LCCI png

Nigeria’s economic recovery in Q2 depends on increased investment, non-oil sector – LCCI

The Lagos Chamber of Commerce and Industry (LCCI) has projected that Nigeria’s economy is expected to commence full recovery in the second quarter of 2021 following disruptions occasioned by the COVID-19 outbreak.

READ ALSO: Inflation widens negative real return on investment

The chamber, however, adds that this anticipated recovery will be driven majorly by the increased inflow of Foreign Direct Investments (FDI) and full utilization of the country’s non-oil sector.

Addressing journalists at the chamber’s quarterly press briefing on the state of the economy in Lagos, Toki Mabogunje, president, LCCI, said although Nigeria exited recession in the fourth quarter of 2020, it did not imply an end to the country’s economic woes as growth has remained fragile since then.

“Growth recovery should gain momentum starting from the second quarter of 2021, with oil sector in deep contraction due to suppressed production, fragile recovery in global oil demand, regulatory and investment climate issues, we expect the non-oil sector to drive growth in the year 2021,” Mabogunje said.

“However, major risks to economic growth include heightened security concerns, weak confidence of investors, relatively lower oil production and weak commitment to key policy, regulatory and institutional reforms,” she explained.

Read Also: Declining oil production signals more trouble for Nigerian economy

She said that increased inflow of investment is also critical to achieve economic growth, and urged that the federal government implement policy reforms that will attract investments and ease the business environment, particularly in addressing insecurity and multiple exchange rate windows in the country.

Mabogunje noted that there is a strong correlation between insecurity and investment, however, insecurity has worsened over time in Nigeria, causing the country to be perceived as an unsafe location for investments which scares prospective investors away.

She said if not promptly addressed, insecurity will continue to weaken the government’s efforts in attracting private investments into the country.

Other than the rising insecurity, she said the country’s foreign exchange policy direction needs to be clear and precise, noting essentially the need to unify Nigeria’s multiple exchange rates. She added that policymakers and financial regulators need to complement their activities and policies to avoid lack of cohesion.

She reasoned that the lack of cohesion among policymakers sends a negative signal to the investment community

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Inflation MPC

Inflation widens negative real return on investment

Nigeria’s March inflation widens negative real return on investment

Fixed-income investors seeking high-yielding securities in the light of the prevailing developments in the markets were not disappointed in the last auction on Wednesday, as rates on the 364-day Federal Government short-term Treasury bills (T-bills) rose to 9 percent from 1.5 percent at the beginning of the year.

READ ALSO: Inflation rate hits 18.17%

But with Nigeria’s 18.17 percent inflation rate in March, the highest in four years, the real return on the Federal Government less risky short-term debt instrument depreciated further when compared with March 2020, when the inflation rate stood at 12.26 percent.

While inflation-adjusted return on the shorter 91-day and 182-day bills were -9.77 percent and -8.48 percent, respectively, in April last year, the real return on the bills dropped further to -16.17 percent and -14.67 percent in the comparable month of 2021, thanks to Nigeria record-high 18.17 percent inflation rate.

The trend was the same for the longer 364-day bill. From a -6.96 percent real return on investment last year, the bill gave investors -9.17 percent in the same period of this year.

As the interest rate is trying to play catch up, inflation is moving upward too, Yinka Ademuwagun, research analyst, FMCGs, United Capital plc, said.

“The real return is still clearly negative because inflation is rising faster. If inflation was still at, say, the 11 percent that reported before the border closure last year, then we would have been fine,” Ademuwagun said.

However, the recent uptick in the yields on the short-term government instrument is helping to comfort investors against the rate at which the high inflation rate is impacting their returns.

“While the rising inflation has broadened negative real return, it is comforting to know that yield on fixed income instruments is also on the rise, which will bridge this gap,” Ayodeji Ebo, head, retail investment, Chapel Hill Denham, said.

After hitting a four-year low of near-zero percent in 2020, yields on the Federal Government risk-free treasury bills climbed to more than 16 month-high, as compiled from Nigerian Treasury bills primary market auction Results for April 14, 2021.

