Amidst several projections of challenging economy in the year 2016 by many economists and the International Monetary Fund, IMF, the National Bureau of Statistics, NBS, has outlined its own position on all key economic indicators, not just for 2016 but also in the next four years to 2019.
The projections covers the annual growth rate of real Gross Domestic Products, GDP, annual Inflation rate, and the annual growth rate of the Value of Total Trade, VTT.
Gross Domestic Product, GDP
In a report released last weekend NBS said “growth in 2016 is expected to be tepid at best”. Economic tepidity is one characterised by dull activities in key market segments and performance areas. NBS’ prediction was based on the happenings in the economy recently especially in 2015 marked by huge negative impact of its dependency on oil revenue amidst price shocks.
It noted “years prior to 2015, the Nigerian economy was largely supported by the non-oil sector as supply disruptions hampered oil output. In 2015 however, various factors including political uncertainty prior to and six months after the elections, and intermittent supply shocks of refined petroleum products, and others weighted on both oil and non-oil output. The entire economy took a hit”.
Consequently GDP which is the key indicator of economic health of a country was on the downside, declining in the first and second quarter with marginal recovery in the third quarter 2015.
However, NBS stated that “in 2016, the economy is expected to grow by 3.78 per cent, as output in the oil and non-oil sectors are expected to perform marginally better relative to 2015”. According to the Bureau, Federal Government’s main economic research agency, “the declines in prices of crude oil and related refined products give the Nigerian government the opportunity for some potential savings as subsidies payments on PMS and other refined products may be diverted into more productive aspects of the economy”.
It noted that “the government has taken a step further to repeal subsidies on kerosene products. As it stands there are no subsidies on PMS and this should bode well for government coffers going forward. “In the near term, support to the non-oil sector is expected to come through initiatives by the Central Bank of Nigeria, CBN, and the Government at Federal and State levels.
“One of such initiatives is the N300 billion Naira export stimulation fund by the CBN. Increased efforts by State governments to boost internally-generated revenue, when combined with more prudent and targeted infrastructure spending, is likely to lead to better output performance”.
Going forward NBS said the 2017 to 2019 period is expected to reap the benefits of the extra N1.6 trillion into capital expenditures in the 2016 budget, adding that in particular, plans by the government authorities to increase power supply by developing critical infrastructure to transport gas to the power plants in order to add 2,000 mega watts to the country’s stock of power within the next 12 to 15 months will have multiplier effects on both the manufacturing and services sectors.
NBS stated “other measures expected to spur growth include fiscal measures such as the implementation of the Treasury Single Account, TSA, improvements in tax collection efforts and the creation of an Efficiency Unit in the Federal Ministry of Finance to ensure that scarce resources are adequately deployed. With hopes on the salutary effects of these measures NBS said over the 2017 to 2019 period, growth is expected to average 5.42 per cent.
Another key economic variable examined and projected by NBS is the inflation rate. In this report NBS has projected that inflation may rise to 10.16 by end of 2016.
But it also indicated a gradual decline such that over the 2017 to 2019 period, inflation is expected to average 9.01 per cent. NBS’s outlook for the previous year predicted that curbing inflation would be harder to achieve as a result of the devaluation of the Naira, which occurred in November 2014. Indeed the first half of the year recorded more macroeconomic volatility as the headline rate, year-on-year, recorded a wider range relative to the second half of the year.
In the Second half of the year speculative pressure on the Naira compounded supply shocks exhibited in the first half of the year. Though administrative measures by the CBN helped curb some inflationary pressure, according to NBS, speculative pressure on the Naira is likely to exist in 2016 in light of the current state of foreign reserves.
The Bureau noted, ‘’while administrative measures will help provide some cover, the downside risk of such measures is that by making imported goods more difficult to obtain, they increase the price of such goods, leading to higher inflation. “We expect that the Central Bank’s adjustment of the foreign exchange management framework will be steady in the year and will thus mean a gradual easing in prices beyond 2016”.
Value of Total Trade
2015 saw a decline in both the values of imports and exports. Exports were weighed upon by the decline in the price of crude, while overall sluggish growth as well as foreign exchange restrictions weighted on the value of imports. NBS stated that “going forward the relative lower price of the Naira is expected to result in cheaper prices of non-oil exports, and again curb increases in imports. “Nevertheless, Value of Total Trade is forecast to increase on the margin, increasing by 2.41 per cent as Imports increase by 2.88 per cent and exports increase by 2.16 per cent.
