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Nigeria, South Africa, Egypt to Raise Interest Rates

The central banks of the three biggest economies in Africa are expected to raise interest rates in days to come in an effort to curb rising inflation rates.

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Inflation - Investors King

The central banks of the three biggest economies in Africa are expected to raise interest rates in days to come in an effort to curb rising inflation rates.

In recent events, Africa, like its global counterparts has struggled to tame rising inflation rates amid the persistent increase in commodity prices, food shortage, weak economic fundamentals, and low purchasing power.

Central banks in Nigeria, South Africa, and Egypt, the three largest economies on the continent, could raise interest rates further this month in a move to cap escalating consumer prices and reduce the currency in circulation, according to a series of projections by economic experts.

In August 2022, inflation in Nigeria, Africa’s largest economy, grew at a 17-year high of 20.52% year-on-year despite efforts by the Central Bank of Nigeria (CBN) to rein in prices and cool the economy. The apex bank has raised interest rates by 150 basis points from 12.5% to 14% this year alone, there seems to be no solution in sight.

The persistent increase in prices at a period when the foreign exchange rate is at a record-high of N700/US$1 on the black market, the unemployment rate at 33.33%, foreign reserves below $40 billion, and retail sales below the norm, has forced the CBN to damn the consequence and consistent raise interest rates.

If the CBN moved as expected, the apex bank would have risen interest rates three times this year.

In South Africa, the second largest economy on the African continent, the story is not different as experts have started predicting that the Reserve Bank of South Africa will raise the monetary policy rate by 75 basis points from the current 5.5% to 6.25% this month.

Inflation rose to 7.8% in July, above central bank’s 3% – 6% inflation target.

As expected, economists surveyed by Bloomberg in its latest report, believed that with inflation at 14.6% in Egypt in the month of August, the central bank in Africa’s third-largest economy will likely move to curb rising prices.

Bloomberg noted that “while a minority of forecasters predict the benchmark deposit rate will stay at 11.25% for a third meeting, most see an increase of 50 to 100 basis points to curb annual inflation that hit its highest level in almost four years.”

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

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Economy

Federal Government to Create Jobs Through Sugar Production

Nigerian government to create jobs and earn foreign exchange through sugar production

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Sugar - Investors King

Nigerian government to create jobs and earn foreign exchange through sugar production. 

The Executive Secretary of the National Sugar Development Council (NSDC), Zacch Adedeji disclosed during an interview in Abuja that Nigeria will soon be competing globally in sugar production. 

Zacch Adedeji pledged that the National Sugar Development Council under his leadership will open doors for job creation and foreign exchange. He further stated that the sugar production sector has a lot of potential that can enhance the economy if the sector is vigorously explored. 

He also stated that the implementation of the Nigerian Sugar Master Plan (NSMP)  has been able to attract huge investment to the sugar sector. 

Investors King could recall that the Federal Executive Council in September 2012 approved the National Sugar Master Plan (NSMP) as a government strategy roadmap for the development of the Nigerian sugar sub-sector.

According to the NSDC boss, “The Federal Government, through the National Sugar Development Council, is committed to building a globally competitive sugar industry that would boost the local economy, provide jobs for Nigeria’s teeming youth population and position Nigeria as a net exporter of the commodity.”

Adedeji also disclosed that the council is trying to address this issue of inadequate qualified indigenous manpower. He noted the council has created the Nigeria Sugar Institute in Ilorin, Kwara State to help drive local production and possibly export in the future. 

“The Institute has commenced the training of young Nigerian graduates both in field and factory operations through an exchange programme with famous sugar institutes like the National Sugar Institute, Kanpur, India as well as the Mauritius Sugar Industry Research Institute, in Mauritius”. 

Meanwhile, the Federal Government at its weekly Federal Executive Council meeting (FEC) yesterday approved the second phase of the National Sugar Masterplan. The MasterPlan which is a 10-year plan is aimed to save $350 million yearly from foreign exchange and also create 110,000 jobs.

While addressing newsmen after the meeting, the Minister of Industry, Trade and Investment, Niyi Adebayo disclosed that the second phase of the National Sugar Masterplan will span from 2023 to 2033. 