While investors bid at a rate as high as 8 percent for the 91-day bill, 9 percent and 13 percent for the 182-day and 364-day bills, respectively, the Central Bank of Nigeria (CBN) settled at 2 percent, 3.5 percent and 9 percent, respectively. The stop rates for the 91-day and 182-day bills remained sticky for the fourth consecutive auction, but the 364-day bill increased by 100 basis points compared to the 8 percent reported in the previous auction.

Market analysts link the increase in the stop rates to the hike in CBN’s Open Market Operation (OMO) rates some weeks ago. Investors are bidding at higher rates and the Debt Management Office (DMO) also needs to raise the cut-off rate to fill some of the orders, an analyst noted.

Weeks after the CBN shocked the market with a 10.10 percent stop rate for the 362-day OMO bill, the highest levels seen in almost a year, fixed-income investors demanded higher rates for T-bills.

Analysis of the T-bills auction result for April 14, 2021, shows that the CBN raised a total of N153.38 billion from the 91-day, 184-day and 384-day bills, N83.82 billion more than the initial N69.56 billion the apex bank offered to raise in this week’s auction.

Investors were less interested in the shorter 91-day and 182-day bills as they attracted a lower interest rate but were willing to subscribe to the longer 364-day bill, which rose by 100bps to 9 percent interest rate.

While the 364-day with a much higher interest rate was oversubscribed by N168.45 billion, the shorter 182-day was oversubscribed by N9.44 billion but the 92-day bill was undersubscribed by N50 million.

The CBN planned to raise N15.92 billion for the shorter 91-day bill, investors were willing to subscribe with N15.87 million. The apex bank was eventually able to allot N12.46 billion, N3.46 billion more than its initial offer.

Investors were willing to bid with N13.94 billion for the CBN N4.50 billion offered for the 182-day bill. The apex bank was able to raise N8.80 billion, N4.3 billion more than its initial offer.

While the CBN offered to raise N49.14 billion through the longer 364-day Treasury bill, investors said they were willing to invest N217.59 billion. The apex bank later raised N132.12 billion, N83 billion more than its initial offer.

Though the recent uptick in T-bills rate to more than one year-high is good news for fixed income investors whose real return appreciated to -9.17 percent in April from -9.33 percent in March, the expected high inflation rate remains a challenge.

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Food inflation

Inflation rate hits 18.17%

Nigeria’s consumer price index, which measures the rate of increase in the price of goods and services, increased to 18.17 percent in March from 17.33 in February, according to an inflation report released by the National Bureau of Statistics on Thursday.

Food prices are surging on the back of lingering security challenges, festive induced demand and an acute dollar squeeze

READ ALSO: FG begins full commercialization of Federal Mortgage Bank

This implies that Nigerians spent more on purchasing goods and services in the month of March, compared to February.

The March figure is the highest since January 2017 when it climbed 18.72 percent.

“Nineteen straight months of rising inflation rate and momentum is not even slowing. Looks like we are going to break the 2017 record in Q2,” Omotola Abimbola, assistant vice president at Chapel Hill Nigeria tweeted on Thursday.

The NBS data also showed Nigeria’s food inflation is now at the highest in over 12 years. Food inflation increased by 1.16 percent, year on year, from 21.79 percent in February to 22.95 percent in March.

The rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, meat, vegetable, fish, oils and fats and fruits.

The “All items less farm produce” or Core inflation, which excludes the prices of volatile agricultural produce rose to 12.67percent in March 2021, up by 0.29percent when compared with 12.38percent recorded in February 2021.

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mortgage house

FG begins full commercialization of Federal Mortgage Bank

As part of ongoing reform in the Housing sector, the federal government (FG) has commenced a process that would see the repositioning of its owned Mortgage Bank (FMBN) as a profitable entity.

READ ALSO: End current monetary rascality, Obaseki replies FG

Alex Okoh, director-general, Bureau of Public Enterprises (BPE), said efforts to reposition the bank are for optimum performance and to bridge the country’s huge housing deficit estimated at 22 million as at 2019.

Consequently, the BPE on Wednesday inaugurated an 8- member committee for the Full commercialisation and recapitalisation of the Bank.

