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Capital Budget Implementation Raises Concerns on Inflation



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  • Capital Budget Implementation Raises Concerns on Inflation

As disbursements for the capital projects would begin in earnest following the signing of the 2017 budget into law by Acting President Yemi Osinbajo, concerns have been raised on the impact of increased liquidity in the economy on declining inflationary trend. The ability of the Central Bank of Nigeria to manage excess liquidity arising from capital budget implementation has, however, been acknowledged.

The National Bureau of Statistics, which recently released report on the Consumer Price Index for May 2017, disclosed that the index, which gauges inflation increased by 16.25 per cent (year-on-year) in May 2017, representing 0.99 percent points lower than 17.24 per cent in April. The decline is the fourth since January 2017.

NBS also revealed that, on a month-on-month basis, the headline index increased by 1.88 percent in May 2017, 0.28 percent points higher than the rate of 1.60 percent recorded in April 2017, indicating persistence pressure on prices despite the general decline in year-on-year inflation. Month on Month inflation has cumulatively risen by 7.7 per cent since January 2017

Food Inflation increased by 19.27 per cent (year-on-year) in May 2017, down by 0.03 percent points from the rate recorded in April of 19.30 per cent. But on a month-on-month basis, the food sub-index increased by 2.54 percent in May, up by 0.50 percent points from 2.04 per cent recorded in April.

According to NBS, “The Food index in May whether on a year on year basis on month on month basis therefore indicates sustained pressure on food prices since then beginning of the year following high food prices recorded the whole of 2016.”

While analysts attributed the improvement in macroeconomic indices to the decline in CPI year-on-year, liquidity surge into the economy, which is still volatile could adversely affect the inflationary trend, if not well managed. But the CBN armed with its instruments of controlling excess liquidity has been deemed capable to rise to the occasion.

According to analysts at Eczellon Capital Ltd, “The execution of capital projects in the 2017 budget will increase the level of liquidity in the economy and this may lead to an increase in inflation rate. Conversely, excess liquidity in the economy may be mopped by judicious application of monetary policies.”

The analysts argued that, “The war against inflation rate has not been fully won as inflation rate may increase due to excess liquidity bolster by the execution of capital projects in the just released 2017 budget. The CPI is still very high at 16.25 per cent, thus, inflation rate has not been fully tamed.” But they acknowledged that the CBN had been able to reduce the increase in inflation rate.

The analysts pointed out that the decline in the CPI could be related to “the base rate which has priced in an already volatile economy, hence the improvement in some macroeconomic indicators has helped to reduce the CPI.”

They enthused that, “The drop in the CPI will boost the purchasing power of the local currency as the prices of goods and service decline. Hence, the value of naira will gradually rebound as more economic activities unfold. Also, the decrease in the CPI will resuscitate confidence in the economy as purchases of goods and services bounced back at lower rates.”

In his view, Director, Union Capital Ltd, Egie Akpata, noted that, “There is a risk that the recently passed budget and its expansionary focus could drive up inflation. However, the ability of the Federal Government to fund the deficit and the CBN strategies in the second half of the year will be instrumental in keeping inflation on a downward trend.

Nevertheless, Akpata posited that, “The big drop in CPI is welcome but not unexpected,”, stating, however, that the increase in month-on-month inflation continued to give cause for concern.

Pointing out that the figures in the CPI report suggested that the CBN policies were pushing inflation down, Akpata, contended that, “The CBN is not likely to reduce interest rates on the near term as cost pressures as shown in the month-on-month increase are not moving in the right direction.”

Similarly, CEO, Global Analytics Consulting Ltd, Tope Fasua, pointed out that the recent release of the budget will lead to more liquidity and a further increase in inflation – “if we follow the theory.”

Fasua therefore believed, “We have to be more circumspect to discombobulate the drivers of inflation in Nigeria. A lot of the inflation is driven by perception and expectations, rather than a calculated response to economic situations. I have had to note elsewhere that food vendors are getting smarter than before and getting their own back from a perceived ‘opulent’ society.”

The economist, however, argued that, the role of taming inflation, though chiefly that of the CBN, had to now be viewed from a multi-sectoral, multi-stakeholder perspective.

According to him, “Monetary policies have their own shortcomings, and in a country such as ours where data is suspect, the reliance on monetary policies alone to achieve these objectives is inefficient. Regarding the recently released data, it is noteworthy that food inflation is still on the rise, and this is where it pinches the common man the most. Whose role is it to ensure that food prices don’t continue to increase? Certainly not a matter for only the CBN because if it is we are only further promoting extra-monetary interventions of which we have a surfeit for now. It is also dangerous to leave all the levers of an economy to a single agency which already has intervention funds for Agric, Aviation, Manufacturing, SMEs and the rest.”

