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Ambode Seeks Improved Infrastructure to Boost Exports

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  • Ambode Seeks Improved Infrastructure to Boost Exports

The Governor of Lagos State, Akinwunmi Ambode, has said there is an urgent need for the nation’s infrastructure to be improved upon so as to boost exports.

Ambode said the state had decided to focus on the exportation of coconut, fish and vegetables, adding that it was high time the country diversified from the oil sector.

The governor spoke in Lagos on Thursday at the 2nd National Committee Meeting on Export Promotion of the National Economic Council.

He stated that the export inflow at the Lekki Free Zone in the Ibeju Lekki area of the state had been projected to hit over $6bn (about N2.159tn) by 2020.

Ambode explained that it was important for the country to put in place infrastructure and other initiatives to support non-oil sectors with a view to preparing them for export.

He said, “Our efforts in this area include the development of Lekki Free Zone as a one-stop export processing zone, and we are happy to report that we have made tremendous progress in this particular export zone.

“Just to give you a clearer picture of what we are saying, at the end of 2020 when the investment of the Dangote Industries and the other deep seaport that we are putting in that place will fully come on stream, the export inflows that we are projecting for that place is over $6bn and that is just the way to go.”

The governor added that through the export initiatives being monitored by the Nigerian Export Promotion Council, the state government had commenced the process of developing three key commodities – coconut, fish and vegetables – in which the state had comparative and competitive advantage.

Ambode stated, “We plan to facilitate the development of these commodities into exportable products. Our export promotion initiatives also include export aggregators designed to boost production capacities of our indigenous micro, small and medium industries. The objective is to create locally made products and services that not only satisfy the local market, but meet competitive export demand.

“We have also developed enterprise zones, small-scale industrial estates and light industrial parks in different parts of this state to provide business accommodation and also factory spaces, support made-in-Lagos campaign and to enhance market access for our MSMEs.”

He said the initiatives were some of the programmes of the state government to support the zero oil plan of the Federal Government.

While alluding to the visit of French President, Emmanuel Macron, to the Afrika Shrine in Ikeja, the governor added that the development signposted the need for the country to develop other sectors of the economy, especially the creative industry, among others.

The governor noted, “For me, the visit is clear that Afrobeat is a product that we can export but not only that, what about other things such as intellectual property and others that we need to harness to create a final product of our export policy? What about fashion? What about arts? There are lots of products that we can export beyond agriculture.

“However, before we can do that, we must put in place the infrastructure and the framework to support these industries. The message here is that let us expand the scope of our export considerations and increase the wealth of our nation.”

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

IMF Urges Nigeria to End Fuel and Electricity Subsidies

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In a recent report titled “Nigeria: 2024 Article IV Consultation,” the International Monetary Fund (IMF) has advised the Nigerian government to terminate all forms of fuel and electricity subsidies, arguing that they predominantly benefit the wealthy rather than the intended vulnerable population.

The IMF’s recommendation comes amidst Nigeria’s struggle with record-high inflation and economic challenges exacerbated by the COVID-19 pandemic.

The report highlights the inefficiency and ineffectiveness of subsidies, noting that they are costly and poorly targeted.

According to the IMF, higher-income groups tend to benefit more from these subsidies, resulting in a misallocation of resources. With pump prices and electricity tariffs currently below cost-recovery levels, subsidy costs are projected to increase significantly, reaching up to three percent of the gross domestic product (GDP) in 2024.

The IMF suggests that once Nigeria’s social protection schemes are enhanced and inflation is brought under control, subsidies should be phased out.

The government’s social intervention scheme, developed with support from the World Bank, aims to provide targeted support to vulnerable households, potentially benefiting around 15 million households or 60 million Nigerians.

However, concerns persist regarding the removal of subsidies, particularly in light of the recent announcement of an increase in electricity tariffs by the Nigerian Electricity Regulatory Commission (NERC).

While the government has taken steps to reduce subsidies, including the removal of the costly petrol subsidy, there are lingering challenges in fully implementing these reforms.

Nigeria’s fiscal deficit is projected to be higher than anticipated, according to the IMF staff’s analysis.

