The Central Bank of Nigeria (CBN) led Monetary Policy Committee (MPC) left interest rates unchanged on Tuesday to better address Nigeria’s rising consumer prices and other factors impacting economic activities.
The nine-member committee did not vote unanimously as two members voted to raise rates by 25 basis points while one voted that rates be raised by 50 basis points. The remaining six members voted to maintain current parameters as follows:
- Retain the Monetary Policy Rate at 11.5 percent;
- Retain the asymmetric corridor of +100/-700 basis points around the MPR;
- Retain the CRR at 27.5 percent; and
- Retain the Liquidity Ratio at 30 percent.
Breaking down the modalities for its decision, the committee said the surge in the price of petroleum and other products due to the ongoing war in Ukraine is having a negative effect on the purchasing power of Nigerians and the cost of living in general.
The committee admitted that before the war, it was optimistic that consumer prices will continue to moderate with improvements across key sectors. However, the Russia-Ukraine war and unexpected fuel scarcity escalated inflation to 15.70% in February, forcing the MPC to adjust its monetary stance to accommodate current economic realities.
MPC said “Before the Russia-Ukraine war, MPC was optimistic that the moderate decline in inflation was sustainable due to the positive impact of good harvest on price levels. The MPC worries that, whereas global prices have gone up, this has been compounded by the shortage of supply of petroleum products. In the short run, MPC urges NNPC to take urgent steps to ensure an adequate supply of petroleum products in Nigeria so as to reduce the rate of arbitrary increase in the price of petroleum products by oil marketers.”
Investors King noted with concerns that the committee is now relying on the proposed take-off of the Dangote Refinery to address the nation’s persistent fuel scarcity and chronic forex challenges. It presently does not have solutions for the rising insecurities and oil theft debilitating the nation’s reserves and other resources.
“MPC is hopeful that the proposed take-off of the Dangote Refinery in the course of the year would help to improve the supply of petroleum products in Nigeria,” the committee stated.
ICT Changing The Face of Nigeria’s Economy
While many thought the oil sector would save the Nigerian economy, the drift is gradually shifting away from the oil sector into the non-oil sector – the Information and Communications Technology (ICT).
A recent data revealed by the National Bureau of Statistics, sighted by Investors King, shows that the ICT has contributed 16 per cent to the growth of Nigeria’s Gross Domestic Product (GDP).
On a year-on-year basis, compared to the previous year in the same quarter, ICT contributed 14.9 per cent to the GDP – a growth of 1.3 per cent.
According to the data released by NBS, “In nominal terms, in the first quarter of 2022 the sector growth was recorded at 20.54 per cent (year-on-year), 12.68 per cent points increase from the rate of 7.86 per cent recorded in the same quarter of 2021, and 14.84 per cent points higher than the rate recorded in the preceding quarter. The Quarter-on- Quarter growth rate recorded in the first quarter of 2022 was -1.87 per cent.
“The Information and Communications sector contributed 10.55 per cent to the total Nominal GDP in the 2022 first quarter, higher than the rate of 9.91 per cent recorded in the same quarter of 2021 and higher than the 9.88 cent it contributed in the preceding quarter”.
The report added that the sector, in the first quarter of 2022, recorded a growth rate of 12.07 per cent in real terms, year-on-year.
From the rate recorded in the corresponding period of 2021, there was an increase of 5.60 per cent points. Quarter-on-Quarter, the sector exhibited a growth of -9.09 per cent in real terms.
“Therefore, of total real GDP, the sector contributed 16.20 per cent in 2022 first quarter, higher than in the same quarter of the previous year in which it represented 14.91 per cent and higher than the preceding quarter in which it represented 15.21 per cent,” the data revealed.
The Information and Communications sector in Nigeria comprises of Telecommunications and Information Services, Publishing, Motion Picture, Sound Recording and Music Production and Broadcasting.
Nigeria’s Economy Moderates in Q1 2022 as Oil Sector Contracts by 23.89%
Nigeria’s GDP moderated to 3.11% year-on-year in real terms in the first quarter (Q1) of 2022
Despite the surge in global oil prices due to the ongoing war in Ukraine, the Gross Domestic Product (GDP) of the largest exporter of the commodity in Africa, Nigeria moderated to 3.11% year-on-year in real terms in the first quarter (Q1) of 2022, the National Bureau of Statistics (NBS) stated in its latest report.
