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Nigeria’s Economy Expands by 2.28% in Q3, 2019

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  • Nigeria’s Economy Expands by 2.28% in Q3, 2019

Nigeria’s economy expanded at 2.28 percent year-on-year in the third quarter (Q3) of 2019, according to the National Bureau of Statistics (NBS).

Africa’s largest economy recorded a 0.47 percent increase in Gross Domestic Product when compared with the 1.81 percent achieved in the same period of 2018.

This was 0.17 percent higher than the 2.12 percent filed in the second quarter of 2019 when the economy grew at 2.12 percent and the second-largest growth rate since 2016.

According to the report, aggregate GDP rose by 13.30 percent from N33,368,049.14 million attained in the same period of 2018 to N37,806,924.41 million in nominal terms.

Oil Sector

The oil sector grew by 6.49 percent year-on-year in the third quarter, representing an increase of 9.40 percent when compared to the third quarter of 2018 but 0.68 percent lower than the 7.2 percent growth recorded in the second quarter of 2019.

On a quarterly basis, the sector expanded by 18.88 percent in the third quarter, largely due to the increase in crude oil production.

Nigeria’s crude oil production rose by 0.2 million barrels per day (mbpd) from 2.02mbpd in the second quarter of 2019 to 2.04 mbpd in the Q3, 2019, its highest in over three years. This was 0.1mbpd higher than the same period of 2018 when 1.94mbpd was recorded.

The sector contribution to total GDP rose from 8.98 percent in the third quarter to 9.77 percent in the third quarter.

Non-Oil Sector

Nigeria’s non-oil sector, the largest part of the economy, expanded at 1.85 percent in real terms in the third quarter. This was 0.48 percent lower than what was attained in the same period of 2018 and 0.20 percent higher than the second quarter of 2019.

The Information and Communication industry that saw the likes of MTN Nigeria, Airtel, etc listed this on the Nigerian Stock Exchange this year bolstered the sector contribution to national growth, still growing below expectations.

Other key drivers were Agriculture, Mining and Quarrying, Transportation and Storage, and Manufacturing.

The sector contributed 90.23 percent to GDP in the quarter, slightly lower than the 90.62 percent recorded in the corresponding period of 2018 and 91.02 percent filed in the second quarter of 2019.

Despite Federal Government efforts at diversifying the economy, the non-oil sector grew at just 1.85 percent in the third quarter while the oil sector that contributed 9.77 percent expanded at 6.5 percent during the same period. Suggesting that government efforts are yet to crystalise or have a meaningful impact outside the oil sector and also that the oil sector remains Nigeria’s source of growth.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Nigeria’s Manufacturing Activity Contracts in September Amid Weak Macro Fundamentals

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Manufacturing Sector Contracts in September to 46.7 Index Points Amid Economic Uncertainties

Nigeria’s manufacturing sector contracted again in the month of September, according to the latest report from the Central Bank of Nigeria (CBN).

The Manufacturing Purchasing Managers’ Index that measures the healthiness of the sector revealed that activities contracted to 46.9 index points in the month of September. Below the 50 threshold that separates contraction from expansion.

The CBN report also stated that out of the 14 subsectors surveyed during the month under review, only 4 subsectors reported growth in the following orders: electrical equipment; transportation equipment; cement and nonmetallic mineral products. While the remaining subsectors reported declines in the following order: petroleum & coal products; primary metal; furniture & related products; printing & related support activities; food, beverage & tobacco products; textile, apparel, leather & footwear; chemical & pharmaceutical products; fabricated metal products and plastics & rubber products. Only the paper product subsector was described as stable.

Accordingly, production in the manufacturing sector stood at 47.3 index points in the month with activities expanding in just 5 subsectors out of the 14 subsectors surveyed. Eight of the subsectors contracted in production while activities in one subsector were unchanged.

Demand in the sector also contracted at 46.4 index points as demand dropped for the fifth consecutive month in September. Only six of the 14 subsectors surveyed recorded growth. The remaining eight declined.

Job creation in the sector declined with activities as the employment index stood at 44.1 index points, suggesting that businesses in the sector are not creating new jobs with plunging demands amid falling consumer spending.

Broad-based economic uncertainties continued to dictate productivity in Africa’s largest economy as a series of weak macro fundamentals, counterproductive government policies and COVID-19 negative impacts plunged business sentiment.

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Economy

COVID-19: CBN Injects N3.5 Trillion into the Economy

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CBN Stimulates the Economy With N3.5 Trillion as COVID-19 Impact Thickens

The Central Bank of Nigeria on Tuesday said it has so far injected N3.5 trillion into the Nigerian economy following the outbreak of COVID-19 in Africa’s largest economy.

Godwin Emefiele, the Governor of the Central Bank of Nigeria, disclosed this on Tuesday after the nation’s monetary policy committee meeting.

So far, he said N216.87 billion was injected through the real sector funds; COVID-19 Targeted Credit Facility N73.69 billion; AGSMEIS N54.66 billion; pharmaceutical and healthcare support fund N44.47 billion; and creative industry financing initiative N2.93 billion.

Breaking down expenditure, under the real sector funds, he said 87 projects that comprises of 53 manufacturing, 21 agriculture and 13 services projects were funded.

While in the healthcare sector, 41 projects which include 16 pharmaceuticals and 25 hospitals and health care services were funded.

Under the Targeted Credit Facility, he explained that 120,074 applicants had received financial support for investment capital.