The persistence of fuel and electricity subsidies is expected to contribute to this fiscal imbalance, along with lower oil and gas revenue projections and higher interest costs.

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IMF Warns of Challenges as Nigeria’s Economic Growth Barely Matches Population Expansion

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The International Monetary Fund (IMF) has said Nigeria’s growth prospects will barely exceed its population expansion despite recent economic reforms.

Axel Schimmelpfennig, the IMF’s mission chief to Nigeria, who explained the risks to the nation’s economic outlook during a virtual briefing, acknowledged the strides made in implementing tough economic reforms but stressed that significant challenges persist.

The IMF reaffirmed its forecast of 3.3% economic growth for Nigeria in the current year, slightly up from 2.9% in 2023.

However, Schimmelpfennig revealed that this growth rate merely surpasses population dynamics and signaled a need for accelerated progress to enhance living standards significantly.

While Nigeria has received commendation for measures such as abolishing fuel subsidies and reforming the foreign-exchange regime under President Bola Tinubu’s administration, these reforms have not come without costs.

The drastic depreciation of the naira by 65% has fueled inflation to its highest level in nearly three decades, exacerbating the cost of living for many Nigerians.

The IMF anticipates a moderation of Nigeria’s annual inflation rate to 24% by the year’s end, down from the current 33.2% recorded in March.

However, the organization cautioned that substantial challenges persist, particularly in addressing acute food insecurity affecting millions of Nigerians with up to 19 million categorized as food insecure and a poverty rate of 46% in 2023.

Moreover, the IMF emphasized the importance of maintaining a tight monetary policy stance to curb inflation, preserve exchange rate flexibility, and bolster reserves.

It raised concerns about proposed amendments to the law governing the central bank, fearing that such changes could undermine its autonomy and weaken the institutional framework.

Looking ahead, Nigeria faces several risks, including potential shocks to agriculture and global food prices, which could exacerbate food insecurity.

Also, any decline in oil production would not only impact economic growth but also strain government finances, trade, and inflationary pressures.

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Nigeria’s Cash Transfer Scheme Shows Little Impact on Household Consumption, Says World Bank

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The World Bank has said Nigeria’s conditional cash transfer scheme aimed at bolstering household consumption and financial inclusion is largely ineffective.

Despite significant investment and efforts by the Nigerian government, the program has shown minimal impact on the lives of its beneficiaries.

Launched in collaboration with the World Bank in 2016, the cash transfer initiative was designed to provide financial support to vulnerable Nigerians as part of the National Social Safety Nets Project.

However, the latest findings suggest that the program has fallen short of its intended goals.

The World Bank’s research revealed that the cash transfer scheme had little effect on household consumption, financial inclusion, or employment among beneficiaries.

Also, the program’s impact on women’s employment was noted to be minimal, highlighting systemic challenges in achieving gender parity in economic opportunities.

Despite funding a significant portion of the cash transfer program, the World Bank found no statistical evidence to support claims of improved financial inclusion or household consumption.

The report underscored the need for complementary interventions to generate sustainable improvements in households’ self-sufficiency.

According to the document, while there were some positive outcomes associated with the cash transfer program, such as increased household savings and food security, its overall impact remained limited.

Beneficiary households reported improvements in decision-making autonomy and freedom of movement but failed to see substantial gains in key economic indicators.

The findings come amid ongoing scrutiny of Nigeria’s social intervention programs, with concerns raised about transparency, accountability, and effectiveness.

The cash transfer scheme, once hailed as a critical tool in poverty alleviation, now faces renewed scrutiny as stakeholders call for comprehensive reforms to address its shortcomings.

In response to the World Bank’s report, government officials have emphasized their commitment to enhancing social safety nets and improving the effectiveness of cash transfer programs.

Minister of Finance and Coordinating Minister of the Economy, Wale Edun, reaffirmed the government’s intention to restart social intervention programs soon, following the completion of beneficiary verification processes.

As Nigeria grapples with economic challenges exacerbated by the COVID-19 pandemic and other structural issues, the need for impactful social welfare initiatives has become increasingly urgent.

The World Bank’s assessment underscores the importance of evidence-based policy-making and targeted interventions to address poverty and inequality in the country.

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