“Beyond 2016, a stabilization in oil prices while not expected to reach 2014 levels in the medium term in combination with a more competitive economy is expected to yield a rebound in both imports and exports.
“Total Trade is projected to increase by 2.41 per cent in 2016, and grow by an average 15.62 per cent yearly over the forecast period 2017 to 2019”.
Nigeria’s Exports Under US Duty-free Policy Declines to $300.48m
Nigeria’s Exports to the United States Under Duty-free Policy Declined by 88 Percent to $300.48 million
Nigeria’s total exports under the US duty-free declined by 88 percent from $2,502.86 million to $300.48 million in the first eight months of 2020.
In the latest African Growth and Opportunity Act (AGOA) policy report established in 2000, crude oil export accounted for 99.8 percent of Nigeria’s AGOA exports to the United States in 2019.
In 2019, oil and gas products worth $3.12 billion were exported to the US under the duty-free policy.
However, the plunged in global demand for Nigerian crude oil due to the COVID-19 lockdown weighed on the nation’s oil exports and revenue generation.
The United States imported 5.53 million barrels of crude oil from Nigeria in the first quarter of 2020, down from 15.07 million barrels imported in the final quarter of 2019.
Speaking on the need to improve non-oil export to take advantage of the duty-free like other African nations Mr Olusegun Awolowo, the Executive Director and Chief Executive Officer, Nigerian Export Promotion Council, who spoke at a virtual event recently said despite efforts to sensitise Nigerian exporters on the need to take advantage of the duty-free trade opportunity, only a few Nigerian exporters are benefiting from it.
He said the record crash in global oil prices is an indication that a mono-product economy like Nigeria is not sustainable and that there is an urgent need to develop non-oil export.
“We cannot rely on crude oil export as both our major source of government revenue and foreign exchange generation. We must diversify our export base,” Awolowo said.
Road Projects: Nigeria Owes Contractors More Than N390 Billion, Says Fashola
FG Owes Road Contractors N392 Billion for Road Projects
The Minister of Works and Housing, Babatunde Fashola has said the Federal Government owes companies handling the 711 road projects across the country a total sum of N392 billion.
This, he said was higher than the N276 billion allocated for road projects in the proposed 2021 budget.
The minister disclosed this on Wednesday while defending the 2021 budget of his ministry before the Senate Committee on works.
Fashola said, “With the situation on ground, a stop has come for new projects and the country needs to prioritise the existing ones in order to complete some of them.”
According to him, a total of N6.62 trillion was needed to fund the 711 road projects but because of the limited available resources, there is a need to prioritise the important ones.
He said, “We do not have the resources that we need to fix our road infrastructure at once; the very reason we need to prioritise what want to do.
“The situation on ground requires us to cut our coat according to our cloth and not according to our size because no good will come out of more new road projects now.”
Waltersmith’s 5,000bpd Modular Refinery in Imo State to Commence Operations
5,000bpd Modular Refinery Built in Imo State to Start Operations
The Department of Petroleum Resources (DPR) has said the 5,000 barrels per day Modular Refinery project built in Imo State is ready for operations.
Sarki Auwalu, the Director, DPR, disclosed this during a pre-commissioning visit to the project site in Ibigwe, Imo State.
In a statement released by Waltersmith, Auwalu was quoted as saying the purpose of his visit was to ensure that the refinery was ready to commence operations.
He said “We can confirm that the refinery is very much ready to commence operations. We have seen all the preparations.
“To us, the plant is alive. The commissioning is just symbolic. Everywhere is ready to start off. My overall assessment is excellent.
“We have been to other modular refineries but we have not seen anything like this – the space, the way it is arranged and the way it will work.”
The 5,000 barrels per day modular refinery is scheduled for inauguration this month. The refinery has crude oil storage capacity of 60,000 barrels and it is expected to deliver more than 271 million litres per year of refined petroleum products.
Auwalu said, “The role we play is to enable businesses and create opportunities. When DPR issues you a licence, it enables you to invest and as a result of that opportunity we create, that business is enabled.
“Waltersmith is one of our success stories. We consider the project as ours. We have been tracking their growth and we are happy to see that our child is growing. It is our plan that they expand and they have the potential.”
Speaking on the project, Abdulrasaq Isah, the Chairman, Waltersmith Refining and Petrochemical Company, said the project is the first phase of a series of refinery projects that will lead to the delivery of up to 50,000 barrels per day in refining products.
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