- Inflation Rate May Hit 20% in First Quarter
Economic and financial experts have said that the country’s inflation rate may rise further to 20 percent during the first quarter of this year from the current 18.4 percent.
They, however, said the inflation rate was expected to reduce significantly as the fiscal and monetary authorities would begin to implement certain policies to better the economy.
The experts made this known in investment notes detailing their outlook for this year on Sunday.
An economic analyst at Ecobank Nigeria, Mr. Kunle Ezun, wrote, “Inflation is likely to accelerate towards 20 per cent by the end of Q1 17, driven by fiscal expansion, energy cost and high FX cost caused by the over 30 per cent naira devaluation in 2016.”
“Slow but steady rise in liquidity arising from projected government spending in 2017 will add to the pressure on the naira owing to higher import demand; this will stoke inflation.”
Speaking further, he said tight monetary policy, higher borrowing and higher inflation rate would continue to put pressure on domestic interest rates.
He said, “Exchange rate uncertainties will persist due to sustained low oil prices, lower FX reserves, and robust import demand; we expect a managed interbank exchange rate of 305.50/dollar and a parallel market rate of 495/dollar in 2017.
“The naira will remain under pressure largely due to a structural imbalance between the dollar supply and demand, which will be reflected in proliferated FX market and rates.”
According to the expert, there will be high but declining banking sector liquidity as structural imbalance between the dollar supply and demand continues to weigh on the economy.
On key risks to the outlook, Ezun said a fall in oil prices would add pressure on external reserves, fuelling more pressure on the naira.
In the same vein, the Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said if the CBN reviewed its foreign exchange policies to enable the market to function effectively, the gap between the official and parallel market rates of the naira would become smaller.
He said, “Forex policies usually complement trade and investment policies. The Nigerian government will in 2017 strive towards greater coordination of these policies, and will move from its current bias for a command economy monetary policy towards a mixed economy.
“I believe that with oil prices at $55 per barrel and production back up to 2mbpd, the naira will slip in the interbank markets to N350-N380/$. It will fall at the parallel market to N520/$ before recovering sharply to N425/$. These projections are based on the assumption that the market will be reformed and that sanity will return to what is now essentially a foreign exchange asylum.”
To escape from what he described as forex trap, Rewane stressed the need for the authorities to understand the importance of a properly functioning market.
He said, “The CBN will need to eliminate or phase out regulations that stifle market activity, create a sense of two-way risk in the market, reduce its market-making role and stop indirect or overt rate determination, and increase market information on the sources and uses of foreign exchange.
“There must be liquidity, transparency and openness, and the CBN as a regulator must be firm in dealing with market infractions.”
Nigerians to Pay N417.09bn in 4 Months for Electricity Consumption
Electricity Consumers to Pay N419.09bn in 4 Months
Following the recent increase in electricity tariffs, the 11 distribution companies in the country are allowed to collect a total of N417.09bn from their customers from September to December.
The Discos had early this month announced what they called ‘new service reflective tariff’, which took effect from September 1, with the tariffs being charged residential consumers receiving a minimum of 12 hours of power supply rising by over 70 per cent.
The amounts recoverable by the Discos through the allowed end-user tariffs range from 61 per cent to 90 per cent of the total revenue required, according to the Nigerian Electricity Regulatory Commission.
The tariff shortfall, which is the difference between the Discos’ revenue requirement and the amounts they are allowed to recover from their customers by the regulator, will be funded by the Federal Government.
The media had reported that the Federal Government would fund a tariff shortfall of N104.5bn that will be recorded by the Discos in the four-month period, according to the Nigerian Electricity Regulatory Commission.
Ikeja Disco is allowed to recover N66.52bn (90 per cent of its total revenue requirement) from September to December, a NERC document showed.
Eko Disco is allowed to recover N48.46bn (86 per cent); Kano Disco, N34.13bn (84 per cent); Abuja Disco, N49.16bn (83 per cent); and Enugu Disco, N38.81bn (82 per cent).
The amounts recoverable by Kaduna Disco is N35.22bn (82 per cent: Ibadan Disco, N54.61bn (78 per cent); Benin Disco, N34.94bn (74 per cent); and Yola Disco, N13.34bn (71 per cent).
Port Harcourt and Jos Discos are allowed to recover N23.63bn (68 per cent) and N18.27bn (61 per cent) respectively.
NERC said the Power Sector Recovery Plan provided for a gradual transition to cost-reflective tariffs with safeguards for the less privileged in the society, adding that full cost-reflective tariffs would be charged by July 2021.
