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Air Transport Grew by 50.7% in Q1 2022 – Coronation Merchant Bank

Air transport grew by 50.7% y/y in Q1 ’22 compared to the contraction of -11.8% recorded in Q1 ’21.




The latest national accounts released by the National Bureau of Statistics (NBS) show the continuous recovery of the air transport sector from the adverse effects of the COVID19 pandemic. Air transport grew by 50.7% y/y in Q1 ’22 compared to the contraction of -11.8% recorded in Q1 ’21.

This was the second fastest-growing segment in Q1 ’22, following rail transport (124.5% y/y). We note that this is from a low base.

Given that the sector was one of the most impacted sectors during the pandemic, the easing of COVID19-related restrictions globally has contributed to its recovery. The current geopolitical crisis is weighing heavily on domestic airline operators. The Russia-Ukraine crisis has led to a surge in oil prices globally (Russia controls c.10% of the global oil supply).

This has been transmitted through higher energy, oil and gas prices, worsening the already elevated inflation in advanced and emerging economies. Following the US ban on Russian oil imports, oil prices surged above USD100 per barrel to hit their highest level since 2008. As at end-May ’22, Brent crude stood at USD122.8/b.

In Nigeria, aviation fuel is a deregulated product and as such, its price is dependent on movements in global oil price and the foreign exchange rate among others. Aviation fuel has increased from N190/litre in 2021 to N700/litre in May ‘22. The surge is placing pressure on operational costs. Based on our channel checks, aviation fuel accounted for 40% of operating cost in 2021. However, this has now risen to 95% of total operational cost.

This increase in operating cost has resulted in upticks in ticket fares across airline operators within the country and has also led to a significant decline in the frequency of domestic flights.

Based on data from the NBS “Transport Fare Watch” series, the average airfare for select routes (one-way) increased by 52.4% y/y from N36,409 (USD87) recorded in April ’21 to N55,501 (USD132) in April ’22. On a m/m basis, it rose by 18.6% from N46,810 (USD112) recorded in March ’22 to N55,501 (USD132) in April ’22.

On a zonal basis, North-Central recorded the highest average airfare (N57,552) for select routes (one-way) in April ‘22, followed by North-East (N56,800), South-South (N55,586), North-West (N54,760), South-West (N54,338), and South-East (N53,402).

To put the current strain in perspective, in May ‘22, the Airline Operators of Nigeria (AON) announced a shutdown of operations within the industry due to the price surge in aviation fuel (Jet-A1) and uptick in other operating costs. However, following discussions with government officials, AON suspended its plan to shut down operations.

Coronation Merchant Bank understand that the NNPC agreed to supply Jet A1 to marketers nominated by airline operators for three months and at a fixed price of N480/litre. However, the airlines are to apply for aviation fuel import licenses so they can import directly to reduce reliance on NNPC.

The potential impact of a prolonged Russia-Ukraine crisis is likely to stretch the current challenges for domestic airlines. Furthermore, there are limits to the cost that can be passed on to the consumers, given that inflationary pressure continuously weighs heavy on consumer pockets.

The subsidy route seems unsustainable as the FGN is currently grappling with costs associated with the ongoing fuel subsidy (PMS). Forward thinking solutions would include innovative mechanisms that can optimise operations and accommodate rising operating costs within the aviation industry.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq,, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Federal Government Halts Cooking Gas Export to Lower Local Prices



cooking gas cylinder

In a bid to stabilize domestic prices and meet rising demand for cooking gas within Nigeria, the Federal Government has announced a temporary halt on the exportation of Liquefied Petroleum Gas (LPG), commonly known as cooking gas.

This decision follows a significant surge in the cost of cooking gas, which has placed a strain on consumers across the country.

According to reports, the halt in LPG export aims to increase the availability of the commodity within Nigeria’s borders, thereby reducing its local price.

The move is part of broader efforts to address the challenges faced by consumers grappling with the high cost of living.

In recent years, the demand for cooking gas has steadily increased in Nigeria, driven by urbanization, population growth, and a shift towards cleaner energy sources.

However, despite being a major producer of LPG, Nigeria has struggled to meet its domestic demand due to insufficient local production and distribution infrastructure.