Nigeria’s GDP was 2.60% higher than the 0.51% recorded in Q1 2021 when COVID-19 disrupted business activity and dragged on economic productivity. However, this was 0.88% lower than the 3.98% filed in the fourth quarter of 2021.
On quarterly basis, the nation’s real GDP grew at -14.66% in the quarter under review when compared to the fourth quarter of 2021.
Aggregate GDP increased by 13.25% year-on-year from N40,014,482.74 million in nominal terms in the first quarter of 2021 to N45,317,823.33 million in Q1 2022. According to the NBS, “the nominal GDP growth rate in Q1 2022 was higher relative to the 12.25% growth recorded in the first quarter of 2021 and higher compared to the 13.11% growth recorded in the preceding quarter.”
Nigeria’s Oil Sector
In the first quarter, Nigeria’s crude oil production dropped to 1.49 million barrels per day (mbpd), down from 1.72mbp achieved in the same quarter of 2021. This was also lower than the 1.50mbpd recorded in the fourth quarter of 2021. Suggesting that despite the increase in global oil prices in the quarter, Nigeria’s inability to up crude oil production impeded investment in the sector and subsequently dragged on revenue generation.
As expected, the real growth of the oil sector contracted by 26.04% year-on-year in Q1 2022, representing a decline of 23.83% when compared to the same quarter of 2021. Also, growth decreased by 17.99% when compared to -8.06% filed for Q4 2021.
On a quarterly basis, the oil sector grew by 9.11% in the quarter under review. The sector contributed 6.63% to Nigeria’s total real GDP in Q1 2022, own from 9.25% contributed in the corresponding quarter of 2021 and slightly higher than the 5.19% achieved in Q4 2021.
Nigeria’s Non-Oil Sector
As usual, the non-oil sector grew by 6.08% in real terms in the first quarter. This was better than the 5.28% recorded in the first quarter of 2021 and 1.34% higher than the fourth quarter of 2021.
The report attributed the growth in the non-oil sector to the increase in activities in the following sectors; Information and Communication (Telecommunication); Trade; Financial and Insurance (Financial Institutions); Agriculture (Crop Production); and Manufacturing (Food, Beverage & Tobacco).
Nigeria’s non-oil sector contributed the most to total economic growth. The sector contributed 93.37% to the nation’s GDP in the quarter under review.
FG Directs NDDC to Revoke 20 Year-old Unexecuted Projects
The Federal Government of Nigeria says it has directed the Niger Delta Development Commission (NDDC) to revoke unexecuted contracts awarded between 2000 and 2019.
Director of Corporate Affairs, NDDC, Ibitoye Abosede, said in a statement issued on Sunday in Port Harcourt. According to him, the cancellation followed recommendations of the recently-concluded forensic audit report by the NDDC.
“This is to bring to the notice of all contractors engaged by the NDDC as well as stakeholders and the general public, the implementation of the forensic audit report,” she said.
“The Presidency has directed that all contracts awarded by the NDDC from 2000 to December 31, 2019, for which the beneficiary contractors are yet to mobilise to the sites, are cancelled.
“Consequently, all affected contractors are advised to note that all monies earlier received by way of mobilisation for any of the projects are to be promptly refunded
“The contractors are to refund the monies to the commission’s account with the Central Bank of Nigeria.’’
Abosede said that the cancellation was subject to any future re-award in accordance with the Public Procurement Act and in line with the terms of the contracts for the projects.
Earlier in February, some contractors, who identified themselves as members of the Niger Delta Indigenous Contractors Association, alleged that the Niger Delta Development Commission (NDDC) owed them over N2 trillion. This, among many others, has ravaged the effective delivery of the commission.
The contractors had earlier picketed the headquarters of the NDDC in Port Harcourt, Rivers State, over the alleged outstanding debt.
Several reports have suggested that there are a group of people who have formed a “cartel” running the affairs of the commission secretly.
In 2019, the former Minister of Niger Delta Affairs, Godswill Akpabio, during an interim inauguration of a NDDC committee in Abuja said “the mandate of the committee is to help create an “enabling environment” for the forensic audit of the NDDC.”
Akpabio said the corruption and political interference have disrupted the original purpose of setting up the NDDC.
“I think people were treating the place as an ATM, where you just walk in there to go and pluck money and go away, I don’t think they were looking at it as an interventionist agency,” said Mr Akpabio, a former governor of Akwa Ibom State.
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