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World Bank Raises Concern Over Inflation in Nigeria in 2022

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The World Bank has said Nigeria may have one of the highest inflation rates globally in 2022, with increasing prices diminishing the welfare of Nigerian households.

In the November 2021 edition of the Nigeria Development Update prepared by the global financial institution, Nigeria is projected to have one of the highest inflation rates globally and the seventh-highest among Sub-Saharan African countries in 2022

“In 2022, Nigeria is expected to have one of the highest inflation rates in the world and the seventh highest in Sub-Saharan Africa,” it said.

“High inflation is frustrating Nigeria’s economic recovery and eroding the purchasing power of the most vulnerable households. In the absence of measures to contain inflation, rising prices will continue to diminish the welfare of Nigerian households.”

The bank further highlighted the adverse effects of inflation on Nigeria, which include pushing eight million Nigerians into poverty, and the possible disruption of consumption, investment and saving decisions, among other consequences.

The position of the World Bank is in agreement with the concern of many analysts and concerned Nigeria that the complete removal of fuel subsidy as already announced by the Federal Government will cause severe hardship and will lead to inflation in the country this year.

The Founder and President, Moahz Group Of Companies, Dr. Ojo Abdulqadir was reported by Punch Newspaper to have said that the proposed fuel subsidy removal by the Federal Government will significantly increase Nigeria’s hardship index. He was also said to have added that the said planned fuel subsidy removal should be strategically implemented in a manner that would not plunge more Nigerians into unprecedented levels of economic hardship.

Dr. Ojo’s view continues to buttress the concerns that have been raised already by prominent Nigerians like Femi Falana (SAN), sociocultural groups across the country and Nigeria Labour Congress (NLC).

Recall that NLC has fixed January 27 and February 1 to protest against the planned fuel subsidy removal.

This forecast is coming despite the fact that the World Bank is one of the major forces pushing the federal government to consider the removal of all forms of subsidies in the country without considering the possibilities of such removals heightening the said inflation.

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Economy

Nigeria’s Inflation Rate Rose in December After 8-month Decline– NBS

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The National Bureau of Statistics, on Monday announced that Nigeria’s annual inflation rate has risen to 15.63 percent in December 2021. This was higher than the 15.40 percent recorded in November 2021 when the headline inflation moderated for eight consecutive months. The increase is likely due to the usual surge in the prices of goods and services around Christmas time.

The report stated, “This is showing a slowing down in the rate when compared to the corresponding period of 2020.

“Comparing the rate to the year-on-year performance in the previous months shows that the rate has increased.

“Also, comparing the rate of price change between December and November (month-on-month) shows that the headline index rose by 1.82 per cent in December 2021. The November figure was 1.08 per cent. The rise was in part driven by a continued surge in food inflation.”

According to NBS, the composite food index increased by 17.37 per cent in December 2021 down by 2.19 per cent points compared to the 19.56 per cent obtained in December 2020.

“The average annual rate of change of the Food sub-index for the twelve months ending December 2021 over the previous twelve-month average was 20.40 per cent, 0.22 per cent points lower from the average annual rate of change recorded in November 2021 (20.62) per cent,” it said.

It further mentioned that the rise in the food index was as a result of increases in prices of bread and cereals, food products, meat, fish, potatoes, yam and other tubers, soft drinks and fruits.

The statistics showed that on a month-on-month basis, the food sub-index increased by 2.19 per cent in December 2021, up by 1.12 per cent points from 1.07 per cent obtained in November 2021.

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Manufacturing Activities, Macroeconomy Witness Gradual Growth in Q4 2021: MAN

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The Manufacturers Association of Nigeria (MAN) has said that Nigeria’s macroeconomy and manufacturing operating environment were buttressed by the marginal recovery of some key manufacturing indicators allowed a gradual improvement in the fourth quarter (Q4) of 2021.

In its Manufacturers CEOs Confidence Index (MCCI) Q4 report, the President of the association, Mr. Mansur Ahmed clarified that although changes in almost all manufacturing indicators as measured in the report are still not as desired, the fourth quarter performance is better than what was obtained in the 2021 Q3.

The MCCI is an index set up by MAN to measure changes in the quarterly pulsation of manufacturing activities in relation to movement in the macroeconomy and government policies. The Index is considered as MAN’s barometer used to aggregate the views of CEOs of manufacturing companies on changes in the economy.

In the report, Ahmed stated that manufacturers’ resilience, seasonal transactions, and passive policy support sustained manufacturing in the quarter despite the prevalence of familiar and emerging excessive tax-related challenges faced by manufacturers.

The manufacturing sector in Q4 of the year under review, overall recorded a mixed grilled performance occasioned by meagre improvement in the operating environment indices and macroeconomic ambiance evidenced by the high points. This he said, cumulatively triggered the increase in the aggregate MCCI score for the quarter to 55.4 points from 54.0 points recording the preceding quarter.

“Manufacturing performance is still below the mark,” Ahmed explained, saying, “notwithstanding the marginal improvement in the operating environment during the quarter under review, as the sector is still plagued by numerous familiar constraints. Some of these challenges enumerated by manufacturers are clearly presented in this report.”

The president further advised the government to implement mechanisms such as providing incentives to encourage investments in raw materials, pharmaceutical and petrochemical materials, iron and steel, etc. He also beckoned on the government to specifically provide security to lives and investments in industrial areas.

