Inflation Rate Surges in July to 12.82% Amid High Unemployment Rate
Prices of goods and services in Nigeria rose further in the month of July, according to the latest report from the National Bureau of Statistics (NBS).
The Consumer Price Index, which measures inflation in an economy, increased by 12.82 percent year-on-year in July. This was 0.26 percent more than the 12.56 percent recorded for the month of June and represents the highest rate of increase since April 2018.
On a monthly basis, inflation rose by 1.25 percent in July, representing an increase of 0.04 percent from 1.21 percent achieved in June.
Nigeria’s inflation has now risen for 28 consecutive months despite efforts by both the Federal Government and Central Bank of Nigeria to curb the persistent increase in prices.
The Food Index rose by 15.48 percent in the same month, up from 15.18 percent filed in the month of June. The report attributed the increase to the surge in prices of Bread and cereals, potatoes, yam and other tubers, meat, fruits, oils and fats, and fish in July.
Economic uncertainties amid dwindling foreign reserves plunged Nigeria’s dollar liquidity and negatively impacted the entire economic outlook due to how the economy is structured.
Nigeria is an import-dependent economy, meaning the economy depends on foreign revenue to make available import goods or service its huge population of about 200 million people.
Therefore, the inability of businesses to access the US dollar to import necessary raw materials and offset foreign loans has led to a massive unemployment rate and a broad-based decline in consumer spending.
The nation’s unemployment rate rose from 23.1 percent in the third quarter of 2018 to 27.1 percent in the second quarter of 2020. Suggesting that businesses, especially those that depend on import goods for operations, are no longer employing or creating new jobs.
This was evident in the purchasing managers index released by the central bank last month. In the report, new job creation in the sector declined due to limited dollar availability and disruption of the global supply chain by the COVID-19 pandemic.
In turn, the scarcity plunged the Naira to a record low of N475 against the United States dollar on the black market, forcing the central bank to devalue the local currency (official rate) to N360/$ to better ease pressure on the weak foreign reserves.
All these, coupled with the lack of clear economic direction and rising debt servicing to GDP ratio negatively impacted Nigeria’s capital importation necessary to supplement foreign reserves.
Egypt Leads Nigeria, South Africa in Foreign Direct Investment
The United Nations Trade Association has Nigeria recorded a total of $2.6 billion in Foreign Direct Investment (FDI) in 2020, below the $3.3 billion posted in the preceeding year.
South Africa, Africa’s most industrialised nation, reported $2.5 billion during the same year, slightly below Africa’s largest economy and 50 percent below the $4.6 billion attracted a year earlier.
The report also noted that Africa recorded a total of $38 billion FDI in the same year, representing a 18 percent decline from the $46 billion posted in the corresponding year of 2019.
However, Egypt led Nigeria and South Africa with $5.5 billion FDI, an increase of 38 percent from the preceeding year.
The report read in part, “FDI flows to Africa declined by 18% to an estimated $38 billion, from $46 billion in 2019. Greenfield project announcements, an indication of future FDI trends, fell 63% to $28 billion, from $77 billion in 2019. The pandemic’s negative impact on FDI was amplified by low prices of and low demand for commodities.”
UNCTAD also noted that global foreign direct investment declined by 42 percent to an estimated $859 billion, down from $1.5 trillion in 2019.
“The decline was concentrated in developed countries, where FDI flows fell by 69 percent to an estimated $229 billion. Flows to Europe dried up completely to -4 billion (including large negative flows in several countries). A sharp decrease was also recorded in the United States (-49%) to $134 billion.”
FG to Partly Fund Six Rail Projects Connecting All Regions
The Federal Government will pay a total sum of N71 billion to partly fund six rail projects connecting all regions of the country.
In the report obtained from the Federal Ministry of Finance, Budget and National Planning, the six rail projects marked for development this year are Lagos-Kano rail line (ongoing), Calabar-Lagos (ongoing), and Ajaokuta-Itakpe-Aladja (Warri).
Others are the Port Harcourt-Maiduguri railway, the new Kano-Katsina-Jibiya-Maradi line in Niger Republic and the Abuja-Itakpe and Aladja-Warri Port and refinery/Warri new harbour.
The Buhari administration will also spend N15.1 billion on the development of safety and security of critical projects, airport certification, runway construction, terminal building, among others in the aviation sector in 2021.
Last week, Rotimi Amaechi, Minister of Transportation, said the Lagos-Kano line would be connected from the Ibadan end of the Lagos-Ibadan railway and would cost $5.3 billion.
“We are waiting for the Chinese government and bank to approve the $5.3bn to construct the Ibadan-Kano. What was approved a year ago was the contract,” the minister said.
He added, “The moment I announced that the Federal Government had awarded a contract of $5.3bn to CCECC (China Civil Engineering and Construction Corporation) to construct Ibadan-Kano, people assumed the money had come in; no.
“We have not got the money, which is a year after we applied for the loan. We have almost finished the one of Lagos-Ibadan. If we don’t get the loan now, we can’t commence.”
FG Launches E-ticketing Platform to Deepen Train Usage and Convenience
In a bid to improve the usage and enhance the convenience of train transport in Nigeria, the Federal Government on Thursday announced the launching of the Electronic Ticketing platform for the Kaduna-Abuja rail services.
The N900 million E-ticketing platform was introduced by the Minister of Transportation, Chibuike R. Amaechi, and the Nigerian Railway Corporation.
Amaechi said the new platform would improve efficiency, promote accountability, reduce leakage and enhance economic growth, as well as save time.
The E-ticketing platform was a Public-Private Partnership project done in conjunction with Secure ID Solutions, who provide and would manage the system for 10 years in an effort to recoup its investment before the Nigerian Railway Corporation take charge.
Kofo Akinkugbe, the Chief Executive Officer, Secure ID Solutions, said as the new E-platform issued 25,000 tickets after a successful pilot test on Thursday.
Potential Travelers can book via three ways:
1. Mobile app
3. POS or Cash at the station
A validator would be used to scan the ticket barcode to ascertain its authenticity before boarding.
Amaechi further announced that self-service ticket vending machines at various train stations would be introduced soon.
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