- Inflation Rate Predicted to Reduce Further in April
The year-on-year inflation rate has been predicted to drop further in April.
According to analysts at FSDH Merchant Bank Limited, the Consumer Price Index (CPI) is anticipated to drop to 17.11 per cent in April, from the 17.26 per cent recorded in the month of March 2017. FSDH Merchant, which stated this in its latest inflation forecast noted that although it noticed increases in the prices of food and non-food classification for the fourth consecutive month, the base effect in the CCPI in April 2016 will be responsible for the drop in the inflation rate.
Based on the data release calendar on the National Bureau of Statistics (NBS) website, the bureau is expected to release the inflation rate for the month of April 2017 next week.
“Our analysis indicates that the value of the naira appreciated at the inter-bank market, while it depreciated at the parallel market. The naira gained by 0.16 per cent at the inter-bank market to close at US$/N305.85 while it lost 0.25 per cent at the parallel market to close at US$/N396 at the end of April.
“The fall in the international prices of food helped to counter the effect of the depreciation in the value of the naira at the parallel market. The appreciation of the naira in the inter-bank market and the drop in the prices of food at the international market led to a moderation in the prices of consumer goods in Nigeria,” the firm added.
It further stated that its model indicated that the general price movements in the consumer goods and services in April 2017 would increase the Composite Consumer Price Index (CCPI) to 226.01 points, representing a month-on-month increase of 1.48 per cent.
Similarly, the Economic Intelligence Group of Access Bank Plc has estimated that inflation rate (year-on-year) to trend downwards. But the bank in a report predicted 17.05 per cent in April 2017, from the 17.3 per cent posted in March 2017.
“As usual, our methodology adopts an autoregressive analysis of past prices, while it recognises all the assumptions used by the NBS in its computation of monthly CCPI. The expected moderation in inflation is chiefly attributable to an anticipated downward movement in the food and core sub-indexes.
“Price movements for major commodity groups in the food basket, which makes up over half of the CPI basket, remained muted in April. Based on an independent survey, vegetable oils, rice, and flour trended downwards, while the price of garri, potatoes and noodles were stable.
“Core inflation, which excludes the prices of volatile agricultural produce, is expected to extend its downward trend in April. This partially reflects the effects of currency appreciation in the parallel market. Month-on-month, the naira appreciated by 8.32 per cent as the Central Bank maintained the tempo of interventions in the forex market.
The monthly Food Price Index (FPI) that the Food and Agriculture Organisation (FAO) released recently showed that the Index averaged 168 points, 1.84 per cent lower than the revised value for March 2017, but 9.93 per cent higher than the April 2016 figure.
According to the FAO, sugar prices dropped the most, vegetable oils, dairy and cereal prices also declined. However, prices of meat continued to trend upward since the beginning of the year. The continued weak global import demand and improved supply conditions in the main sugar producing regions continued to weigh on the prices of sugar. Hence, the FAO Sugar Price Index fell by 9.07 per cent in April 2017 to a 12-month low.
The FAO Vegetable Oil Price Index was down by 3.92 per cent, driven by a fall in prices of palm and soy-oil, the key commodities in the Index.
The FAO Dairy Price Index fell by 3.28 per cent from March 2017 to April 2017. Milk powders and cheese were the main commodities affected. Butter prices on the other hand, rose amid reduced exports.
The FAO Cereal Price Index declined by 1.2 per cent from the previous month, due to the continued fall in the prices of wheat. Good production prospects in 2017/18 season continued to weigh on the prices of most cereals.
Manufacturing Firms Borrowed N570bn from Banks in 2020 – CBN
Manufacturing firms borrowed a total of N570bn from Nigerian banks last year amid the economic fallout of the COVID-19 pandemic.
Banks’ credit to the manufacturing sector rose to N3.19tn as of December 2020 from N2.62tn at the end of 2019, according to the sectoral analysis of banks’ credit by the Central Bank of Nigeria.
The sector received the second biggest share of the credit from the banks after the oil and gas sector, which got N5.18tn as of December.
“The manufacturing sector, which is the engine of sustainable growth, is still struggling with the debilitating impact of the pandemic and is yet to recuperate,” the Director-General, Manufacturers Association of Nigeria, Mr Segun Ajayi-Kadir, said in January.
MAN, in a January report, revealed that most manufacturers said commercial banks’ lending rates were discouraging productivity in the sector.
The report said 71 per cent of Chief Executive Officers interviewed “disagreed that the rate at which commercial banks lend to manufacturers encourages productivity in the sector.”
It said the cost of borrowing in the country remained at double digits even amidst the reforms meant to culminate in lower rates to engender the country’s economic recovery process.
The report said, “Special single digit loans offered by development banks are still hard to leverage as conditionalities to assess the loans through commercial banks are often overwhelming and laden with additional charges that will eventually make the interest rate double digit.
