- Analysts Proffer Measures to Enhance Economic Growth
Following a World Bank report that revealed economic growth in Nigeria has not been impressive since 1995, some economic analysts have advised the federal government to enhance investment in infrastructure and also develop policies that would encourage foreign direct investments (FDIs).
The World Bank had in the latest edition of its Africa’s Pulse stated that Nigeria’s economic growth has remained below population growth in the fourth consecutive year, adding that although regional growth was expected to rebound to 2.8 per cent in 2019, it has remained below three per cent since 2015.
However, reacting to the position of the multilateral institution, an analyst at Ecobank, Mr. Kunle Ezun, stressed the need for increased government spending.
He said: “This report wouldn’t come to me as a surprise looking at the economy in the last few years. We had slipped into recession and by 2017, we recovered slightly to grow at 0.8 per cent Gross Domestic Product (GDP) and by 2018, we grew by 1.93 per cent.
“So if you put that side by side with the size of the economy, and the population growth, you can completely say growth is slow and may not be adequate to support the economy.
“The economy on its own has a population growth of two per cent annually and if you have a growth of less than two per cent, then you would begin to see the gap and the threats to the economy.
“So if the World Bank has said is a slow-growing economy, it is accurate because the data are in line with that argument. This would continue to widen the gap between the rich and the poor and this gap might be the fertile ground for social unrest and for insecurity.”
Speaking on measures to boost economic growth, he said: “There is need for government to rejig the economy. This can start from the 2019 budget. I think the amount in the 2019 budget is low for our economy.
“The government needs to see how much of funds you can push into the system to stimulate the output and growth.”
Ezun added: “The federal government is a big spender in a growing economy like ours. So the government could spend like 60 per cent while the private sector would do about 30 per cent or more.
“So if they can fast track the approval of the minimum wage and all other reforms that would improve liquidity in the system and empower the citizenry to spend more, then we would be on the right path.
“That is because the citizenry is empowered to spend more, it stimulates local production and creates demand and when those two work together, you begin to see an improvement in the economy.”
On his part, an economist and Senior Lecturer at the Lagos Business School, Dr Bongo Adi, called for a different approach to monetary policy in the country.
He said: “We have to look at the implications of tight monetary policy which includes the tightening of liquidity, which reduces credit to the private sector.
“So if you back 10 years from 2008, aggregate monetary policy has been tight and when you look at our growth, you see that Nigeria has underperformed compared with sub-Saharan and middle-income countries in Africa and our growth rate has declined significantly.
“The slow growth is simply because of the way monetary policies have been managed.”
Speaking on measures the government should adopt to enhance growth, Adi said: “The truth is that we need to use monetary policy instruments to grow the economy and for that to happen, we should be approaching single-digit rates to enhance growth.”
To the Managing Director, Afrinvest Securities Limited, Mr Ayodeji Ebo, a major catalyst for growth is creating policies to secure foreign investments.
He explained: “What needs to be done is that there needs to be a more political will to implement a lot of the policies that are already available on investments. For this economy to grow, we need more partnership with private investments.
“Why people are not investing is because of the way by which the government can easily resign a transaction where investors would have put in a lot of money. so if we can rejig our policies to attract and ensure that once a contract is signed, no new government can come to override that first contract, then we can begin to attract more investments into critical areas that would jumpstart the economy.
“I think the federal government should come up with deliberate policies that would attract foreign direct investment, reduce the burden on the government and if we are able to that, I feel that this economy can grow at the rate of six to seven per cent if those policies are put in place.”
Nigeria to Become Leading Gold Producer in West Africa – Adegbite
Adegbite Says Nigeria to Become Gold Hub in West Africa
The Minister of Mines and Steel Development, Olamilekan Adegbite, has said Nigeria is on its way to becoming a leading gold producer in West Africa.
Adegbite made the statement in Abuja while taking stock of his first year in office as minister.
