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FG’ll Complete Lagos-Ibadan Rail Project Payment Next Week – Minister

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Railway Projects
  • FG’ll Complete Lagos-Ibadan Rail Project Payment Next Week

The Federal Government will next week complete payment for the construction of the new Lagos-Ibadan rail line being handled by the China Civil Engineering Construction Corporation, the Minister of Transportation, Mr. Rotimi Amaechi, has said.

Amaechi, who spoke in Lagos on Tuesday during the inspection the project, reiterated that it would be completed in December 2018.

He said, “There are no funding challenges because they have their money. We have paid part of the counterpart funds and whatever is remaining, we will pay in the next one week.

“When we sign, they will collect their money from the China-Exim Bank. So, in terms of funding, there is no problem. In terms of capacity, they have to deliver and by next year June-July, we should be able to deliver the central line which starts from Itakpe to Warri.”

The new Lagos-Ibadan rail line with extension to Lagos Port Complex, Apapa, Lagos State, is expected to cost N458bn and will span 156.65 kilometres.

The agreement between Nigeria and the CCECC for the construction of the standard gauge line was signed in July 2016. The new rail line will eventually be taken to Kano and linked up with the already completed and running Abuja-Kaduna standard gauge rail track.

Amaechi also disclosed that President Muhammadu Buhari had approved the sourcing of loan for the construction of another rail line from Port Harcourt to Maiduguri, adding that the project would cover both the South-East and the North-East.

He said that the rail project from Lagos to Kano was capable of generating 250,000 jobs.

“You can imagine how many people they are already employing. More people will be employed as the rains stop. We are creating jobs and paying salaries through this process and the government’s intention is to ensure that all state capitals are covered,” the minister said.

He added, “The directive of the President is that we should ensure that the whole country can be accessed by rail. You understand that the economy cannot run without logistics; and logistics is transportation; for him, the roads will last longer if we transfer freight from road to railway.

“This is part of that directive that we should at least ensure the construction of the Lagos to Ibadan rail while we are negotiating for the Ibadan to Kano part of it and at the same time negotiating for the loan for Lagos-Calabar rail line.”

Amaechi said that the steel needed for rail could not be found in Nigeria and that was why the country was importing it.

The Chief Project Coordinator, CCECC, Mr. Leo Yin, said 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 that only 85 per cent of the payment had been released.

He noted that the delay in the release of the counterpart funds had been a major challenge to the execution of the project.

According to him, the first batch of 6,000 tonnes of rail out of 45,000 tonnes for the project will be ready for shipment to Nigeria from China next week.

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

The committee members led by Senators Gbenga Ashafa (Land Transport) and Shehu Sani (Local and Foreign Debts had visited the project site at Agege, Lagos.

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

MPC Meeting on July 22-23 to Tackle Inflation as Rates Set to Rise Again

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Interbank rate

The Monetary Policy Committee (MPC) is set to convene on July 22-23, 2024, amid soaring inflation and economic challenges in Nigeria.

Led by Olayemi Cardoso, the committee has already increased interest rates three times this year, raising them by 750 basis points to 26.25 percent.

Nigeria’s annual inflation rate climbed to 34.19 percent in June, driven by rising food prices. Despite these pressures, the Central Bank of Nigeria (CBN) projects that inflation will moderate to around 21.40 percent by year-end.

Market analysts expect a further rate hike as the committee seeks to rein in inflation. Nabila Mohammed from Chapel Hill Denham anticipates a 50–75 basis point increase.

Similarly, Coronation Research forecasts a potential rise of 50 to 100 basis points, given the recent uptick in inflation.

The food inflation rate reached 40.87 percent in June, exacerbated by security issues in key agricultural regions.

Essential commodities such as millet, garri, and yams have seen significant price hikes, impacting household budgets and savings.

As the MPC meets, the National Bureau of Statistics is set to release data on selected food prices for June, providing further insights into the inflationary trends affecting Nigerians.

The upcoming MPC meeting will be crucial in determining the trajectory of Nigeria’s monetary policy as the government grapples with economic instability.

The focus remains on balancing inflation control with economic growth to ensure stability in Africa’s largest economy.

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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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