To the CEO, The CFG Advisory Ltd, Adetilewa Adebajo,the development did not come as a surprise as the economy’s exchange rate had been relatively stable at N305/$ with forex supply on the increase and high interest rates maintained at 14 per cent. “We hope that the downward trajectory continues at faster pace. Falling inflationary pressures is indicative of the possibility that interest rates could be revised at the next MPC meeting which will the n help to stimulate economic growth,” he added.

Professing strong belief in CBN’s strategies for tackling inflation, Adebajo stated: “There is a greater level of certainty regarding the CBN’s approach towards taming inflation as year-on-year inflation has fallen for the five consecutive months from 18.72 per cent (Jan) to 16.25 per cent(May) by 2.47 percent points.”

“ The decline by almost a 100 basis points from April to May CPI figures can help restore confidence in the naira. We can strongly say CBN’s efforts to tackle inflation are finally reaping some benefits,” he posited.


Forex Market

The Central Bank of Nigeria on Monday intervened yet again in the inter-bank foreign exchange market to the tune of $413.5 million to further shore up the international value of the naira. The latest intervention underscored the apex bank’s resolve to sustain liquidity in the foreign exchange market. “The CBN offered the sum of 100 million dollars to dealers in the wholesale window, while the Small and Medium Enterprises window was allocated a total of 28 million dollars. The invisibles segment was allocated the sum of 25.5 million dollars to meet the needs of those requiring forex for business and personal travel allowances, school tuition, medicals, etc.,” the apex bank explained.


Nigeria generated N204.77 billion as Value Added Tax in the first quarter of 2017. The National Bureau of Statistics said this in a Sectoral Distribution of VAT Data for first quarter of 2017. The report showed that the N204.77 billion generated in the quarter was lower than N207.35 billion generated in the fourth quarter of 2016. The decline in the amount generated represented 1.25 per cent decrease quarter-on-quarter. The manufacturing sector generated the highest amount of VAT with N28.73 billion.


The Federal Airports Authority of Nigeria conducted a test-run on an upgraded baggage scanner machine that can detect explosives, narcotics and other prohibited items at the Murtala Mohammed International Airport, Lagos. A statement by Henrietta Yakubu, the agency’s spokesperson, said the initiative was put in place to boost safety and security programmes around the country’s airports. FAAN also explained that the scanner was intended to complement the Executive Order recently issued by the acting president, Professor Yemi Osinbajo.

Tax Evasion

Nigeria ratified multilateral conventions on tax-related treaties to end profit shifting and tax evasion by multinational companies. The ratification of the treaties followed the approval of a memo submitted by the Minister of Finance, Kemi Adeosun, in an effort to widen the country’s tax base and improve revenue generation. Adeosun said the ratified conventions would enable Nigeria evaluate, amend and cancel existing treaties that were not beneficial to the country. Signing of the convention would also curtail illicit financial flows from and into the country.


The Consumer Price Index, which measures inflation, dropped from 17.24 per cent in April to 16.25 per cent year-on-year in May, according to the National Bureau of Statistics. The NBS in the report stated that on a month-on-month basis, the headline index rose by 1.88 per cent in May, representing 0.28 per cent points higher than the rate of 1.60 per cent recorded in April.

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


CBN Freezes Another 194 Accounts of firms, BDCs, Others



Godwin Emefile

The Central Bank of Nigeria on Thursday said it got orders from the Federal High Court, Abuja division, to freeze 194 bank accounts belonging to firms and Bureaux de Change to enable it to conduct investigations into suspicious activities.

It disclosed this on Thursday in three separate documents on its website.

In one of the documents, the CBN said it got an order to freeze 60 bank accounts of Bluebeam Capital Limited.

The accounts were domiciled in 13 different banks, the CBN as the plaintiff stated.

Bluebeam, as the respondent had eight accounts each in Access Bank and Keystone Bank; seven each in First Bank and Ecobank; five each in UBA and GTBank; four each in Fidelity Bank, FCMB and Sterling Bank; three accounts in Polaris Bank; two each in Wema Bank and Heritage Bank; and one in Providus Bank.

In another document, the CBN said it got an order to freeze 84 accounts in 17 banks.

The third document revealed that the banking regulator had the court order to freeze 50 accounts domiciled in different banks.

The motions exparte which were signed on different dates sought the orders of the court to direct the banks to freeze all other bank accounts of the defendants for a period of 180 days, pending the outcome of investigation and inquiry being conducted by the CBN.

In the document signed by the Presiding Judge, A.R. Mohammed, the court empowered the CBN to direct the banks to freeze all the bank accounts for a period of 45 days only, pending the outcome of the investigation.

