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Ajaokuta-Warri Rail Ready in June 2018, Says FG

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rail project- Investorsking
  • Ajaokuta-Warri Rail Ready in June 2018

The Federal Government on Monday announced that commercial activities will begin on the Itakpe-Ajaokuta-Warri rail line in June next year.

According to the government, the rail line connecting about five states has been abandoned for over 30 years.

The Minister of Transportation, Rotimi Amaechi, told journalists during an inspection tour of rail lines that the Itakpe-Ajaokuta-Warri rail project had been budgeted for by the current administration.

He said the contract had been awarded in two phases, adding, “The first one was awarded in 1987. We have a directive from the Federal Government that we must complete the rail line and it was put in this year’s budget. By the end of December last year, we had disbursed some money to the contractors, Julius Berger and others, to commence work. So, we have come to see how far.

“We are constructing bridges too in order to reduce contact with human beings who would try to cross the track because this is a speed lane. Once it starts, it is going to be 120 kilometres to 150 kilometres per hour and the chances of killing human beings are going to be higher than the narrow gauge because it is a standard gauge.”

Amaechi also said, “This contract, depending on who you are talking to, some will say 30 years while others will say 34 years, but whatever year it is, we need to get this place functioning and the directive of the Federal Government is that we should start and our target is that by June, commercial activities will resume.”

He said the government might award some vandalised portions of the rail line to the China Civil Engineering Construction Corporation, adding, “We are hoping that the CCECC would be able to finish before May 2018.”

The minister said, “Also, there are no stations; so, the CCECC will have to build stations. Julius Berger was handling the project before but it said it could not continue because it had demobilised and taken all its equipment back to France.

“They (Julius Berger) can’t start bringing equipment back again because it would cost us more than to take a contractor that is in Nigeria and has all the equipment and can fix it because standard gauge is standard gauge anywhere; there is no magic about it.”

Amaechi said Julius Berger would complete all other civil work it started and that the firm was on site to complete the highlighted portions.

On the cost implication, he said, “I can’t tell you about that because it was awarded in 1987 and later in 1994 and they were in phases. What is important now is that the Federal Government is determined to complete it so that we can have train on this track by June next year.”

Meanwhile, the construction work on the Lagos-Ibadan standard gauge rail line is set to begin soon as the first batch of 6,000 tonnes of rails out of 45,000 for the project will be ready for shipment to Nigeria from China next week.

The Chief Project Coordinator, Mr. Leo Yin, said this in Lagos on Monday during a visit to the Nigerian Railway Corporation headquarters by the Senate Committees on Land Transport, and Local and Foreign Debts.

He also said that 700 workers out of 7,000 workforce required for the project had been mobilised.

Yin, who said only 85 per cent of advanced payment had been released, noted that the delay in the release of the counterpart funding had been a major challenge to the execution of the project.

The committee chairmen, Senators Gbenga Ashafa (Land Transport) and Shehu Sani (Local and Foreign Debts), who visited the site at Agege alongside other members of the committees, said they were impressed with the progress of work.

The committees, however, directed the Ministry of Transportation to submit to the secretariats detailed work plan for the project with feasible timelines for actualising the different stages of the work.

The Federal Government, which awarded the N458bn project to the CCECC, had earlier given the end of 2018 for new rail line to commence operation. The plan is to connect it to the recently inaugurated Abuja-Kaduna rail and take the double line to Kano.

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 Growth Forecast Lowered to 3% for 2025, Higher than Most Emerging Markets

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IMF global - Investors King

The International Monetary Fund (IMF) has projected a 3% growth rate for Nigeria in 2025, slightly down from the 3.1% forecasted for 2024.

Despite this slight decline, Nigeria’s projected growth remains higher than that of many emerging markets as detailed in the IMF’s latest World Economic Outlook released on Tuesday.

In comparison, South Africa’s economy is expected to grow by 1.2% in 2025, up from 0.9% this year. Brazil’s growth is projected at 2.4% from 2.1% in 2024, and Mexico’s growth forecast stands at 1.6% for 2025, down from 2.2% in 2024.

However, India is anticipated to see a robust growth of 6.5% in 2025, although this is slightly lower than the 7% forecast for 2024.

The IMF’s projections come as Nigeria undertakes significant monetary reforms. The Central Bank of Nigeria has been working on clearing the foreign exchange backlog, and the federal government recently removed petrol subsidies.

These reforms aim to stabilize the economy, but the country continues to grapple with high inflation and increasing poverty levels, which pose challenges to sustained economic growth.

Sub-Saharan Africa as a whole is expected to see an improvement in growth, with projections of 4.1% in 2025, up from 3.7% in 2024. This regional outlook indicates a modest recovery as economies adjust to global economic conditions.

The IMF report underscores the need for cautious monetary policy. It recommends that central banks in emerging markets avoid easing their monetary stances too early to manage inflation risks and sustain economic growth.

In cases where inflation risks have materialized, central banks are advised to remain open to further tightening of monetary policy.

“Central banks should refrain from easing too early and should be prepared for further tightening if necessary,” the report stated. “Where inflation data encouragingly signal a durable return to price stability, monetary policy easing should proceed gradually to allow for necessary fiscal consolidation.”