“The Federal Government, under the PSRP Financing Plan, has committed to fund the revenue gap arising from the difference between cost-reflective tariffs determined by the commission and the actual end-user tariffs during the transition to cost-reflective tariffs,” it added.
According to the commission, all the Discos are obligated to settle their market invoices in full as adjusted and netted off by applicable tariff shortfall approved by the commission.
It said the Discos would be liable to relevant penalties/sanctions for failure to meet the minimum remittance requirement in any payment cycle in accordance with the terms of its respective contracts with the Nigerian Bulk Electricity Trading and the Market Operator, an arm of the Transmission Company of Nigeria.
The Discos only collect an estimated 24 per cent of the tariff revenue, while the balance goes to the TCN, generation companies and other industry stakeholders, according to the Association of Nigerian Electricity Distributors.
Nigeria Emerges 13th Rice Producer Globally, 1st in Africa
Nigeria is the 13th Rice Producer Globally and 1st in Africa
Following the series of adjustments made by the federal government to stimulate local production of rice and curb the large inflow of foreign-produced rice, Nigeria has emerged 13th largest rice producer in the world and number one in Africa just two years after President Buhari moved against the importation of rice.
The Minister of Agriculture and Rural Development, Muhammed Sabo Nanono, disclosed this at the commissioning of the Agribusiness Incubation Centre of Federal University Dutse, Jigawa State.
In a statement issued by Ahmed Aminu, the Technical Assistant to Nanono, the minister said the nation has managed to transition from a net importer of the commodity to a sizeable producer that is gradually moving towards self-sufficiency in rice production.
Nanono said president Buhari has consistently pursued agricultural revolution to ensure that Nigeria attains food security and wealth creation from within.
The Minister said “the rice production drive as championed by President Muhammadu Buhari administration has triggered off massive industrialisation with the springing up of countless rice milling facilities across the country generating tremendous job opportunities down the rice value chain as well as creating sizeable wealth for many.”
Sabo Nanono further stated that Kano State alone has 14 integrated rice mills with the capacity to produce between 180 and 400 metric tonnes per day. He added that another 32 integrated mills also abound in Kano with a combined production capacity of another 100 to 120 metric tonnes per day.
“Thousands of rice milling clusters can also be found all over the federation, especially in the northern part, which adds up towards the attainment of tangible self-sufficiency in the staple food item as would enable Nigeria to sell rice to our neighbours in the not too distant future.”
FG Establishes New Crime Agency, Proceeds of Crime Recovery and Management Agency
Proceeds of Crime Recovery and Management Agency Established by Government
The Federal Government has approved the creation of a new crime agency called “The Proceeds of Crime Recovery and Management Agency” to better manage the loots recovered from financial criminals by the growing list of anti-graft agencies established by the government.
The new agency was approved on Wednesday at the Federal Executive Council (FEC) meeting presided over by President Muhammadu Buhari.
The president said the new agency seeks to move the fight against corruption to the next level as there is no agency of government that “can give you off-head the number of landed assets, number of immovable assets, the amount in cash that are recovered by the federal government by way of interim forfeiture overweigh of a final forfeigture.”
“So, it is indeed overtime a kind of arrangement that is not uniform and consistent.”
He added: “Next level of transparency, next level of accountability in essence, will have in place an agency of government that is exclusively responsible for anything proceeds of crime.
“A one-stop shop arrangement by which all the assests that are recovered arising from crimes that are indeed vested in the federal government, you have a one-stop arrangenet where you can have an information. As it is for example, the Federal Ministry of Justice is only in a position to account and giving comprehensive account of what
recoveries were made by the ministry.
“But any recovery made by the police, DSS, the Ministry of Justice is not in a position to know. So, for the purpose of decision making and policy, the federal government is not in a position to have a wholistic appreciation.
“So, by the bill that is now presented for the consideration of the council, we’ll have a law that establishes an agency, and secondly, an agency.
“And as you rightly know, Mr President has sanctioned ever since he came on board, that there should be a budget line, a budget item for recovered assets.
“So, if you have a budget item for recovered assets, this agency will now be in a position to provide information to the Federal Ministry of Finance, Budget and National Planning on demand as to what amount is available for budget purposes, thereby establishing the desired transparency, the desired accountability which has not been available before now.
“So, it is about a memo that seeks to establish a legal framework, that seeks to establish institutional framework, that seeks to further take the fight against corruption to the next level by way of establishing transparency, accountability and making the possibility of forfeiture a proceeds of crime easy through the sanctioning of non-conviction based forfeiture among others.”
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