The Joint Technical Committee (JTC) which has 60 days to conclude set task comprises four members each from the Bureau of Public Enterprises (BPE) and the Federal Mortgage Bank of Nigeria (FMBN).

The Committee is expected to among others things; conduct a diagnostic review of the Bank’s existing institutional framework, organisational structures and operational modality.

The committee would review and harmonise all existing policies, law and regulations governing mortgage banking in Nigeria in order to identify areas that would facilitate the implementation of full commercialization and recapitalization of the FMBN.

The Committee is also expected to harmonise and synchronize all the reform processes of the FMBN with the ongoing reform of the Housing sector; develop strategies on how to reform FMBN that would enable it to raise funds from the money and/or capital markets without government guarantees.

It would further undertake a review of the legal, institutional and operational frameworks of mortgage banking in a few African counties and other emerging economies with a view to learning from their key success factors (KSFs) that can be replicated.

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Obaseki

End current monetary rascality, Obaseki replies FG

What is fast becoming a forth and back between Edo State Governor Godwin Obaseki and the Federal Government continued on Thursday as the governor urged the FG to stop the act of deliberately ignoring the prevailing economic challenges in the country and take urgent steps to end the current financial rascality.

READ ALSO: LCCI Seeks National Asset Register For Debts

Obaseki, in a tweet via his official Twitter handle @GovernorObaseki titled “Our advice is that we stop playing the ostrich”, noted that he is not joining issues with the Federal Ministry of Finance but was only offering useful advice for the benefit of Nigeria.

The governor had recently expressed worry over the country’s penchant for borrowing, noting that the debt profile could rise to N16 trillion by the end of 2021.

He also claimed that the Federal Government printed additional N50 billion-N60 billion to top up the Federal Accounts Allocation Committee (FAAC) for states to share.

Zainab Ahmed, minister of finance, budget and national planning, on Wednesday, however, said it was untrue that the FG printed N60 billion in March to support federal allocations to states.

But responding via a tweet on Thursday, Obaseki, who stood by his claim, urged the minister of finance, budget and national planning to rally Nigerians to stem the obvious fiscal decline confronting the nation.

“We believe it is our duty to offer useful advice for the benefit of our country. Rather than play the ostrich, we urge the government to take urgent steps to end the current monetary rascality, so as to prevent the prevailing economic challenge from degenerating further,” Obaseki said.

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LCCI

LCCI Seeks National Asset Register For Debts

The Lagos Chamber of Commerce and Industry (LCCI) has sought a national asset register to document the specific projects that the debts are incurred for so as to ease the pressure of debt service on the budget.

READ ALSO: FDC Analysts Predict March Inflation To Hit 17.8%

“We note that the majority of Nigeria’s debts are not linked to assets or specific projects. As such, it is critical to create a national asset register, and have a coordinated mechanism in place for valuing and managing Nigerian assets”, noted LCCI President Toki Mabogunje

She faulted government’s penchant for issuing new debt to redeem maturing ones as not being an optimal debt management strategy.

“It is critically important to replace existing debts with asset-linked securities to reduce debt cost. This will ease the pressure of debt service on the budget,” Mabogunje said.

she said further that LCCI acknowledged the introduction of the electronic call-up system at Apapa and Tin Can ports, which is aimed at resolving the systemic gridlock crisis around the Apapa corridor caused by port congestion.
“This measure is a work-in-progress and may not alone provide a sustainable solution to numerous issues faced by economic agents at the ports.

“It is important for the Federal Government, Lagos State government, Nigerian Ports Authority (NPA), and other relevant stakeholders to address the internal issues within the ports including the terminal operators, custom processes and procedures, quality of cargo handling equipment, lack of credible framework for dispute resolution on import valuation and classification, presence of several government agencies with overlapping roles, serial extortions and racketeering; and other structural bottlenecks stifling the ease of doing business at the ports.

“The solution to this problem must be holistic and inclusive. It demands strong political will to bring discipline to the entire cargo clearing and export evacuation processes.

