Economy

Afrinvest Forecasts 2.5% Economic Growth in 2019

Published

5 years ago

January 21, 2019

Afrinvest Forecasts 2.5% Economic Growth in 2019

AFRINVEST (West Africa) Limited has predicted an improved but sluggish growth rate of 2.5 per cent for the 2019 financial period.

The firm stated this in its report titled, On the Precipice, “The Nigerian economy and financial market/ 2018 review & 2019 outlook.”

Part of the report read, “In our ‘base case’ for 2019, we do not expect a marked turnaround in the economy. We estimate that growth will improve to 2.5 per cent from 1.9 per cent in 2018 based on the expectation of improved oil GDP and sustained expansion in the non-oil sector. This forecast implies that with the population growing at 2.6-3.0 per cent, Nigerians are projected to remain poorer on the average in 2019.”

It stated that it was optimistic that a strong festive season and better agriculture output could push Nigeria past the finish line.

“Our growth expectations in 2019 is somewhat linked to the outcome of the general elections,” it added.

While modelling three scenarios to capture different effects, it stated that the “base case assumes that President Muhammadu Buhari wins the election and there is policy continuity. The optimistic case is that regardless of the winner, the government implements reforms to attract investment; and the pessimistic case assumes that political risks intensify and lead to continued violence in the Middle-Belt, North-East and the Niger-Delta.”

While noting that 2018 was a year of two distinct paths for growth, it stated that overall, the pace of growth remained slow and uneven, coming below the long-term growth rate of six to seven per cent and the pre-recession level of 2.8 per cent.

It stated, “Real GDP growth came in at 1.9 per cent in Q1:2018, below our estimate, due to a poor performance in the service sector and a slower expansion in agriculture. In Q2:2018, growth further moderated to 1.5 per cent due to both a 5.0 per cent contraction in oil output and a slump in agriculture growth to 1.2 per cent – the lowest in more than a decade.

“This slowdown in agriculture output was due to the herder-farmer conflict in the middle-belt which led to the destruction of livestock and poor harvests of crops.”

Afrinvest added that the contraction in the oil sector in Q2:2018 was mainly due to a reduction in output by 160,000b/d to 1.8mb/d.

Elsewhere, growth was not broad-based as sectors such as trade and real estate remained weak due to fragile consumer spending, it added.

Meanwhile, it stated that manufacturing growth was soft and volatile.

The report noted that, “In Q3:2018, growth came in better at 1.8 per cent but this was slower than the 2.1 per cent we expected. Oil output contracted by 2.9 per cent and agriculture growth remained weak at 1.9 per cent in Q3:2018. This prompted a revision of our forecast of FY:2018 growth to 1.9 per cent from 2.1 per cent.”

To achieve this growth target, it said, it believed the economy would expand by at least 2.6 per cent in Q4:2018.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, 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 Q3 Foreign Trade Skyrockets: Crude Oil Revenue Surges by 83.23% to N8.54tn

Published

10 hours ago

December 5, 2023

Investors King

Nigeria’s foreign trade expanded by 53.16% year-on-year to N18.80 trillion in the third quarter (Q3) of 2023.

The surge was primarily propelled by an impressive 83.23% spike in crude oil revenue to N8.54 trillion, a substantial increase from N4.66 trillion recorded in the same quarter of the previous year.

This was reported by the National Bureau of Statistics (NBS) in its ‘Foreign Trade in Goods Statistics (Q3 2023)’ that highlighted the nation’s trade balance and economic outlook.

The report noted that total exports rose by 60.78% to N10.35 trillion.

Mr. Gbenga Komolafe, CEO of the Nigerian Upstream Petroleum Regulatory Commission, emphasized the importance of viability in retaining exploration leases.

He said, “Based on PIA (Petroleum Industry Act), the commission is focused on delivering value for the nation so only firms that are technically and financially viable will keep their leases.”

The report outlined the dominance of crude oil in exports, constituting 82.50% of total exports, while non-crude oil products contributed N677.57 billion or 6.55% of total exports. The positive trade balance stood at N1.89 trillion.

The top five export destinations for Nigeria included Spain, India, The Netherlands, Indonesia, and France, collectively accounting for 45.98% of total export value.

