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Nigeria, Other African Nations Must Improve Infrastructures, Reduce Unemployment to Boost Growth

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Trade - Investors King

Nigeria’s rising unemployment rate is becoming unbearable with no end in sight despite the nation’s potential and vast natural resources. Battered by the Covid-19 pandemic, weak economic fundamentals and many more, Africa’s largest economy, continues to struggle to address salient issues like infrastructure, rising debt servicing cost, etc.

Nigeria and other African countries have been advised to broaden and improve their infrastructures if they must rein in their unemployment rates and boost economic growth post-pandemic.

According to a report by Bloomberg, the most industrialized African nation, South Africa has the highest unemployment rate on a global list of 82 countries with a jobless rate of 34.4 percent in Q2, 2021, while Namibia trailed South Africa with 33.4 percent and Nigeria, Africa’s largest economy, came third with 33.3 percent unemployment rate.

The global chief economist, Renaissance Capital, Charles Robertson advised the African countries to look deeply into industrialization, their educated population and electricity in a bid to record sustainable growth like their Asian counterpart.

According to him, about five decades ago, the Asian Tigers, Hong Kong, Singapore, South Korea, and Taiwan, were in almost similar conditions as most African countries today, but they leveraged on the impact of industrialization, building major industrial estates, offering tax incentives to foreign investors, and implementing compulsory education for its young population, this was when the global economy was just starting to recover from the traumas of the Second World War.

A professor in the institution of statistical, social, and economic research, University of Ghana, Peter Quartey stated that African countries should look beyond becoming import-dependent with less production, less manufacturing, and more consumption. Quartey explained that the region if continued on the current path, will keep creating jobs for others, who have developed their country.

In a statement by the World Bank, 80 percent of the world’s extremely poor people reside in countries with a human capital index under 0.5, which Nigeria with (0.36), Angola (0.36), Ethiopia (0.38), and Tanzania (0.38) falls into this category compared to the ‘tiger’ nations that have some of the world’s highest human capital index, Singapore (0.88), Hong Kong (0.81) and South Korea (0.80).

The CEO, Alluvial Agriculture, Dimieari Von Kemedi at the business gathering has challenged Africa for underutilizing agriculture given its 60 percent of the world’s uncultivated arable land. He urged the continent to effectively utilize its comparative advantage in agriculture, adding that it will enhance the capacity and productivity of small-scale farmers.

However, the industry experts claimed that the ability to create opportunities for its young talents to acquire skills and reduce brain drain will also play a role in taking Africa to its desired destination.

In recent times, many of Africa’s experts and talented minds had fled the continent to other regions with necessary infrastructures. For example, Nigeria saw 805 medical doctors migrate to the UK between July and December 2021, according to the data by the British General Medical Council.

The managing director of Africa’s largest disposable Syringe Company, Jubilee Syringe, Akin Oyediran said if Africa continent must achieve the much-needed development, it should do well by retaining its health workers in order to boost the health sector, reduce brain drain, and ease medical workers off tax.

 

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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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