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Agric Leads Non-oil Export Proceeds with N105.06bn in First Quarter

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NEPC
  • Agric Leads Non-oil Export Proceeds with N105.06bn in First Quarter

Efforts by the federal government to diversify the economy and generate foreign exchange from other sources might have started yielding the needed results as the trade statistics report by the National Bureau of Statistics (NBS), revealed that the exportation of agricultural goods grew by 82 per cent in the first quarter of 2017.

The sectoral breakdown showed that proceeds from agricultural products stood at $340 million (N105.06 billion) in the first quarter of 2017, representing 39.5 per cent of total non-oil export proceeds. Food products, manufactured products and industrial goods counted for 10.8 per cent, 16.9 per cent and 10.9 per cent respectively.

However, the latest quarterly Economic Report from the Central Bank of Nigeria (CBN) puts non-oil exports provisionally at $87 million (N26.88) in Q1 2017, indicating a substantial rise of 86 per cent Quarter-on-Quarter ( q/q). However, they declined by 15 per cent Year-on-Year (y/y).

Analysts believe the q/q surge was attributed to a significant increase in receipts from food and agricultural products.

They however warned that the federal government should urgently address increasing drive by farmers to export their produce, a situation, they stressed will fuel the rise in food inflation.

According to analysts at FBN Quest, “We note that food inflation has risen steadily over the past few months (January – March 2017 inclusive). One likely reason, although anecdotal at this stage, is the increasing preference of farmers to export their produce as opposed to supplying domestically. In our view, this preference can be linked to the fact that the currency has depreciated by 56 per cent from N196/US$ on the interbank market over the period in question (i.e. Q1 2017 vs Q1 2016).”

They added: “The Federal Government of Nigeria (FGN) has announced its intention to boost export activities through payment of the export expansion grant (EEG). The EEG was suspended in 2014. However, N20bn was set aside for its revival in this year’s budget.

“The Manufacturers Association of Nigeria (MAN), following discussions with the authorities, thinks that the new grant may have lower rates than previously, be robustly designed to prevent abuse by applicants and reward exporters for value addition.”

The Minister of Agriculture, Audu Ogbe recently formally flagged off the export of yam with 72 tons of the produce exported to Europe.

Speaking during the flag off of the project at the Lilypond Container Terminal, Ijora, Lagos, Ogbe said he considers the event another giant leap in the country’s quest to grow the agricultural sector towards the diversification of the nation’s revenue base and conservation of foreign exchange by limiting citizen’s appetite for imported food.

“The 72 tonnes is going out in three containers but this is just the beginning; more will follow. There is demand in China, everywhere where Nigerians are and until we stabilise the economy through serious work like this, there will never be peace and stability,” he said.

While emphasising the need for farmers to ensure quality control, Ogbe appealed to exporters to ensure that their produce meet global standard as Nigeria can no longer afford the embarrassment of product rejection.

He said there is high demand for Nigerian yam once international standards are met; adding the federal government was working at taking yam production, processing and marketing in Nigeria to the level of that obtains in Ghana.

According to him, Ghana yam export trade employs over one million people with the country currently accounting for 94 percent of the total yam export in West Africa and covering markets in Canada, UK and Europe.

The minister also assured that the yam export drive would not lead to the product’s scarcity at home.

“I am aware that since we made the announcement that we are going to export yams, Nigerians have begun to express anxiety. I have seen people say we are hungry and you are exporting our yam. Quite frankly, I appreciate the point they are making but the truth is that the yams we export will in no way diminish the quantity at home. Most of the yams we produce rot away.

“New yam will be here in two weeks, the old stock is still there and people in the markets are getting worried but the new yam will come and nobody will touch the old one. We actually overproduce food here,” he said.

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

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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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