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Nigeria’s Economy Contracts 1.51% in 2016



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  • Nigeria’s Economy Contracts 1.51% in 2016

The Nigerian economy contracted in the fourth quarter of 2016 for the fourth consecutive quarters. However, the rate of contraction has started reducing following the Federal Government efforts at bolstering economic activities.

The economy contracted 1.30 percent in the fourth quarter of 2016 to N18,292.95 billion, from N18,533.75 billion recorded in the fourth quarter (Q4) of 2015, according to the National Bureau of Statistics (NBS) report released on Tuesday.

This was -2.24 percent less than the decline recorded in the previous quarter but lower than the 2.11 percent growth rate recorded in the final quarter of 2015.

On a quarterly basis, real GDP rose 4.09 percent following rise in the general price level.

However, on a yearly basis, the economy contracted 1.51 percent, indicating real GDP of N67,984.20 billion for 2016. This reduction in the economic activities reflects weaker inflation-induced consumption demand, an increase in pipeline vandalism, significantly reduced foreign reserves and a weaker currency.

Also, it showed series of problems in the energy sector – lower electricity generation and struggling banking sector.

Oil Sector

According to the NBS, Oil output was estimated at 1.9 million barrels per day (mbpd) in the fourth quarter of 2016. Which was about 0.27 million barrels per day higher than output in the previous quarter, but lower than production in the same quarter of 2015 by 0.25 million barrels per day, when output was recorded at 2.16 mbpd.

“For the full year 2016, oil production was estimated to be 1.833 mbpd, compared to 2.13 mbpd in 2015. This reduction has largely been attributed to vandalism in the Niger Delta region. As a result, the sector contracted by -13.65 percent; a more significant decline than that in 2015 of -5.45 percent. This reduced the oil sectors share of real GDP to 8.42 percent in 2016, compared to 9.61% in 2015.

“In the fourth quarter of 2016 this sector declined by -12.38 percent in real term (year-on-year). This was an improvement relative to the previous quarter, when the sector declined by -22.01 percent, but nevertheless was a more severe decline than in the fourth quarter of 2015, when a contraction of -8.23 percent was recorded.

“Quarter-on-Quarter, real oil GDP grew 8.07 percent. As a share of the economy, the Oil sector represented 7.15% of total real GDP, compared to 8.06 percent in Q4 2015 and 8.19 percent in Q3 2016.”

Non-oil Sector

“The non-oil sector declined by -0.33 percent in real terms in the fourth quarter of 2016. This was 0.36 percent points lower than growth of 0.03 percent recorded in Q3 2016, and 3.46 percent points lower than the 3.14 percent growth recorded in Q4 2015. Given that the growth rate was stronger than in the oil sector, the non-oil sector increased its share of GDP to 92.85 percent, from 91.94 percent in the fourth quarter of 2015.

“The sector to weigh on non-oil growth the most was Real Estate, which declined by -9.27 percent and contributed to –0.77 percent points to year on year growth in total real GDP. However, Manufacturing, Construction and Trade also made significant downwards contributions, ameliorated slightly by continuing strong growth in Agriculture (especially Crop Production).

“For full year 2016, the non-oil sector declined by -0.22 percent in real terms, compared to a growth rate of 3.75 percent in 2015, a difference of 3.97 percent points.”

The figures showed the pace of contraction has started cooling from the third quarter of 2016 and on track for economic recovery by the second quarter of 2017.


Similarly, for the past 4 months, the pace of increase of inflation rate has been reducing, indicating consumer prices are beginning to adjust to a series of policy been implemented by the Central Bank of Nigeria. This further validated CBN projection that economic recovery plan would start manifesting by the second quarter of 2017 following successful OPEC consensus in November 2016.

The Naira has gained N95 against the US dollar since the CBN introduced new forex policy last week and continued to do so as importers can now access dollar at a moderate exchange rate. Experts have said the continuous gain in the Naira value will curb surge in consumer prices and boost activities in the manufacturing sector.

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

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South Africa’s Inflation Rate Holds Steady in May



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South Africa’s inflation rate remained unchanged in May, increasing the likelihood that the central bank will maintain current borrowing costs.

According to a statement released by Statistics South Africa on Wednesday, consumer prices rose by 5.2% year-on-year, the same rate as in April.

The consistent inflation rate is expected to influence the decision of the six-member monetary policy committee (MPC), which is set to meet in mid-July. The current benchmark rate stands at 8.25%, a 15-year high, and has been held steady for six consecutive meetings.

Central Bank Governor Lesetja Kganyago has repeatedly emphasized the need for inflation to fall firmly within the 3% to 6% target range before considering any reduction in borrowing costs.

“We will continue to deliver on our mandate, irrespective of how our post-election politics plays out,” Kganyago stated earlier this month in Soweto. “The only impact is what kind of policies any coalition will propose. If the policies are not sustainable, we might not have investment.”

While money markets are assigning a slim chance of a 25-basis point rate cut in July, they are fully pricing in a reduction by November.

Bloomberg Africa economist Yvonne Mhango anticipates the rate-cutting cycle to begin in the fourth quarter, supported by a sharp drop in gasoline prices in June and a rally in the rand.

The rand has appreciated more than 3% since Friday, following the ANC’s agreement to a power-sharing deal with business-friendly opposition parties and the re-election of President Cyril Ramaphosa.

In May, the annual inflation rates for four of the twelve product groups remained stable, including food and non-alcoholic beverages.