Despite the laudable initiative of the Electronic Call Up system and the initial successes recorded on its introduction, there seems to be a reversion to the old ways. Many importers and exporters are expressing severe frustrations,” she said.

The LCCI president asserted that to achieve an enabling investment environment for the advancement of the Nigerian economy and the good of all investors and economic players, right policy and regulatory framework are imperative,” Mabogunje concluded.

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Inflation MPC

FDC Analysts Predict March Inflation To Hit 17.8%

The upward surge in inflation may not decline anytime soon as indications show that Nigeria’s economy may witness a 0.47 percent jump in headline inflation to bring it to 17.8 per cent, analysts have projected.

READ ALSO: Organization commends SMEDAN DG over rural healthcare intervention

The February data from the National Bureau of Statistics (NBS) put the inflation rate at 17.33 per cent and with the static economic condition, the rate is expected to inch up.

The analysts’ projection comes on the heel of higher prices of goods and services that has left the citizens impoverished in addition to higher food prices that have left many malnourished. The high price of food items since the beginning has not dropped and worsened by the insecurity situation that has kept farmers away from their farms.

Following this projection, the Financial Derivatives Company (FDC) in its Economic Monthly Publication for April 13, said the increase in inflation will be the 19th consecutive monthly increase and a 48-month high.

With the increase in food and core sub-indices in March, food inflation is projected to go up to 22.3 per cent while the core sub-index could climb to 12.6 per cent. a development which the FDC said could make life unbearable for the average consumers.

The current situation, they said could push the Central Bank of Nigeria (CBN) to reconsider its tightening cycle to curb the inflationary cycle

Analysts supported the views with the fact that monetary conditions and monetary policy move in opposite directions to keep the price level under control and when monetary conditions are loose, the CBN adopts a tight monetary policy stance to ensure price stability and vice versa.

“With inflation spiralling and currently double, the upper band of the CBN’s inflation target (9%), a likely increase in interest rates is not only imminent but almost inevitable”, the report noted.

They noted that the exchange rate pressures, government’s growing propensity for borrowings, among others, have proven to be major inflation drivers and all indications show that the end is not in sight.
https://insidebusiness.ng/163171/harder-times-as-fdc-analysts-predict-march-inflation-to-hit-17-8/

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SMEDAN

Organization commends SMEDAN DG over rural healthcare intervention

A health promotion service organization, Klytical Allied Ltd has commended the Director-General, Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Dr. Dikko Radda for his humanitarian intervention in rural healthcare.

READ ALSO: UBA BUSINESS SERIES TO EQUIP SMES WITH PERFORMANCE MANAGEMENT STRATEGIES

The Director General was applauded for his interest in and sponsoring of a health outreach in Charanchi and Dutsin Ma local government areas of Katsina State during which about 2759 villages received medical attention, medications and referral on various diseases.

A team of experts from Klytical Allied Ltd led by Dr. Vincent Okpara were at SMEDAN headquarters in Abuja on Wednesday to make a visual presentation of the outreach and award of honour to Dr. Radda.

Okpara said the outreach done in three phases comprised of health talk in preparation for the outreach; distribution of medications and referral for further medical attention.

Making a presentation of the outreach, Dr.Ifeyinwa Ani – Osheku, said perennial diseases and ailments prevalent among people of the area include high blood pressure, diabetes, cancer, stroke, low back pain, arthritis,respiratory tract, urinary tract problems, cataract and glaucoma were attended to by the team of experts and 25 health volunteers.

The organisation called on persons in public offices to emulate the kind gesture of the SMEDAN director general.

Responding, Dr. Radda said he was impressed by the level of commitment of a team of medical experts from Klytical Allied Ltd to the outreach project.

He said “I sincerely thank the organisation for providing the outreach. The approach to the outreach was a success story. You have done it beyond my expectation . What I saw and heard from people is quite encouraging.

“I will like you to do more of this sacrifice to the nation. It is a fact that there is deficiency in healthcare delivery. Government alone cannot shoulder the responsibility. We need organisations like yours to bridge the infrastructural deficit in medicine and healthcare sector.