It added that the order may be extended upon good reasons shown.

Any person aggrieved by this order could apply to the court to have the order set aside, discharged or have the order reviewed upon good reasons without waiting for the 45 days to lapse, the document stated.

The CBN on Wednesday disclosed it got an order to freeze 11 bank accounts to enable it conduct investigations into suspicious activities.

It had listed the names of the defendants/respondents as Albert Austin Ugochukwu with two bank accounts; Belfour Energy & Allied Services; Belfour Oil and Gas Limited with three bank accounts; Circle Flow Integrated Services; Kacynaus Reality Nigeria Limited with three bank accounts; and Tasmara Integrated Services.

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Banking Sector

Insider Dealing: Henry Oroh, An Executive Director of Zenith Bank, Acquires N46.982 Million Worth of Zenith Bank Shares



Henry Oroh

Henry Oro, an executive director of Zenith Bank Plc, has dumped N46.982 million on shares of Zenith Bank, according to the latest filing with the Nigerian Stock Exchange.

The executive director purchased Zenith Bank’s shares of 724,527 on April 1st, 2021 at N22.05 each or N15.976 million.

On April 6th, Oroh added 612,573 shares at N22 a unit and another 400,000 units at N21.90 per share.

On the same day, he purchased another 400,000 units at N21.90 a share. Bringing aggregate purchase on April 6th to 1,412,573 at an average price of N21.95 a unit or N31.006 million.

Henry Oroh has spent a total of N46.982 million on Zenith shares in April.

Henry Oroh was appointed as Zenith Bank’s executive director on September 1st, 2019 and holds a Bachelor’s Degree in Accounting from the University of Benin, Edo State and an MBA from the Lagos State University as well as an LLB Degree from the University of London.

He is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and an honorary member of the Chartered Institute of Bankers (CIBN), Nigeria.

He has over two decades of banking experience. He began his banking career in 1992 at Citibank where he served for seven (7) years in Operations, Treasury and Marketing.

He joined Zenith Bank in February 1999 and has worked in various Groups and Departments within the Zenith Group Office. His expertise spans Operations, Information Technology, Treasury, Marketing, including the Manufacturing, Food and Beverages, Pharmaceuticals, Oil and Gas, Public Sector, Consumer, as well as Corporate Banking and Business Development.

In April 2012, he was seconded to Zenith Bank Ghana Limited as an Executive Director and became the Managing Director/ Chief Executive in February 2016, where he successfully spearheaded the phenomenal growth of the Zenith Brand both within the Ghana market and the West African sub-region.

Henry has attended several Leadership Programmes and Executive Management Courses at the Harvard Business School, Columbia Business School, New York, University of Chicago, University of Pennsylvania, HEC Paris, JP Morgan Chase, UK and the Lagos Business School.

He comes to the Board of Zenith Bank Plc with strong competencies in Credit & Marketing, Operations, Information Technology, Treasury and impressive Leadership skills.

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Banking Sector

Access Bank Lagos City Marathon Adopts Virtual Audience For 10km Runners



In a bid to ensure the health and safety of all runners and essential service workers amid the global COVID-19 pandemic, the title sponsors of the Access Bank Lagos City Marathon, Access Bank PLC, has announced that the Lagos City Marathon will be held virtually for interested 10km runners this year.

The marathon, scheduled for April 10, 2021 can only accommodate 300 runners in line with the guidelines provided by the World Health Organisation (WHO), World Athletics and the Lagos State Ministry of Health.

Speaking on the development, Access Bank’s Executive Director of Retail Banking, Victor Etuokwu said, “Our primary consideration is the health and safety of participants, attendees and staff that will be a part of the Lagos City Marathon. This is why we decided to have an exclusive virtual event – that allows participants from all over the world to run the race wherever they are.

‘’While we regret that we can’t host the live 10km race and fanfare that have become synonymous with the Access Bank Lagos City Marathon, we continue to stand with the other sponsors to preserve public health as we look forward to hosting a successful marathon. We implore all well-meaning Lagosians to please adhere to the movement guidelines put in place by the Lagos State Government to ensure that the marathon fulfills its purpose of positively placing Lagos and indeed the whole of Africa on the global map,” he concluded.

Though audience participation may have changed, the organisers have also announced that the race route will largely remain the same. Runners will begin the race from the National Stadium, Surulere, opposite Teslim Balogun Stadium and finish at the Eko Atlantic City, Victoria Island.

Now in its sixth edition, the Silver – Labelled Access Bank Lagos City Marathon has featured over 200,000 registered athletes from over 12 participating countries collectively covering a distance of 42,000 kilometers.

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