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IMF Cuts Nigeria’s Growth Forecast to 3.2% for 2022

The International Monetary Fund (IMF) has lowered Nigeria’s growth projection from the initial 3.4% to 3.2% for the 2022 fiscal year.

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Lagos Nigeria - Investors King

The International Monetary Fund (IMF) has lowered Nigeria’s growth projection from the initial 3.4% to 3.2% for the 2022 fiscal year.

The Fund attributed the reduction to Nigeria’s limited fiscal space for external shock, rising cost of living as inflation jumped above 20% in the month of August, political unrest ahead of 2023 presidential elections, weak economic fundamentals and a host of other factors.

Nigeria’s National Petroleum Corporation Limited on Monday announced it had agreed on a 90-day delayed payment term with local importers of gasoline due to the drop in revenue generation from the nation’s record low crude oil production.

As a mono-product economy that depends on crude oil for over 90% of its foreign revenue, drop in crude oil production from over 2.1 million barrels per day to about 1 million barrels per day at a time when crude oil prices are trading at a record high has limited Nigeria’s ability to fund capital projects and increase borrowing. A situation IMF and the World Bank said must be checked to avoid further catastrophe.

The adjustment in growth projection was to accommodate changes in Nigeria’s economic reality following a previous robust prediction of 3.4% in July, up from 3.3% in April.

According to the institution’s World Economic Outlook (WEO) for October 2022 titled, “Countering the Cost-of-Living Crisis”, Sub-Saharan Africa will experience a downgraded economic growth from 3.8% to 3.6%.

IMF noted that this reduced economic projection is a result of tighter financial and monetary conditions. 

Investors King learnt that the financial institution also cut global growth projection to 3.2% in 2022 and 2.7% in 2023.

Save from the global financial crisis of 2007/08 and the economic impacts of the Covid 19 pandemic, this global projection is the lowest since 2001. 

However, the report projected that growth in the Middle East and Central Asia would increase to 5.0% in 2022.

According to the IMF, the growth in the middle east is a reflection of a favourable outlook for the region’s oil exporters.

The IMF further projected that about one-third of the world economy will face two consecutive quarters of negative growth while global inflation could rise from 4.7% in 2021 to as high as 8.8% in 2022. 

Inflation could, however, decline to 6.5% in 2023 and further to 4.1 per cent by 2024. 

In a probable worst-case scenario, the IMF expects global inflation to pick at 9.5% before decelerating to 4.1% by 2024.

The report however warned that inflation could yet again prove more persistent, especially if labour markets remain extremely tight, while a further escalation of the raging war in Ukraine could exacerbate the energy crisis.

Conclusively, the financial institution advised central banks to keep a steady hand with monetary policy firmly focused on taming inflation and complement it with fiscal response to the rising cost of living and energy crisis which has also become a serious challenge for many countries.

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Economy

Fourth Mainland Bridge: Lagos State Shortlists Three Companies, Budgets $2.5 Billion

The shortlisted bidders are Mota-Engil (Nigeria and Africa) CCCC and CRBC Consort; CGGC-CGC joint venture; and CCECC and CRCCIG Consortium.

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Agege Pen Cinema Bridge

Lagos state government has shortlisted three multinational companies as bidders for the construction of a $2.5 billion fourth mainland bridge.

The shortlisted bidders are Mota-Engil (Nigeria and Africa) CCCC and CRBC Consort; CGGC-CGC joint venture; and CCECC and CRCCIG Consortium.

According to the Special Adviser to the Governor on Public-Private Partnerships (PPP), Ope George, the Fourth Mainland Bridge was a proposed PPP transport infrastructure development that includes the construction and operation of a greenfield tolled road and bridge with a design speed of 120kph, including the development of adjacent real estates.

It could be recalled that Lagos State Governor, Babajide Sanwo-Olu, earlier announced that construction on the fourth mainland bridge will begin as soon as a preferred bidder is announced.

Investors King understands that the construction of the fourth mainland bridge will be strategic in easing traffic in the most populous state in Nigeria. It is estimated that Lagos state has a population of almost 20 million.

Besides, after completion, the bridge has the potential to open a new phase of investment opportunities to Lagos state. Already, Lagos has the largest economy in Nigeria and one of the largest in Africa.