The Agri-Business/Small and Medium Enterprise Investment Scheme (AGSMEIS) intervention has been extended to a total of 14,638 applicants, while 250 SME businesses, predominantly the youths, have benefited from the creative industry financing initiative,” he said.

In addition to these initiatives, he said, the CBN was set to contribute over N1.8 trillion of the total sum of N2.3 trillion needed for the Federal Government’s one-year Economic Sustainability Plan, through its various financing interventions using the channels of Participating Financial Institutions.

Meanwhile, the monetary policy committee lowered interest rate by 100 basis points to stimulate growth and broaden economic productivity. The benchmarkt intrest rate was lowered from 12.5 percent to 11.5 percent.

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Economy

Labour to Begin Strike as FG Refuses to Back Down on Petrol Price, Electricity Tariffs

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Ayuba Wabba

Labour to Embark on Industrial Action to Force FG  to Reverse Increase in Petrol Price, Electricity Tariffs

The sudden increase in prices of fuel and electricity tariffs despite the negative impacts of COVID-19 on the Nigerian people has forced the Nigerian labour union once again to announce an industrial action to compel the Federal Government to emulate other economies easing COVID-19 impacts through various palliatives and measures.

Labour union on Tuesday set Monday for what it described as “unprecedented mass action” and “total strike” to get the government to reverse the hike in petrol pump price and the increased electricity tariffs.

At a meeting with members of the National Administrative Council, Presidents and General Secretaries, the Nigeria Labour Congress National Executive Council (NEC) agreed to embark on a total strike against what they described as anti-people policy.

While the ultimatum given to the federal government by Trade Union Congress (TUC) expired on Monday, TUC has extended it till Monday in line with NLC announced industrial action.

NLC President Ayuba Wabba, who read the communique of the meeting, said: “NEC resolved to reject in its entirety the issue of hike in electricity tariffs by almost 100 per cent as well as the fuel price increase in the name of full deregulation.

“This decision is premised on the fact that these twin decisions alongside other decisions of government including the increase of VAT by 7.5 per cent, numerous charges by commercial banks on depositors without any explanations will further impoverish Nigerian workers and citizens.

“Therefore, this increase, coming in the midst of the COVID-19 pandemic, is not only ill-timed but counter-productive.

“NEC also observed that the privatisation of the electricity sub-sector seven years down the line has not yielded any positive result. Whereas, the entire privatisation process, the entire sector was sold at about N400 billion, we are surprised that government within the last four years injected N1.5 trillion over and above the amount that accrued from this important asset.

“Therefore, NEC came to the conclusion that the entire privatisation process has failed and the electricity hike is actually a process of continuous exploitation of Nigerians.

“On the issue of the refineries and also the increase in the pump price of PMS, this particular issue had been on the table for more than three decades and the argument has not changed.

“Whether it is the name of full deregulation or subsidy removal, what is obvious is that it is fuel price hike and this has further eroded the gains of the N30,000 minimum wage because it has spiral effects which include the high cost of food and services and the reduction in the purchasing power of ordinary Nigerians.

“While demanding that our three refineries should be made to work optimally, NEC also concluded that government has business in doing business because the primary purpose of governance is about the security and welfare of the people and if in other countries, governments are maintaining refineries, and they are working optimally for the benefit of the people, Nigeria cannot be an exception.

“In the light of these, NEC decided to endorse the two-week ultimatum given to the Federal Government to reverse those obnoxious decisions and also pronounce that the action proposed by the Central Working Committee is hereby endorsed by the NEC that 28th of September should be the date that those decisions should be challenged by the Nigerian workers, our civil society allies and other labour centres.”

“We’ll meet. We don’t want anything that will cause more financial pain to workers.”

Speaking on the matter and the reason for industrial action, TUC’s  President Quadri Olaleye and Secretary-General Comrade Musa-Lawal Ozigi, urged to Nigerians to get ready for the “unprecedented mass action”.

TUC said it resolved to work with the NLC and civil society allies because of the magnitude of the situation. Hence, it suspended the previously planned strike to join force with NLC and others.

Consequent upon this, the ultimatum which should expire by midnight of today (yesterday) has been shifted to 28th September 2020 for effective and maximum effect.

“We want to use this opportunity to call on Nigerians, especially those in the informal sector, to bear with us while the industrial action lasts.

“There is no need for the pains we bear. It is a needless one. They ask us to tighten our belts while they loosen theirs. Services are not rendered yet we are compelled to pay estimated bills.

“You will recall that this government during its electioneering campaigns in 2014 told the world there is nothing like subsidy. We were told that they will build refineries. All that is history now.

“We run a mono-economy and any hike in fuel automatically will have an adverse effect on us, yet successive governments tow that path because they are not creative.

“As at today, about eight states are yet to commence the payment of new minimum wage and its consequential adjustment even though the President signed it into law on April 18, 2019. We have written letters to the governors and also engaged them in dialogue but all to no avail. Sometimes we wonder if these people have a conscience at all.

“The Congress hereby appeals to all Nigerians to get ready for the unprecedented mass action against corruption, obnoxious policies, rape and other violent offences, breach of the collective agreement, unemployment, etc.

“We also call on the USA, UK, Germany, Spain, etc to support our struggle by placing indefinite visa ban on our political leaders whose stock in trade is to loot and impoverish the masses and the country. We can no longer take it. Enough is enough!”

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