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Economy

Analysts Want CBN to Sustain Strategies

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  • Analysts Want CBN to Sustain Strategies

As the monetary policy committee begins its two-day meeting tomorrow, analysts have suggested that the Central Bank of Nigeria (CBN) should sustain it’s strategies which had ensured the consumer price index (CPI) assumed a downward trajectory for three consecutive months.

The National Bureau of Statistics (NBS) has said the CPI, which gauges inflation, increased by 17.24 percent (year-on-year) though at a slower pace in April, translating to 0.02 percent points reduction from 17.26 per cent recorded in March. According to NBS, the decline in the headline CPI, which is occurring consecutively for three months, has exhibited effects of some easing in already high food and non-food prices, as well as favourable base effects over 2016 prices.

Analysts, who have made suggestions on the outcomes of the MPC meeting, urged the apex bank to maintain its policies and strategies with a view to sustaining the declining momentum in the CPI.

In his estimation, , the Chief Executive Officer, The CFG Advisory Ltd, Adetilewa Adebajo, enthused that, “We are over the worst now as high inflation rates have bottomed out at 18.72 per cent and it is moving towards a downward trajectory.”

“Howbeit, the decline is still at the bud stage and could easily be reversed. Sustained policies would be needed to maintain the momentum in the downward trend. If we can maintain this steady decline in inflation rate, the CBN would in turn, reduce MPR, thereby stimulating growth,” he however suggested.

Adebajo noted that the CBN approach at taming inflation was working but cautioned that the trend should be monitored for some time to fully ascertain the effect.

According to him, “The CBN sought to control inflation by keeping a high MPR (at 14 per cent). One can say that we are seeing the result of this in bottoming out and the successive decline in inflation for three consecutive months; however we need to monitor CPI for the next few months to fully ascertain the effects of the CBN’S approach.”

Similarly, Director, Union Capital Ltd, Egie Akpata, noted that, the overall inflationary trend is down and it seems “the CBN strategy of constraining Naira liquidity and flooding the market with US dollars is having a positive effect.” He believed, “It will take a few more months of this sustained strategy before inflation is brought closer to the CBN target range.”

Generally, he pointed out, inflation was falling a lot slower than predicted, even though, “the rise in annual food inflation coupled with a few disease outbreaks affecting a number of key crops is worrying.”

“Unfortunately, the CBN strategy has resulted in extremely high risk free rates making it very difficult for liquidity and credit to flow to the private sector. If GDP growth remains negative or very weak, the CBN would have to loosen liquidity and cut rates in the next few months so as to be seen as supporting the Federal Government’s effort to reflate the economy,” Akpata submitted.

To the analysts at Eczellon Capital Ltd led by Diekola Onaolapo, if the CBN maintains its policy that brought down CPI, which also consistently decreased for three months, the economy may witness further drop in the index in the months ahead, resulting to stability and exit from recession.

“The three months consistent decline in Consumer Price Index (CPI) after fifteen months uninterrupted upsurge in inflation rates indicates the CPI may drop slightly as prices become stable. The Monetary Policy Committee (MPC) decisions had targeted price stability in their previous meetings, and this is reflecting in the CPI numbers. If this policy is maintained in the coming months, the CPI may progressively drop further as the economy stabilizes and bounces back from recession,” they submitted.

The analysts expressed the belief that, “The drop in the CPI gives investors insight into future rates. Fixed-income investors always analyze their investments based on the released CPI figures as it is imperative to keep current yields ahead of inflation, otherwise real wealth will fall.” Specifically, they projected that, “The Monetary Policy Committee would fix the next Monetary Policy Rate (MPR) based on the direction of the CPI. This is to ensure that the MPR is in line with the CPI. “

Besides, the analysts were also convinced that, “The slight improvement in the CPI and the slackening inflation may not be unconnected to the CBN’s intervention in the Foreign Exchange Market.”