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Economy

CBN Not Mandated to Sell Dollars to Airlines, Godwin Emefiele Tells Foreign Airlines

The Central Bank Of Nigeria (CBN) has disclosed that it was not mandated by any law to sell dollars to foreign airlines operating in the country.

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Emirates Airlines

The Central Bank Of Nigeria (CBN) has disclosed that it was not mandated by any law to sell dollars to foreign airlines operating in the country.

The central bank governor Godwin Emefiele while speaking at the monetary policy committee meeting stated that the apex bank is committed to clearing up trapped funds of foreign airlines, however, it was not the CBN’s responsibility to provide the funds in dollars.

The CBN governor said, “The sector is a sector that has always enjoyed priority allocation. For other sectors where there are priorities like the airlines, we have always granted them the priority that they desire because we know people want to travel and they don’t want to be constrained by the need for them to travel. 

“In spite of this, we have seen that the number of travels or naira value of tickets issued by the airlines has increased. We decided to release $265 million when the pressure was building aggressively. 

“We will do everything possible and are determined to clear the backlog and consistently, at all the retail interventions. As long as the bank accounts are funded, we will continue to ensure that the cumulative backlog is cleared. 

“But I think it is important for me to say this — the foreign airlines are saying this because they said we should respect bilateral air services agreements (BASA) that say proceeds of all their ticket sales must be repatriated out of the country.

“It did not say you must repatriate all your dollars. There is no law that makes it compulsory that you must buy your dollars from the central bank. When you put money in your account, what it means is that you tell your bank to buy your dollar.

“Your bank will go to the legitimate or approved sources which in this case is the I&E to buy dollars and pay for your ticket sales proceeds.

“If they don’t find, they may resort to the CBN but it doesn’t mean that the CBN is under compulsion to provide your dollars because it is good for me to say this so that people don’t just rest on the conclusion that CBN is under compulsion to provide the dollars.” 

Recall that the issue of trapped funds had generated several reactions from aviation stakeholders and the non-repatriation of airlines revenue had grown from $450 million in May to $464 million in July. The CBN intervened by releasing $265 million to clear part of the forex backlog.

It should be recalled that earlier this month, Investors King had reported that the federal government of Nigeria sought to sanction airlines selling tickets in dollars.

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Economy

Lagos State to Generate at Least N240 Billion From Metro Train in One Year

Lagos State Government will likely generate at least N240 billion from the metro rail when it becomes fully operational. 

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Lagos Train

Lagos State Government will likely generate at least N240 billion from the metro rail when it becomes fully operational. 

In the wee hours of yesterday, Lagos State Government took delivery of about 20 modern coaches and two motors of its red rail. The coaches were reportedly shipped from Milwaukee USA. 

In January 2022, Lagos State Governor, Babajide Sanwolu visited the factory of Talgo Inc, a train manufacturer in Milwaukee where the coaches for the red line train were purchased. 

It will be recalled that the Lagos metro train is being constructed in two phases, the red line and the blue line metro rail. 

The red line part of the project which is scheduled to fully commence operation within the first quarter (Q1) of 2023 will traverse 37 kilometres. 

No doubt, apart from the transportation benefit, many businesses will spring up along the rail corridor while old businesses will be positively impacted. 

Meanwhile, Investors King’s investigation shows that Lagos State Government will generate about N240 billion every year from both the red and blue lines of the metro rail. 

Both the Red and Blue are expected to lift at least 2.2 million passengers daily when they become fully operational. Using an average price of N300 per trip, Lagos State is expected to generate N660 million every day and a culmination of N240.9 billion in one year. 

Early this year, Lagos State Governor, Babajide Sanwolu disclosed when featured on a Channels TV program, Sunrise Daily that the train ticket will cost between N200 to N300 per trip.

“Time is money and we need to move millions of people in Lagos from one corridor to another. The vision is to reduce travel time and gridlock on the road”. 

“Instead of you staying one hour on the road, it’s going to take you 20 minutes which comes with a lot of benefits. Affordability is critical, it’s not going to be in the thousands. So, you will still be in your regular N200, N300 per journey and that is what we are looking at”. He said.

Lagos Metro Rail is being constructed by China Civil Engineering and Construction Corporation (CECC). 

 

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