The idea of a fourth mainland bridge to complement and ease traffic on the third mainland bridge which was built by the former military president, Ibrahim Babangida was conceptualised during the administration of former governor Bola Tinubu. 

Although construction was planned to commence in 2017, nothing significant towards the commencement of the bridge was done until now.

George added that the bridge is expected to become the second longest in Africa featuring three toll plazas, nine interchanges, a 4.5km lagoon bridge, and an eco-friendly environment.

“The fourth mainland bridge which will span about 34 kilometres is projected to start from Abraham Adesanya in Ajah, on the Eti-Osa-Lekki-Epe corridor and transverse the north-west towards the lagoon shoreline of the Lagos-Ibadan expressway via Owutu/Isawo in Ikorodu,” he said.

He concluded that the preferred bidder would be announced before the end of the year.

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Abuja – Kaduna Train Service Postponed by Few Days to Sort Ticketing; Minister for Transportation

Resumption for Abuja to Kaduna train has been postponed due to the need to sort out ticketing

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Lagos-Ibadan Train Services - Investors King

The resumption date of the Abuja to Kaduna train has been postponed due to the need to sort out ticketing, the Minister of Transportation, Mu’azu Sambo disclosed this during a visit to the Rigasa train station ahead of the resumption.

According to the minister, the need to ensure that more security measures are put in place and booking tickets are sorted out necessitates the postponement.

The minister added that although he could not give a definite date for the resumption of the rail service, the resumption would however not be more than a week.

He disclosed that the ministry is 90 percent ready to commence operation along the route. 

“The federal government has introduced a new system of purchasing tickets. It is the beginning of security checks that will enable the government to ascertain who boards the train at every point in time.” the minister stated. 

Investors King earlier reported that Abuja to Kaduna train service will resume on Monday. 

The earlier scheduled date for the resumption follows the minister’s statement at the presidential briefing that the train service along the Abuja to Kaduna route will resume operation before the end of this month. 

It would be recalled that Abuja to Kaduna train service was suspended following the attack on the train on 28th March 2022 when terrorists planted explosives that derailed the train.

The attack led to the death of no less than nine passengers while 60 were abducted. 

They were however released in batches after spending several months with the terrorists. 

Muazu had on several occasions disclosed that service along the route will not resume until all those held in captivity have been released and better security measures put in place to prevent a recurrence. 

While fielding questions from journalists yesterday, the minister disclosed that the number of daily trips would be reduced, and the use of National Identity Number would be strictly requested as part of strategies to secure passengers.

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Economy

CBN Governor, Emefiele Projects Inflation Rate Will Drop Below 15% in 2023

CBN expects inflation to moderate in 2023

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Nigeria's Inflation Rate - Investors King

The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has projected that Nigeria’s inflation rate will fall below 15 percent in 2023.

Emefiele disclosed this in a keynote address delivered at the annual Bankers Dinner Night of the Chartered Institute of Bankers of Nigeria.

According to the CBN governor, 2023 portrays a positive economic outlook for the country while the apex bank will continue to implement policies to curtail inflation. 

The CBN Governor also called on Nigerians to embrace the new naira notes, stressing that the decision to redesign the higher denomination notes is for a purpose that is in the overall interest of the country.

He added that the redesign policy will help control currency circulation and drive a cashless economy. 

“This policy will quicken the attainment of a cashless economy as it is complemented by increased minting of our eNaira. It will curtail currency outside the banking system and, as monetary policy becomes more efficacious, help to rein in inflation,” he noted

Emefiele also used the occasion to underscore the efforts of the central bank to maintain the stability of the exchange rates in 2022. He identifies oil theft as one of the major factors preventing the country from building a robust external reserve. 

While he acknowledged that the narrative might be the same for some time, he added that the forthcoming general election which has overheated the marketplace is another factor that is driving the exchange rate. 

Investors King understands that naira has greatly suffered against dollar and other strong foreign currencies including pounds and euro. 

In October, a Bloomberg report rated Nigeria’s currency as one of the worst-performing currency in the world. 

Meanwhile, the CBN has insisted on January 31st, 2023 as the deadline to phase out the current naira notes. 

The CBN governor reiterated the bank’s decision at the same venue of the annual Bankers Dinner Night of the Chartered Institute of Bankers of Nigeria held in Lagos. 

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