On the import side, China, Belgium, India, Malta, and the United States were the major sources, comprising 57.18% of total imports, valued at N4.84 trillion.

While these promising trade figures indicate a robust economic performance, challenges in the oil sector persist, with the country’s crude oil production below the 2023 target.

The government’s commitment to increasing production aims to boost revenue and fund strategic national projects, as highlighted by Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri.

The surge in exports, possibly linked to the recent naira devaluation, underscores the intricate relationship between economic policies and trade dynamics, shaping Nigeria’s economic trajectory.

Economy

Federal Government to Earn Over $500 Million in INTELS Deal

Published

2 days ago

December 4, 2023

Investors King

The Nigerian Ports Authority (NPA) has unveiled an agreement with INTELS Nigeria Limited that is set to bring substantial financial gains to the federal government.

The comprehensive deal, negotiated over weeks, not only resolves a contentious pilotage contract but also promises to bolster Nigeria’s coffers by over $500 million.

The accord encompasses a multifaceted approach to financial benefits, including an interest waiver of $193,317,556 and a significant reduction in the interest rate on outstanding debt.

The debt, originally at a six-month London Interbank Offer Rate (LIBOR) + 6.5%, has been revised to a more favorable six months Secured Overnight Financing Rate (SOFR) + 3%.

Such financial restructuring is anticipated to save the government a staggering $326.8 million over the next 15 years.

NPA, in a detailed breakdown, elucidated that the agreement further involves spreading the debt repayment over 15 years, with the initial two years being interest-free.

Additionally, there is a commendable reduction in the commission percentage, dropping from 28% to 24.5%, a move that aligns with the government’s commitment to optimizing financial resources.

The Minister of Marine and Blue Economy, Adegboyega Oyetola, received accolades for his tireless efforts in steering the negotiations to a successful conclusion. NPA expressed gratitude for his commitment to putting Nigeria first, emphasizing the critical role played by the minister in resolving the long-standing INTELS dispute.

Former Vice President Atiku Abubakar, however, denied benefiting from the reinstatement of INTELS contracts.

He clarified that his divestment from the company remains unchanged, emphasizing that he cannot be a beneficiary of the restored pilotage monitoring business.

NPA’s move to ensure a resolution with INTELS is not only seen as a financial triumph but also as a strategic step towards fostering economic stability.

The agreement is poised to have a positive ripple effect on revenue generation and underscores the government’s commitment to diplomatic and economically viable solutions.

Economy

Nigeria’s Refinery Output Plummets by 92% in a Decade

Published

2 days ago

December 4, 2023

Investors King

Nigeria’s local refineries recorded a 92% decline in output over the past decade, according to the Statistical Review of the World Energy 2023 report.

The data unveils a drastic drop in refining capacity, plummeting from 92,000 barrels per day (bpd) in 2012 to a mere 6,000 bpd in 2022.

This disconcerting revelation is echoed in the Organisation of the Petroleum Exporting Countries’ (OPEC) Annual Statistical Bulletin 2023, which underscores an 81% reduction in Nigeria’s crude oil refining capacity, falling from 33,000 bpd in 2018 to 6,000 bpd in 2022.

Despite owning four government-owned refineries, located in Port Harcourt, Warri, and Kaduna, with a collective capacity of around 4.45 million bpd, Nigeria continues to heavily rely on importing refined petroleum products.

This dependency raises questions about the nation’s resilience and self-sufficiency in the energy sector.

Minister of State for Petroleum, Heineken Lokpobiri, had previously announced plans for the Port Harcourt refinery to commence operations by the end of the current year, with the Warri and Kaduna refineries expected to follow suit in early 2024.

This revelation comes amid rising concerns over Nigeria’s continued reliance on importing refined petroleum products, even with substantial investments in refinery infrastructure.

The decline in local refining exacerbates the challenge, leading to soaring petrol prices and a strain on the nation’s economic landscape.

Industry experts stress the urgency of revitalizing local refineries, emphasizing that dependence on imports is neither sustainable nor conducive to the country’s economic well-being.

As Nigeria grapples with the complexities of its energy dynamics, the impending revival of local refineries stands out as a crucial solution to navigate these challenging times.