“Seven per cent of respondents were, however, of the opinion that the rate at which commercial banks lend to manufacturers encourages productivity in the sector while the remaining 22 per cent were not sure of the impact of the rate of lending on productivity in the manufacturing sector.”
The report showed that 64 per cent of respondent disagreed that the size of commercial bank loan to manufacturing sector had encouraged manufacturing productivity.
It said the very high presence of the government in the money market, particularly through the sale of treasury bills, had been crowding out the private sector from the market.
Nigeria Earns Extra N318.4 Billion as Crude Oil Hits $67/Barrel
FG Generates Additional Income of N318.4 Billion as Crude Oil Hits $67/Barrel
The Federal Government earned an additional N318.36 billion in February following the surge in crude oil price above $60 per barrel.
Brent crude oil, against which Nigerian oil is priced, average $60 throughout the month of February.
In March, it rose to $67 per barrel.
According to the Minister of Finance, Budget and National Planning, Zainab Ahmed, Nigeria’s crude oil price was retained at $40 per barrel for 2021.
However, she said the nation is presently producing below its 2.5 million barrel per day capacity at 1.7mbpd. This, she said includes 300,000bpd condensates.
“Although Nigeria’s total production capacity is 2.5mbpd, current crude production is about 1.7mbpd, including about 300,000bpd of condensates, which indicates compliance with OPEC quota,” the finance minister stated.
Going by the number, Nigeria is producing 1.4mbpd of crude oil without condensates, but with an additional $20 revenue when compared to the $40 per barrel benchmark for the year. It means the Federal Government realised an additional income of N318.360 billion or $20 X 1.4mbpd X 30days in the month of February.
Crude oil jumped to $68.54 per barrel on Friday following OPEC+’s decision to role-over production cuts.
Nigeria, Morocco sign MOUs on Hydrocarbons, Others
The Federal Government and the Kingdom of Morocco have signed five strategic Memoranda of Understanding that will foster Nigerian-Morocco bilateral collaboration and promote the development of hydrocarbons, agriculture, and commerce in both countries.
The Minister of State for Petroleum Resources, Chief Timipre Sylva, led the Nigerian delegation to the agreement signing ceremony on Tuesday at Marrakech, Morocco, while the Chief Executive Officer of OCP Africa, Mr Anouar Jamali, signed for the Kingdom of Morocco, according to a statement by the Nigerian Content Development and Monitoring Board.
Under the agreement between OCP, NSIA and the Nigerian National Petroleum Corporation, Nigeria will import phosphate from the Kingdom of Morocco and use it to produce blended fertiliser for the local market and export.
The statement said Nigeria would also produce ammonia and export to Morocco.
“As part of the project, the Nigerian Government plans to establish an ammonia plant at Akwa Ibom State,” it said.
The Executive Secretary of NCDMB, Mr Simbi Wabote, and the Group Managing Director of NNPC, Mallam Mele Kyari, were part of the delegation and they confirmed that their organisations would take equity in the ammonia plant when the Final Investment Decision would be taken, the statement said.
Sylva said the project would broaden economic opportunities for the two nations and improve the wellbeing of the people.
He added that the project would also positively impact agriculture, stimulate the growth of gas-based industries and lead to massive job creation.
He said the President, Major General Muhammadu Buhari (retd.), had mandated the Ministry of Petroleum Resources and it agencies and other government agencies to give maximum support for the project.
“He mandated me to ensure that at least the first phase of this project is commissioned before the expiration of his second term in office in 2023,” he added.
According to the statement, the MOUs were for the support of the second phase of the Presidential Fertiliser Initiative; Shareholders Agreement for the creation of the joint venture company to develop the multipurpose industrial platform and MOU for equity investment by the NNPC in the joint venture and support of the gas.
Other agreements are term sheet for gas sales and aggregation agreement and MOU for land acquisition and administrative facilitation to the establishment of the multipurpose industrial platform for gas sales and aggregation agreement.
The NCDMB boss described the bilateral agreement as significant to the Nigerian economy as it would accelerate Nigeria’s gas monetisation programme through establishment of the ammonia plant in the country.
The agreement would also improve Nigeria’s per capita fertiliser application through importation of phosphate derivatives from Morocco, he added.
Wabote challenged the relevant parties to focus on accelerating the FID, assuring them that the NCDMB would take equity investment for long-term sustainability of the project.
He canvassed for the setting up of a project management oversight structure to ensure project requirements and timelines are met.
“There is also need to determine manpower needs for construction and operations phase of the project and develop training programmes that will create the workforce pool from Nigeria and Morocco and design collaboration framework between research centres in Nigeria and Morocco to develop technology solutions for maintaining the ISBL and OSBL units of the Ammonia complex,” he said.
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