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Akinkugbe_Business-Series

UBA BUSINESS SERIES TO EQUIP SMES WITH PERFORMANCE MANAGEMENT STRATEGIES

UBA BUSINESS SERIES TO EQUIP SMES WITH PERFORMANCE MANAGEMENT STRATEGIES FOR ORGANISATIONAL GROWTH

READ ALSO: Federal Government Denies Printing N60bn To Share In March

As part of its commitment to support the growth and sustainability of Micro, Small and Medium-scale Enterprises (MSME) in the continent, Pan African financial Institution, United Bank for Africa (UBA) Plc, is set to organise the next edition of its UBA Business Series.

The UBA Business Series which is a monthly event, is an MSME Workshop as well as a capacity building initiative of the bank where business leaders and professionals share well-researched insights on best practices for running successful businesses, especially in the face of the difficult operating environment that dominates the African business landscape.

Through this initiative,  UBA has been assisting with essential tips to help businesses re-examine their models and strategies and ensure that they stay afloat and remain thriving.

The topic for the next edition of the series  is ‘ Managing Performance for Business Growth,’  and it will be held on Wednesday, April 14, 2021 via Microsoft Teams.

At this session, the Managing Director, Secure ID Limited, Mrs Kofo Akinkugbe, will be sharing useful tips and insights on the key strategies of performance management to boost business growth.

Akinkugbe is the founder of SecureID Nigeria, a MasterCard, VISA and Verve certified Smartcard Personalization Bureau and Digital Technology company.

She currently serves as the Managing Director/CEO, Secure Card Manufacturing, – a Smartcard manufacturing plant producing high security identity cards and documents for the Banking, Telecoms and Public sectors across Africa and beyond.

The capacity building event is a virtual session which is open to all – including business owners and leaders – and will be held on Wednesday, April 14 th, 2021, at 2pm WAT. Interested participants can register via  http://bit.ly/UBASMEWorkshopMarch2021

UBA’s Head, SME Banking, Sampson Aneke said of Akinkugbe,  ‘with her vast experience garnered over the years from various sectors,  she  will help business owners understand how performance management strategies can be effectively implemented to ensure business growth’.

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Federal-Ministry-of-Finance-Budget-and-National-Planning-the-Minister-of-Finance-Zainab-Ahmed-min

Federal Government Denies Printing N60bn To Share In March

The Federal Government has debunkfed claims that it printed N60 billion to support federal allocations to states in March, describing the comment made by the Edo State Governor, Godwin Obaseki as untrue and saddening.

READ ALSO: Sell-offs in microfinance banks over recapitalisation

The Minister of Finance, Budget and National Planning, Zainab Ahmed explained that despite Obaseki’s worry that Nigeria is in ‘huge financial trouble’, the country’s debt profile is still within sustainable limits.

Recall that Edo State Governor was quoted as saying at the Edo transition committee stakeholders engagement last Saturday that, “When we got Federation Account Allocation Committee (FAAC) for March, the federal government printed additional N50 billion- N60 billion to top-up for us to share.

“This April, we will go to Abuja and share. By the end of this year, our total borrowings are going to be within N15 trillion-N16 trillion.”

But the Minister of Finance in a statement by Yunusa Tanko Abdullahi
Special Adviser, Media & Communications, maintains that what is distributed at the monthly FAA meetings were generated revenue from government institutions available to the public at the ministry’s website.

Ahmed said: “The issue that was raised by the Edo State Governor for me is very, very sad because it is not a fact.

“What we distribute at FAAC is a revenue that is generated and in fact, distribution of revenue is a public information. We publish revenue generated by Federal Inland Revenue Service (FIRS), the Nigerian Customs Service (NCS) and the Nigerian National Petroleum Corporation (NNPC), and we distribute at FAAC.

“So, it is not true to say we printed money to distribute at FAAC; it is not true. On the issue of borrowing, the Nigerian debt is still within a sustainable limit.

What we need to do, as I have said several times, is to improve our revenue to enhance our capacity to service not only our debt, but to also service the needs of running government on day-to-day basis. So our debt currently at about 23 percent to GDP is at a very sustainable level if you look at all the reports that you see from multilateral institutions,” Ahmed concluded.

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