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Inflation’ll Ease to 13.4% in 2018, Says Economist Group



Nigerian economy
  • Inflation’ll Ease to 13.4% in 2018, Says Economist Group

The Economist Intelligence Unit of The Economist Group has said inflation, which has maintained a downward streak since the beginning of this year, would ease to 13.4 per cent in 2018.

The EIU gave this projection in a 21-page Country Report on Nigeria, generated on July 1, 2017.

EIU, which presented the country’s Outlook for 2017-21, predicted that while inflationary pressure would stay high in 2019 as a result of pre-election spending and further drop in the value of naira occasioned by weaker oil prices, the rate would drop significantly to an annual average of 10.8 per cent in 2020-21 with tighter fiscal and monetary policy.

According to the report, “The effects of currency devaluation and efforts by the authorities to rein in the subsidy bill and boost power tariffs to cost-reflective levels will see inflation remain high in 2017, at an average rate of 17 per cent. Currency stability improved in the first half of 2017 after the massive volatility seen in 2016, but additional naira depreciation is expected later in 2017, so average inflation will ease only moderately, to 13.4 per cent in 2018. Pre-election spending and a further drop in the naira on the back of weaker oil prices mean that inflationary pressures will stay high in 2019, before it falls back slightly in 2020- 21, to an annual average of 10.8 per cent, as tighter fiscal and monetary policy takes effect.”

The National Bureau of Statistics, which recently released report on the Consumer Price Index for May 2017 put the index, which gauges inflation at 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.

Estimating that, in the second half of 2017, Nigeria would post a weak economic recovery from the recession it slipped into in 2016, the EIU report noted that, “ Oil production will pick up following the resumption of supply through the Forcados export pipe line, which had been shut down by militant activity.” Nigeria, it said, remained exempt from production cuts by OPEC.

The EIU, therefore, projected that real gross domestic product (GDP) growth for the full year of 2017 will be positive, but only reaching 0.8 per cent. “A full year of oil output via Forcados will lift export production a little more in 2018, although militant activity will be an ongoing threat and the current OPEC waiver is unlikely to continue if, as we expect, the organisation attempts to maintain global production cuts throughout the year. Export growth will then be slower in 2019-21 as the elongated reform process and militant action constrain development,” it noted.

Besides, it stated that, “Elsewhere in the economy, some pro-business policy reforms and a gradual improvement in infrastructure provision will support the non-oil sector. Overall, real GDP growth should pick up to 2.1 per cent in 2018. We then expect growth to slip back to 1.8 per cent in 2019, given election-related uncertainty, compounded by an expected recession in the US and an ongoing slowdown in China that will spook global markets and lead to a moderation in oil prices.”

Nevertheless, the EIU, in this report, which is the latest on Nigeria, forecast a moderate rebound in growth, to 2.9 per cent in 2021 as local and global markets strengthen. According to the report, “The average growth rate of 2.1 per cent in 2017-21 is weak for a country with a young and expanding population and will hit living standards and job creation—issues that will feed back into threats to political and social stability.”

Similarly, the report noted that, “The federal administration will attempt to continue its expansionary fiscal stance

into 2017-18, in an effort to drag Nigeria out of the recession it entered during 2016

and with the 2019 elections firmly in mind. However, expenditure growth will be hindered by capacity constraints and an inefficient bureaucracy. Indeed, the budget for the 2017 calendar year was only signed into law in June.”

While, the EIU also projected that, “Revenue collection in 2017 will increase strongly in nominal terms as exchange-rate depreciation boosts the value of Nigeria’s oil exports in local-currency terms”, it added that, “as a proportion of GDP, revenue will creep up to just 3.5 per cent, reflecting the narrow revenue base.”

“Oil revenue will continue to grow in 2018 in line with moderate production gains, offsetting a small price drop. The non-oil tax take in 2017-18 will increase in tandem with the recovering non-oil economy and government efforts to

widen the tax base, but this will be from a miniscule base, and oil will remain the dominant revenue source. Overall, we expect the budget deficit to come in at an average of 2.3 per cent of GDP in 2017-18.”

In the same vein, the EIU also predicted that, “Monetary policy will concentrate on attempts to support economic recovery while limiting inflation and supporting the flagging currency. However, this will yield contradictory pressures in the early part of the forecast period, with the private sector desperate for cheaper credit to spur growth, but inflation running high following currency devaluation.”

It added: “On balance, interest rates will not move much, staying high as pressure on the naira continues and inflation remains high. Even as inflation subsides from 2018, interest rates will have to remain at around double-digit levels, on the assumption that the Central Bank of Nigeria (CBN) will return to its preference for currency stability. Rates are likely to fall in 2019-20 as the global economy slows and the monetary authorities attempt to stimulate activity, with Nigeria following suit, before a small increase in 2021 as economic activity picks up.”

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.


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



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



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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France, Nigeria to Build New Partnership



France is currently aiming at building a new partnership with Nigeria, with the dispatching of its Minister in charge of Foreign Trade and Attractiveness, Franck Riester, to Nigeria.

Riester, who was expected at the time of filing this report on Monday, is scheduled to visit Nigeria from 12-14 April, 2021.

A statement from the French Embassy in Nigeria said: “Franck Riester is visiting Nigeria from 12 to 14 April, a visit that follows up on the priorities set by French President Emmanuel Macron during his official visit to Nigeria in July 2018 and his desire to build a new partnership between Africa and France.

“As the largest economy in Africa and the economic engine of West Africa, Nigeria is indeed a major partner for France, the first in sub-Saharan Africa with bilateral trade amounting to a total of 4.5 billion USD in 2019 (2.3 billion USD in 2020, due to the Covid-19 pandemic).”

It disclosed that the minister will have several official meetings in Abuja and Lagos, in order to underline the importance of the bilateral economic relationship and to prepare the summit on the financing of African economies in Paris on 18 May.

It revealed that the objective of the mission is also to further strengthen the links between the French and Nigerian private sectors, and “in this regard, the minister will have in-depth discussions with the main Nigerian economic actors to strengthen bilateral cooperation and investments, both in Nigeria and in France, particularly in the logistics sector”.

It said while in the country, the minister would meet with young Nigerian entrepreneurs in the cultural and creative industries sector, to discuss the major role of their country in African creativity and the development of the African entrepreneurial ecosystem, with the support of France.

It further said: “The minister will also open the ‘Choose Africa’ conference, a €3.5 billion initiative by President Emmanuel Macron dedicated to supporting the development of start-ups and SMEs in Africa to enable the continent to benefit fully from the opportunities of the digital revolution.”

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