According to them, “You will recall that crisis in the FX environment has largely driven increase in inflation over the past months, as a reflection of the import dependence of the Nigerian economy. CBN hopes to further strengthen the Naira with its continued intervention. The sustainability of the above is however still subject to debate. The CBN initiated an Investors and Exporters FX window, as one of the mechanisms of FX market intervention. However this seems not to have had much impact on the market as Naira to the USD seems to have maintained a value over the past fortnight.”

“As we have argued in the past, monetary policies alone will not solve the overall issues in the Nigerian economy. Having said the above, even the monetary policies should be further reviewed and a more market driven approach, with reduced government intervention be explored as this would be the more sustainable approach over the long term. The CPI is still very high and more practical methods should be explored to reducing the general price level. The diversification of economy, investment in infrastructures, significant boost in agriculture and general boost of local production will ultimately be the drivers of price stability, growth and improvement in general living standards,” they concluded.

In his projection, Director, Corporate Finance, BGL Capital Ltd, Femi Ademola, noted that, “The outlook for inflation in 2017 is an expectation of a low rate compared to 2016. This is due to the combination of high base rate, moderating exchange rate and improving liquidity to manufacturers.”

“In addition, the commencement of harvesting period will lower food prices; thus supporting the falling inflation. Inflation is likely to decline further in the coming months.”

According to him, “This is the first since the beginning of the year we are experiencing a decline in the rate of inflation in the real sense of it. This is because the Year on Year headline inflation which declined to 17.24 per cent in April from 17.26 per cent in March is measuring the rate of increase over an historical period of 12 months. However the most current measure of the rate of change in price increases is the month on month inflation which declined to 1.60 per cent from 1.72 per cent over the period. However, we are still deep in the high inflation momentum.

“This is because according to the NBS, the inflation for April was due to ncreases in prices of bread, cereals, meat, fish, potatoes, yams and other tubers, coffee, tea and cocoa, milk cheese and eggs and oils and fats. This would mean that the reported low inflation rate would have been much higher but for the high base effect over 2016 prices. It follows that the improved economic activities is helping demand especially for food which experienced an increase in inflation to 19.30 per cent in April from 18.44 per cent in March. However, the moderating exchange rate effectively tempered the rate of increase in prices of imported food.”

BRIEFS

FX Market

Central Bank of Nigeria on Monday injected $457.3 million into various segments of the foreign exchange market. The spot and forwards segments garnered $267.3 million, while the wholesale segment got $100 million. CBN’s acting director, corporate communications department, Isaac Okorafor, said the Small and Medium Enterprises and invisibles segments, comprising basic travel allowance, tuition fee and medicals, got $50 million and $40 million, respectively. Naira closed at N383 to a dollar at the parallel market.

Inflation

The Consumer Price Index, which measures inflation, declined by 0.02 per cent in April. According to the National Bureau of Statistics in its new report, the inflation rate, put at 17.24 per cent, declined a little further from the 17.26 per cent recorded in March. This represents the third consecutive month of a decline in the headline CPI rate, indicating some easing in high food and non-food prices.

Economy

The average price of imported rice decreased by 7.22 per cent in April, according to the National Bureau of Statistics. NBS, in its “Selected Food Price watch data for April 2017” in Abuja, noted that one kilogramme of rice was sold for N250.30 in April, from N418.71 in March. It also stated that between April 2016 and 2017, the average cost of 1kg of rice (imported high quality sold loose) increased by 29.98 per cent in the month under review. This is according to prices collected from the 774 local governments across all states and the FCT from over 10,000 respondents.

Aviation

Nigerian operator, Medview Airline, was banned from operating within the airspace of the European Commission. A statement released by the commission said 181 airlines had been banned from EU skies. “Today the European Commission updated the EU air safety list, the list of non-European airlines that do not meet international safety standards, and are therefore subject to an operating ban or operational restrictions within the European Union,” said the commission. The commission will, however, allow banned airlines to operate within the EU using leased aircraft of other airlines.