However, transport, alcoholic beverages and tobacco, and recreation and culture saw higher rates. Food prices increased by 4.3% in May, slightly down from 4.4% in April, while transport costs rose by 6.3%, up from 5.7% and marking the highest rate for this category since October 2023.

The central bank’s cautious stance on monetary policy reflects its ongoing concerns about inflation.

Governor Kganyago has consistently voiced worries that the inflation rate is not decreasing as quickly as desired. The MPC’s upcoming decision will hinge on sustained inflationary pressures and the need to balance economic stability with fostering growth.

As South Africa navigates its economic challenges, the steady inflation rate in May provides a measure of predictability for policymakers and investors alike.

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Ghana Reports Strong 4.7% GDP Growth in First Quarter of 2024



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Ghana’s economy showed impressive growth in the first quarter of 2024 with the Gross Domestic Product (GDP) expanding by 4.7% compared to the same period last year, according to Government Statistician Samuel Kobina Annim.

This represents an increase from the 3.8% growth recorded in the previous quarter and should provide a much-needed boost to the ruling New Patriotic Party (NPP) as the nation approaches the presidential elections scheduled for December 7.

The positive economic data comes amidst a challenging backdrop of fiscal consolidation efforts under a $3 billion International Monetary Fund (IMF) rescue program.

The government has been working to control debt through reduced spending and restructuring nearly all of its $44 billion debt.

This includes ongoing negotiations with private creditors to reorganize $13 billion worth of bonds.

The latest GDP figures are seen as a vindication of the NPP’s economic policies, which have been under fire from the main opposition party, the National Democratic Congress (NDC).

The opposition has criticized the government’s handling of the economy, particularly its fiscal policies and the terms of the IMF program, arguing that they have imposed undue hardship on ordinary Ghanaians.

However, the 4.7% growth rate suggests that the measures taken to stabilize the economy are beginning to yield positive results.

Analysts believe that the stronger-than-expected economic performance will bolster the NPP’s position as the country gears up for the presidential elections.

“The growth we are seeing is a testament to the resilience of the Ghanaian economy and the effectiveness of the government’s policies,” Annim stated at a press briefing in Accra. “Despite the constraints imposed by the debt restructuring and IMF program, we are seeing significant progress.”

The IMF program, which is designed to restore macroeconomic stability, has necessitated tough fiscal adjustments.

These include cutting government expenditure and implementing structural reforms aimed at boosting economic efficiency and growth.

The government’s commitment to these reforms has been crucial in securing the confidence of international lenders and investors.

In addition to the IMF support, the government has also been focused on diversifying the economy, reducing its reliance on commodities, and fostering sectors such as manufacturing, services, and technology.

These efforts have contributed to the robust growth figures reported for the first quarter.

Economic growth in Ghana has been uneven in recent years, with periods of rapid expansion often followed by slowdowns.

The current administration has emphasized sustainable and inclusive growth, seeking to ensure that the benefits of economic progress are widely shared across all segments of the population.

The next few months will be critical as the government continues its efforts to stabilize the economy while preparing for the upcoming elections.

The positive GDP growth figures provide a strong foundation, but challenges remain, including managing inflation, creating jobs, and ensuring the stability of the financial sector.

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World Bank Commits Over $15 Billion to Support Nigeria’s Economic Reforms



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The World Bank has pledged over $15 billion in technical advisory and financial support to help the country achieve sustainable economic prosperity.

This commitment, announced in a feature article titled “Turning The Corner: Nigeria’s Ongoing Path of Economic Reforms,” underscores the international lender’s confidence in Nigeria’s recent bold reforms aimed at stabilizing and growing its economy.

The World Bank’s support will be channeled into key sectors such as reliable power and clean energy, girls’ education and women’s economic empowerment, climate adaptation and resilience, water and sanitation, and governance reforms.

The bank lauded Nigeria’s government for its courageous steps in implementing much-needed reforms, highlighting the unification of multiple official exchange rates, which has led to a market-determined official rate, and the phasing out of the costly gasoline subsidy.

“These reforms are crucial for Nigeria’s long-term economic health,” the World Bank stated. “The supply of foreign exchange has improved, benefiting businesses and consumers, while the gap between official and parallel market exchange rates has narrowed, enhancing transparency and curbing corrupt practices.”

The removal of the gasoline subsidy, which had cost the country over 8.6 trillion naira (US$22.2 billion) from 2019 to 2022, was particularly noted for its potential to redirect fiscal resources toward more impactful public investments.

The World Bank pointed out that the subsidy primarily benefited wealthier consumers and fostered black market activities, rather than aiding the poor.

The bank’s article emphasized that Nigeria is at a turning point, with macro-fiscal reforms expected to channel more resources into sectors critical for improving citizens’ lives.

The World Bank’s support is designed to sustain these reforms and expand social protection for the poor and vulnerable, aiming to put the economy back on a sustainable growth path.

In addition to this substantial support, the World Bank recently approved a $2.25 billion loan to Nigeria at a one percent interest rate to finance further fiscal reforms.

This includes $1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing, and $750 million for the NG Accelerating Resource Mobilization Reforms Programme-for-Results (ARMOR).

“The future can be bright, and Nigeria can rise and serve as an example for the region on how macro-fiscal and governance reforms, along with continued investments in public goods, can accelerate growth and improve the lives of its citizens,” the World Bank concluded.

With this robust backing from the World Bank, Nigeria is well-positioned to tackle its economic challenges and embark on a path to sustained prosperity and development.

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