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152 Million Nigerians Live on Less Than $2/day –AfDB

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Afdb - Investors King
  • 152 Million Nigerians Live on Less Than $2/day –AfDB

About 152 million Nigerians live on less than $2 a day, representing about 80 per cent of the country’s estimated 190 million population, the African Development Bank has said.

According to the AfDB, which stated this in its 2018 Nigeria Economic Outlook, the level of poverty in the country is unacceptably high.

The Nigeria Economic Outlook is part of larger report, the African Economic Outlook, published by the bank on an annual basis.

The report stated, “Nigeria still faces significant challenges, including foreign exchange shortages, disruptions in fuel supply, power shortages and insecurity in some parts of the country.

“Revenue mobilisation efforts are insufficient; at five per cent, Value Added Tax rates are among the lowest in the world, and revenue administration is inefficient.

“Poverty is unacceptably high; nearly 80 per cent of Nigeria’s 190 million people live on less than $2 a day.”

The report noted that recovery in oil prices and production would help drive growth and provide fiscal space as the government pursued important structural reforms to diversify the economy.

According to the AfDB, faithful implementation of the Economic Recovery and Growth Plan (2017–20) holds the promise of weaning the nation off its dependence on oil.

The plan focuses on six priority sectors: agriculture; manufacturing; solid minerals, including iron, gold, and coal; services, including Information and Communications Technology, financial services, tourism, and creative industries; construction and real estate; and oil and gas.

The government had produced specific programmes for each sector and defined broader growth policy enablers to drive the plan, the report stated.

“The outlook beyond is positive, with growth projected at 2.1 per cent in 2018 and 2.5 per cent in 2019. This outlook is anchored on higher oil prices and production, as well as stronger agricultural performance.

“Oil prices rebounded to an average of $52 per barrel (Brent crude) in 2017 and are projected to reach $54 in 2018, up from $43 per barrel in 2016.

“Oil production also increased from 1.45 million barrels per day in the first quarter of 2017 to 2.03 million in the third quarter of 2017 following de-escalation of hostilities in the delta region and is expected to remain at the same level in 2018 and 2019, in tandem with the Organisation of the Petroleum Exporting Countries production restrictions.”

The AfDB noted that fiscal policy remained expansionary in 2017 as in 2016. Although total spending as a percentage of the GDP declined from 13 per cent in 2014 to 10.3 per cent in 2017, revenues declined more sharply, from 11.4 per cent to 5.6 per cent.

It said, “The budget deficit was estimated at 4.8 per cent in 2017, up from 4.7 per cent in 2016, and is projected to improve to 4.3 per cent in 2018 and 4.1 per cent in 2019, as revenue performance improves.

“At 14 per cent, unemployment remained high in 2017, the same as in 2016, and is expected to decline only slightly in 2018, to 13.5 per cent, as recovery eases production constraints in manufacturing and agriculture.

“Monetary policy continued to contract in 2017 and is expected to remain so in 2018; the policy rate has been kept at 14 per cent since July 2016 to support the naira and control inflation. Inflation has remained stubbornly high and in the double digits.”

The report added that foreign currency liquidity had improved following the introduction of administrative measures by the Central Bank since early 2017.

The measures, it stated, included a trading window for portfolio investors at market-determined rates, and the introduction of the Nigerian Autonomous Foreign Exchange Rate Fixing, which allowed commercial banks to quote forex rates that were close to parallel market rates.

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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