Pump Price

Despite the challenges in the downstream oil sector, the Nigerian government said it would maintain the pump price of Premium Motor Spirit (petrol) at N145 per litre. This was contained in an address by the Minister of State for Petroleum Resources, Ibe Kachikwu. He stated that the issues of freighting and docking had been addressed last month.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

The Kenya Private Sector Alliance (KEPSA) and The Canada-Africa Chamber of Business Announce Major Memorandum of Understanding (MoU)

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The Kenya Private Sector Alliance and The Canada-Africa Chamber of Business are proud to announce collaboration to promote, support and facilitate bilateral trade and investment opportunities from Canada into Kenya.

The first engagement will be a virtual trade mission to Kenya from Canada in May.

The 3-year agreement MoU was signed today during the Second Session of the Binational Commission meeting between the Governments of Kenya and Canada – and is subject to ongoing renewal.

“This MoU will solidify the existing trade relations between Kenya and Canada and establish strong bonds between the two countries that will go a long way to boost private sector trade and investment. The MOU will also enable us to exchange business information with CACB which is critical especially to our members who wish to expand their coverage to international market,” explained Ms. Carole Kariuki Karuga, KEPSA CEO.

The Kenya Private Sector Alliance is the apex body of private sector in Kenya.

The Canada-Africa Chamber of Business is a 27-years old organization committed to accelerating trade, business and investment between Canada and Africa.

‘Nairobi is a vital gateway not just to Kenya and the region, but the continent’s economies of the future in Africa,’ noted Garreth Bloor, President of The Canada-Africa Chamber of Business.

‘KEPSA is world leader in the private sector, showcasing excellence on the global stage. This MoU is a great honour for The Canada-Africa Chamber of Business, our leadership, and all our members across Canada,’ says Deepak Dave, the organization’s long-standing representative in Nairobi and Chief Risk Officer at the African Trade Insurance Agency.

‘The joint intended results of the co-operation agreement between CACB and KEPSA seeks to increase two-way trade and investment between Canada and Kenya in all sectors – while laying the foundations to explore trade missions to Kenya by The Canada-Africa Chamber of Business and to Canada by KEPSA,’ said Sebastian Spio-Garbrah, Chair of The Canada-Africa Chamber of Business.

Guided by this MOU, CACB and KEPSA will work together towards on a case-by-case basis exploring events together, exchange of business information and reciprocity members of the Kenya Private Sector Alliance to enjoy the privileges of membership afforded to CACB members, and to ensure KEPSA members are well-positioned in the Canadian market for investment and trade in all sectors and that CACB members are well-positioned in the Kenyan market for investment and trade in all sectors.

“As KEPSA, we remain committed to establishing progressive business and trade partnerships with Canada and other similar minded parties for a mutual benefit of our members as well as those of our CACB counterparts,” said Ms. Carole Kariuki Karuga, KEPSA CEO.

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Economy

India, Spain, the Netherlands, USA, Nigeria’s Major Export Markets -NBS

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Institute of Chartered Shipbrokers

India, Spain and the Netherland top Nigeria’s export markets in the final quarter of 2020, according to the latest data from the National Bureau of Statistics (NBS).

The Commodity Price Indices and Terms of Trade Q4 2020 report showed that the United States and China trailed the three.

However, the NBS revealed Nigeria exports mainly crude oil and natural gas during the period under review.

It, “The major export and import market of Nigeria in Q4 2020 were India, Spain, the Netherlands, United States and China.

“The major export to these countries were crude petroleum and natural gas. The major imports from the countries were motor spirits, used vehicles, motorcycles and antibiotics.”

The bureau stated that the all-commodity group import index increased by 0.13 per cent between October and December 2020.

This was driven mainly by an increase in the prices of base metals and articles of base metals (one per cent), boilers, machinery and appliances; parts thereof (1.03 per cent), and products of the chemical and allied industries (0.75 per cent),” it stated.