He said, “Indeed, the international roadshows we have had in the past have produced fruits. Today, we have Thor exploration in Osun State through the Segilola Gold project.
“The exploration firm is projected to start producing (gold) in the first half of next year. The project is expected to create about 400 direct jobs and 1,000 indirect jobs.”
According to Adegbite, the Federal Government has licensed two gold refineries that would refine in line with the London Bullion Market Association standard.
He added, “Numerous industries will spring up when our gold economy becomes full-fledged. Some of them will include equipment leasing and repairs, logistics and transport, as gold requires a specialised means of transport, security, insurance, aggregators, and so on.”
The minister noted that for the first time, the country had mined, processed and refined gold under the Presidential Artisanal Gold Mining Development Initiative for use as part of Nigeria’s external reserves.
Adegbite also stated that the mines ministry had initiated a process that would lead to local capacity development in the production of barite.
“Presently, the barite that is used in the oil and gas industry is imported. But we are resolved to reverse this trend. As you may know, barite is a critical weighting material in drilling fluids due to its high specific gravity,” he said.
NUPENG, Lagos State Agree to Call Off Strike
NUPENG Agrees With Lagos State, Call Off Strike
The Nigeria Union of Petroleum and Gas (NUPENG) has ordered Lagos State Petroleum Tanker Drivers (PTDs) to call off its ongoing strike.
This was disclosed in a joint communique signed by the Lagos Commissioner of Energy and Mineral Resources, Olalere Odusote, and the NUPENG Deputy National President, Solomon Kilanko.
It would be recalled that Investors King had reported that NUPENG directed all PTDs to withdraw their services from Lagos State effective from Monday 10 August 2020 because of the persistent extortions and harassments of PTDs by both uniform security agencies and touts.
However, on the 10th of August, the commencement day of the strike, Lagos State government met with the leadership of NUPENG to address the union concerns and eventually agreed on a way forward.
Part of the communique reads “The Lagos State Government met today with the representatives of NUPENG, which agreed to call off its strike immediately.
“Other decisions taken at the meeting are security – the state government will meet the heads of all security agencies and secure their commitment to ensure the free passage of petroleum products vehicles given their importance to the economy.”
“Area boys’ – the menace of ‘area boys’ will be handled by relevant government agencies and a dedicated phone number will be established, within the next week to ensure the petroleum products transporters have prompt access to security agencies.”
The communique also stated that the Lagos State government will set up a standing committee to communicate with the union on an ongoing basis, saying it will help address a similar issue going forward. See the complete communique below.
Crude Oil Expands Gain on US Stimulus talks, Better Than Expected Chinese Factory Data
Crude Oil Gains on US Stimulus, Better Than Expected Chinese Factory Data
Oil prices extended its gains on Tuesday following a better than expected factory data from China and a possible agreement between Democrats and Republicans on economic stimulus.
“The oil complex is heavily reliant on that aid. We need people to be able to boost economic activity to spur demand,” said John Kilduff, partner at Again Capital in New York.
President Trump on Monday said House Speaker, Nancy Pelosi and Senator Chuck Schumer, top Democrat in the chamber of Congress, wanted to meet him to discuss or make a deal on coronavirus-related economic stimulus.
The possibility of a stimulus deal, coupled with a reduction in China’s factory deflation in the month of July due to the surge in oil prices and improved industrial activity bolstered the outlook of the energy sector.
China is the world’s largest importer of crude oil. Therefore, improved factory activity generally boosts the oil market.
Also, the announcement from Iraq that it planned to cut an additional 400,000 barrels per day in August and September to compensate for its previous overproduction above OPEC+ quota aided the oil market this week.
“This would send out a strong signal to the oil market on various levels. That said, this would also require the international companies operating in Iraq to join in with the cuts,” Commerzbank analyst Eugen Weinberg said.
The Brent crude oil, against which Nigerian oil is priced, expanded from $41.30 per barrel it traded on Monday to $45.40 per barrel on Tuesday at 10:10 am Nigerian time.
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