Data from the Nigerian Midstream Downstream Petroleum Regulatory Authority reveals that while the total consumption of cooking gas in Nigeria has been on the rise, the country has relied heavily on imports to bridge the supply gap.

The recent decision by the government underscores its commitment to prioritizing the domestic market and ensuring that Nigerians have access to affordable cooking gas.

Consumers have been grappling with escalating prices, with reports indicating a significant increase in the cost of refilling a 12.5kg cylinder of cooking gas in major cities like Abuja, Lagos, and Kano.

The decision to halt LPG exports signals a proactive measure by the government to mitigate the adverse effects of rising prices and alleviate the financial burden on households across the nation.

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Manufacturing Sector Records 7.70% Quarter-on-Quarter Growth in Q4 2023



German manufacturing

In the fourth quarter of 2023, Nigeria’s manufacturing sector grew by 7.70% year-on-year, according to the National Bureau of Statistics (NBS).

The surge in growth reflects a significant uptick from the preceding quarter and underscores the resilience of the manufacturing industry amid economic challenges.

This growth trajectory indicates positive momentum and signals potential opportunities for economic recovery and development.

The manufacturing sector, comprising thirteen key activities ranging from oil refining to motor vehicles and assembly, demonstrated notable dynamism across various subsectors.

This growth surge is attributed to increased production, enhanced operational efficiencies, and strategic investments across the manufacturing value chain.

Despite facing headwinds such as supply chain disruptions and regulatory uncertainties, the sector’s robust performance underscores its pivotal role in driving economic diversification, job creation, and industrialization efforts in Nigeria.

Moving forward, sustaining this growth momentum will require continued policy support, investment in infrastructure, and efforts to address key bottlenecks hindering the sector’s expansion.

By fostering an enabling business environment and promoting innovation and technology adoption, Nigeria’s manufacturing sector can further catalyze inclusive economic growth and contribute significantly to the nation’s development agenda.

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Nigeria’s GDP Grows by 3.46% in Q4 2023, Driven by Services



Nigeria’s Gross Domestic Product (GDP) grew by 3.46% in the fourth quarter (Q4) of 2023 on the back of robust performance of the services sector, according to data released by the National Bureau of Statistics (NBS).

The GDP expansion though slightly lower than the 3.52% recorded in the same period of 2022, reflects a positive trajectory for the Nigerian economy amid ongoing challenges.

The growth rate surpassed the 2.54% recorded in the preceding quarter, indicating a rebound in economic activity.

The services sector emerged as the key driver of growth expanding by 3.98% and contributing 56.55% to the overall GDP.

This sector’s resilience underscores its pivotal role in Nigeria’s economic landscape, encompassing diverse industries such as telecommunications, finance, and real estate.

Also, the agriculture sector experienced growth, expanding by 2.10% compared to the same period in 2022.

Meanwhile, the industry sector recorded a notable improvement, growing by 3.86%, a stark contrast to the -0.94% contraction observed in the fourth quarter of 2022.

On an annual basis, Nigeria’s GDP expanded by 2.74% in 2023 compared to 3.10% in the previous year, reflecting sustained but moderated growth.

The positive trajectory in GDP growth reflects resilience in the face of various economic challenges.

However, sustaining and accelerating growth will require continued efforts to address structural bottlenecks, foster investment, and promote inclusive economic policies across sectors.

Nigeria’s Oil Sector Growth

During the fourth quarter of 2023, Nigeria’s oil sector posted a real growth rate of 12.11% year-on-year, signifying a significant improvement from previous periods.

This was driven by the surge in average daily oil production to 1.55 million barrels per day (mbpd), a positive shift in the sector’s performance.

Despite challenges such as global market fluctuations and production constraints, the oil sector contributed 4.70% to the nation’s total real GDP in Q4 2023.

Nigeria’s Non-Oil Sector

Nigeria’s non-oil sector sustained growth momentum, posting a 3.07% real growth rate in Q4 2023.

This growth was primarily attributed to key industries including finance, telecommunications, agriculture, manufacturing, and construction.

Accounting for 95.30% of the nation’s GDP in the same quarter, the non-oil sector continues to drive economic diversification efforts and reduce dependence on oil revenues.

Despite facing challenges, such as infrastructure deficits and regulatory bottlenecks, the sector’s resilience underscores its pivotal role in fostering sustainable economic development and inclusive growth agendas.

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