed and NNPC has called for bids for the necessary repairs, Obateru said. The company hasn’t determined how much the work will cost.
“It is when we close the bids, everything is analyzed and presented that we will know how much we need,” he said.
The diagnosis is underway at the 125,000-barrel-a-day Warri facility and should be complete before the end of the year, he said. After that, the study of the 110,000-barrel-a-day Kaduna plant will commence.
One year into the process, refining analysts are skeptical that all this work can be done by 2023.
“I don’t think anyone has a good understanding technically of what’s wrong with those refineries,” said Alan Gelder, vice president of refining, chemicals and oil markets at Wood Mackenzie Ltd. “They’re probably corroding, which makes it a very difficult proposition.”
NNPC reaffirmed its deadline and said there’s no reason the refineries, which are at least 40 years old, can’t be restored to full operation.
“There are refineries that are over a hundred years old still running, so age is not necessarily an impediment,” Obateru said.
There are parallel efforts backed by private companies to add to Nigeria’s capacity. Aliko Dangote, Africa’s richest person, is building a state-of-the-art 650,000 barrel-a-day refinery, which Citac estimates will start production in 2023.
Bringing NNPC’s Port Harcourt refinery to the same clean-fuel standards as Dangote’s modern plant would cost about $1.3 billion for the equipment, on top of whatever other repairs are required to get the facility running, Georgieva said.
NNPC is talking to oil-trading firms about $1 billion of prepayment deals that could finance the repairs at Port Harcourt, Reuters reported last week. Obateru declined to comment on the report, but said “I don’t envisage that we will have a problem getting people to invest.”
Food Inflation Hits Record High of 19.56 Percent in December 2020
Food Index, which measures prices of food items, grew by 19.56 percent in the month of December 2020 amid herdsmen attacks and flooding.
In the latest report from the National Bureau of Statistics (NBS), increases were recorded on Bread and cereals, Potatoes, Yam and other
tubers, Meat, Fruits, Vegetable, Fish and Oils and fats.
On month on monthly basis, the food sub-index rose by 2.05 percent in December 2020, 0.01 percent from 2.04 percent recorded in November 2020.
“The average annual rate of change of the Food sub-index for the twelve-month period ending December 2020 over the previous twelve-month average was 16.17 percent, 0.42 percent points from the average annual rate of change recorded in November 2020 (15.75) percent” the report stated.
Headline inflation number increased by 15.75 percent in the month of December 2020, up from 14.89 percent.
The report noted that increases were recorded in all COICOP divisions that yielded the Headline index.
On a month-on-month basis, “the urban index rose by 1.65 percent in December 2020, same as the rate recorded in November 2020, while the rural index also rose by 1.58 percent in December 2020, up by 0.02 percent above the rate that was recorded in November 2020 (1.56 percent).”
Nigeria’s Inflation Rate Rises to 15.75 Percent in December
Inflation rate in Africa’s largest economy, Nigeria, rose at the fastest pace in several months in the last month of 2020, according to the latest report from the National Bureau of Statistics (NBS).
Consumer Price Index (CPI), which measures inflation rate, increased by 15.75 percent year-on-year in December 2020, representing a 0.86 percent increment from the 14.89 percent attained in November.
On a monthly basis, headline inflation rose by 1.61 percent in the month of December, representing 0.01 percent increase from the 1,60 percent posted in the month of November.
Food gauge that measures prices of items in Africa’s largest economy increased by 19.56 percent in December from 18.30 percent in November.
NBS attributed the increase to the surge in prices of Bread and cereals, Potatoes, Yam and other tubers, Meat, Fruits, Vegetable, Fish and Oils and fats.
On a monthly basis, the food sub-index grew by 2.05 percent in December 2020, an increase of 0.01 percent points from 2.04 percent recorded in November 2020.
The more stable annual rate showed Food sub-index over the last 12 months increased by 0.42 percent points from 15.75 percent in November to 16.17 percent in December.
Herdsmen attacks, the rising cost of fuel, flooding and the wide exchange rate are some of the key factors impacting the cost of food items in Nigeria, especially in December when demands were the highest.
Still lack of enough fiscal buffer to cushion the effect of COVID-19 and ease forex scarcity also drag on raw materials necessary for the production of some import-dependent items.
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