The IMF also highlighted the importance of avoiding fiscal slippages, noting that fiscal policies may need to be significantly tighter than previously anticipated in some countries to ensure economic stability.

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Economy

Nigeria’s Inflation Rises to 34.19% in June Amid Rising Costs

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Food Inflation - Investors King

Nigeria’s headline inflation rate surged to 34.19% in June 2024, a significant increase from the 33.95% recorded in May.

This rise highlights the continuing pressures on the nation’s economy as the cost of living continues to climb.

On a year-on-year basis, the June 2024 inflation rate was 11.40 percentage points higher than the 22.79% recorded in June 2023.

This substantial increase shows the persistent challenges faced by consumers and businesses alike in coping with escalating prices.

The month-on-month inflation rate for June 2024 was 2.31%, slightly up from 2.14% in May 2024. This indicates that the pace at which prices are rising continues to accelerate, compounding the economic strain on households and enterprises.

A closer examination of the divisional contributions to the inflation index reveals that food and non-alcoholic beverages were the primary drivers, contributing 17.71% to the year-on-year increase.

Housing, water, electricity, gas, and other fuels followed, adding 5.72% to the inflationary pressures.

Other significant contributors included clothing and footwear (2.62%), transport (2.23%), and furnishings, household equipment, and maintenance (1.72%).

Sectors such as education, health, and miscellaneous goods and services also played notable roles, contributing 1.35%, 1.03%, and 0.57% respectively.

The rural and urban inflation rates also exhibited marked increases. Urban inflation reached 36.55% in June 2024, a rise of 12.23 percentage points from the 24.33% recorded in June 2023.

On a month-on-month basis, urban inflation was 2.46% in June, slightly higher than the 2.35% in May 2024. The twelve-month average for urban inflation stood at 32.08%, up 9.70 percentage points from June 2023’s 22.38%.

Rural inflation was similarly impacted, with a year-on-year rate of 32.09% in June 2024, an increase of 10.71 percentage points from June 2023’s 21.37%.

The month-on-month rural inflation rate rose to 2.17% in June, up from 1.94% in May 2024. The twelve-month average for rural inflation reached 28.15%, compared to 20.76% in June 2023.

The rising inflation rates pose significant challenges for the Central Bank of Nigeria (CBN) as it grapples with balancing monetary policy to rein in inflation while supporting economic growth.

The ongoing pressures from high food prices and energy costs necessitate urgent policy interventions to stabilize the economy and protect the purchasing power of Nigerians.

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Economy

Inflation to Climb Again in June, but at a Reduced Pace, Predicts Meristem

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Nigeria's Inflation Rate - Investors King

As Nigeria awaits the release of the National Bureau of Statistics’ report on June 2024 inflation, economic analysts project that while inflation will continue its upward trajectory, the pace of increase will moderate.

This comes after inflation rose to a 28-year high of 33.95% in May, up from 33.69% in April.

Meristem, a leading financial services company, has forecasted that June’s headline inflation will rise to 34.01%, a slight increase from May’s figure.

The firm attributes this persistent inflationary pressure to ongoing structural challenges in agriculture, high transportation costs, and the continuous depreciation of the naira.

Experts have highlighted several factors contributing to the inflationary trend. Insecurity in food-producing regions and high transportation costs have disrupted supply chains, while the depreciation of the naira has increased importation costs.

In May, food inflation grew at a slower pace, reaching 40.66%, but challenges in the agricultural sector, such as the infestation of tomato leaves, have led to higher prices for staples like tomatoes and yams.

Meristem predicts that food inflation will persist in June, driven by these lingering challenges. Increased demand during the Eid-el-Kabir celebration and rising importation costs are also expected to keep food prices elevated.

Core inflation, which excludes volatile items like food and energy, was at 27.04% in May. Meristem projects it to rise to 27.30% in June.

The firm notes that higher transportation costs and the depreciation of the naira will continue to push core inflation up.

However, they also anticipate a month-on-month moderation in the core index due to a relatively stable naira exchange rate during June, compared to a more significant depreciation in May.

Cowry Assets Management Limited has projected an even higher headline inflation figure of 34.25% for June, citing similar concerns.

The firm notes that over the past year, food prices in Nigeria have soared due to supply chain disruptions, currency depreciation, and climate change impacts on agriculture.

This has made basic staples increasingly unaffordable for many Nigerians, stretching household budgets.

As inflation continues to rise, analysts believe the Central Bank of Nigeria (CBN) will likely hike the benchmark lending rate again.

The CBN’s Monetary Policy Committee (MPC) has raised the Monetary Policy Rate (MPR) by 650 basis points this year, bringing it to 26.25% as of May 2024.

At a recent BusinessDay CEO Forum, CBN Governor Dr. Olayemi Cardoso emphasized the MPC’s commitment to tackling inflation, stating that while the country needs growth, controlling inflation is paramount.

“The MPC is not oblivious to the fact that the country does need growth. If these hikes hadn’t been done at the time, the naira would have almost tipped over, so it helped to stabilize the naira. Interest rates are not set by the CBN governor but by the MPC committee composed of independent-minded people. These are people not given to emotion but to data. The MPC clarified that the major issue is taming inflation, and they would do what is necessary to tame it,” Cardoso said.

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