“In order to improve the performance of the sector, the government needs to intentionally put in place a mechanism that will address these challenges permanently by considering and implementing the following recommendation:

“Further incentivize investment in the development of raw materials locally through the Backward Integration and Resource-based industrialization initiates. Government should call for more investors to key into these initiatives with appropriate and definite incentives.

“For instance, there is need for urgent investment and production of Active Pharmaceutical Ingredients (API) in the country; investment and production of machines; iron and steel; petrochemical materials, etc to support manufacturing activities.

“Give specific attention to the security of life and investment in industrial areas; properly delineate and upscale security infrastructure in the various industrial areas in the country, particularly in the northern part of the country for priority attention. Government should also quickly invest in modern security such as drones, cameras, etc. for robust monitoring of the areas,” Ahmed stated.

The MAN president in the MCCI report stressed the need to ensure effective allocation of available foreign exchange to productive sectors, especially to the manufacturing sector for the importation of raw materials and vital machines and equipment that are not available locally.

He also buttressed the need for the government to expressly direct the Central Bank of Nigeria (CBN) to consult with the Ministries of Industry Trade & Investment and effectively engage MAN on measures to improve forex supply to manufacturing concerns.

He said that the Ministry of Science Technology and Innovation should be directed to inaugurate the Secretariat that will implement the strategies for the Executive Order and the Standard Organisation of Nigeria (SON). The Secretariat will designate local manufacturers of LPG (Liquefied Petroleum Gas) Gas Cylinders as priority provider of the 10 million Cooking Gas Cylinders to be procured by the government for 12 States in the federation.

Ahmed added, “Return milk and other dairy products to the National list in the fiscal policy guidelines to maintain consistency with the Backward Integration Programme, which has spurred heavy investments in the dairy production.

“Unify academic curriculum with industrial skill needs and requirements to guarantee the sustainable development of skilled manpower for the industries. Government should as a matter of urgency synchronize the curricular of tertiary institutions, particularly the Polytechnics with the skills requirements of industries. The various government vocational and training centers should also be re-engineered to offer those skills that are needed by the industries.

“Revisit the resuscitation of the existing national refineries to produce fuels locally, embark on the rehabilitation of major highway corridors, improve trade facilitation infrastructure and deepen the ongoing development of rails system to change the narrative on the operating environment from being a high cost to low production cost environment.”

On electricity, Ahmed said there is a need to sustain the eligible customer initiative to ensure that more power is supplied to the manufacturing sector.

The Manufacturing Association of Nigeria in its Index Report, further adviced the government to, “Strengthen the Bank of Industry (BOI) and Bank of Agriculture (BOA) to adequately provide liberal finance for the manufacturing sector;

“Monitor the implementation of Executive Order 003 to ensure compliance by MDAs so as to boost activities in the manufacturing sector, Publish the list of approved harmonized taxes and levies for the manufacturing sector by the Joint Tax Board (JTB) to address the issues of multiples taxes and levies.

“Rationalize Government Ministries, Departments, Agencies, parastatal and Commissions to resolve the issues of over-regulation and duplication; Improve the time taken to clear machines and raw-materials at the national ports while making the link road accessible.”

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Economy

Adoption, Utilisation Of ICT Pivotal To Nigeria’s Socio-economic Development – Danbatta

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The Information and Communication Technology (ICT) sector is no doubt, one of the fastest-growing sectors of the country’s GDP and is emerging as its most important long-term growth prospect.

The adoption and utilisation of digital revolutions by the government is creating multiplier effects across critical sectors, aiding job creation, better governance, youth empowerment and overall socio-economic development.

Investors King recalls that the sum of N160.59bn was budgeted for the ministry for the year 2022. This is more than the combined N129.59bn allocated to the ministry from 2016 to 2021.

Indeed, for over 10 years, ICT has consistently contributed more than 10 per cent of the Nigeria’s Gross Domestic Product (GDP) – the telecom sector alone contributed 12.45 per cent to GDP as at the fourth quarter of 2020.

In the second quarter of 2021, the ICT sector contributed 17.92 per cent to the real GDP of the nation.

According to the Executive Vice Chairman (EVC) of the Nigerian Communications Commission (NCC), Prof. Umar Garba Danbatta, in all continents of the world, people, organisations and countries have continued to witness leaps and bounds in economic, social and political activities through the instrumentality of ICT, which has meshed computing, information and communication technology to catalyse development in ways and manners humans never envisaged decades ago.

Danbatta who delivered a paper titled  “Empowering the Nigerian Youth though Information and Communication Technology”at the 10th and 11th combined Convocation Lecture of the Fountain University at Osogbo, Osun State recalled the impact of ICT revolution in all parts of human endeavour across countries and continents, insisting that technology will continue to penetrate and foster qualitative and quantifiable changes in all aspects of life.

According to him, Uber, the world’s largest taxi company, owns no vehicle; Airbnb, the world’s largest accommodation provider, owns no real estate; Facebook, world’s most popular public-facing digitally-mediated social networking platform, creates little or no content; Alibaba, a leading global retailer, has little or no inventory, yet they have become signposts of prosperity riding wholly on ICT resources.

These foregoing contextual demonstrations of the possibilities of ICT explain the Federal Government’s policy decisions to strengthen ICT adoption in building a robust digital economy in Nigeria, eloquently expressed in the National Digital Economy Policy and Strategy (NDEPS), 2020-2030; the Nigerian National Broadband Plan (NNBP), 2020-2025 and other series of policies, guidelines and regulations derivative of the NDEPS and NNBP.

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