The NBS, however, noted that the index was negatively affected by animal and vegetable fats and oils and other cleavage products.

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Economy

Onyeama: Qatar To Invest $5bn In Nigeria’s Economy

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The oil-rich state of Qatar is to invest a total of $5 billion in Nigeria’s economy, the Foreign Affairs Minister, Godfrey Onyeama, has disclosed.

Onyeama, who spoke Sunday at a send forth dinner in honour of Nigeria’s Ambassador-designate to the State of Qatar, who is also the outgoing Director of Protocol (DOP) at the State House, Ambassador Yakubu Ahmed, also stated that recent career ambassadorial appointments made by the gederal government was based on merit, experience and professionalism.

The minister further said there had been discussions with Qatar on partnership with Nigeria’s Sovereign Wealth Fund (SWF), for significant investments in the region of $5 billion in the Nigerian economy.

According to him, ‘‘Qatar is a weighty and strategic country and very strategic in that part of the world and we are putting our best feet forward to advance the interest of our country economically and in other areas.”

He recalled that President Muhammadu Buhari had visited the State of Qatar in 2016 and the Emir of Qatar, Tamim Bin Hammad Al-Thani, reciprocated with a State visit in 2019.

Onyeama also explained that only trusted hands with a track record of diligence, experience and professionalism in the Foreign Service were recently appointed career ambassadors by the federal government.

The minister said the appointment of Ahmed and other career ambassadors were predicated on posting dedicated and keen Foreign Service practitioners to serve as image makers of the country.

He said: ‘‘Ambassador Yakubu Ahmed is a dedicated professional with a penchant for rigour and detail. He is very capable and one of the best in the Ministry of Foreign Affairs. He is personable, affable, extremely friendly, dispassionate and objective.

‘‘He is going to head a very important mission, a very important country, reckoned to be one of the richest countries in the world, per capita, and there’s a lot we will be doing with the State of Qatar.”

Also speaking, the Deputy Chief of Staff, Adeola Rahman Ipaye, described the honoree as a ‘‘perfect gentleman, very even-natured and always well turned out’’.

Ipaye said he had no doubt that the newly appointed ambassador would serve the country well in Qatar, adding that: ‘‘We are further encouraged that when he completes this assignment, he would return to serve Nigeria in a higher capacity.’’

In his remarks, the Permanent Secretary, State House, Tijjani Umar, while congratulating the outgoing DOP on his appointment, lauded Ahmed for excellent service to the State House and the nation.

‘‘He served this institution and the nation with the deepest sense of responsibility and it is very important that we establish a tradition where the system appreciates those who have served it well and those who will continue to serve it well,’’ he said.

Umar urged the new envoy to keep very fond memories of his time at the Presidential Villa, assuring him of the prayers and goodwill of all the staff.

Responding, Ahmed thanked President Buhari for the great honour and privilege of making him his principal representative in Doha, Qatar.

The Ambassador-designate pledged to deplore his energy and skill to the promotion of the existing cordial relationship between Nigeria and Qatar, particularly in the areas of economic, political, cultural and consular affairs as well as other key areas.

Ahmed, who joined Nigeria’s Foreign Service in 1993, said during his years in public service he had learnt that ‘‘patriotism, selfless service, diligence, determination and perseverance will always result in the achievement of the desired objective’’.

According to him, these virtues would be his ‘‘watchword’’ in the pursuit of Nigeria’s foreign policy objectives and the attainment of national interests.

The Ambassador-designate singled out for appreciation the Chief of Staff to the President, Prof. Ibrahim Gambari, and the state Chief of Protocol, Ambassador Lawal Kazaure, saying he had learnt a lot working under their mentorship.

He expressed gratitude to the Minister of Foreign Affairs and the Permanent Secretary, State House for giving him the opportunity of a memorable work experience in the State House.

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