Food inflation

Nigeria’s accelerating food inflation shows failure of border closure

The continuous rise in the prices of food in Africa’s most populous country since 18 months ago is an indication that the border closure policy implemented by the Nigerian government failed to serve its purpose.

READ ALSO: Boost For Business In Off-Grid District As Mass Solar Power Debut

Food prices in Nigeria have been making rapid climbs since August 2019 – when the policy was introduced and have shown no sign of receding despite the reopening of the country’s land borders for the African Continental Free Trade Area (AfCFTA) agreement.

It has caused headline inflation to accelerate to a 4-year high of 17.3 percent in February 2021, mainly driven by food inflation that has quickened to 20.6 percent – highest in 13 years.

“The policy brought hardship to Nigerians which we are still experiencing despite the reopening of the borders. It was the policy that triggered an upsurge in food prices,” said a CEO who does not want his name mentioned on print.

“The policy did not increase local production but only enriched few who benefitted at the expense of majority Nigerians,” he said.

Nigeria had in August 2019 closed its land borders with neighbouring West African countries to stem the smuggling of goods – rice in particular, and encourage local agricultural production.

However, the policy failed to stem smuggling as foreign rice and other key staples made entry into the Nigerian markets through new routes at higher costs, thus raising questions about the effectiveness of the policy.

A report by the Institute for Security Studies states that the border closure policy only resulted in creating new smuggling routes as illicit dealers were determined to move their goods across borders.

Nigeria still has an increasing demand-supply gap in most of its staple foods, as the country’s population of 2.6 percent per annum is growing faster than its food production.

According to experts, it was the shortfall in food supply that resulted in surging prices.

“We are yet to bridge our huge demand-supply gaps in most staples, so when we introduced the border closure policy, prices started escalating because of these gaps,” said Abiodun Olorundenro, manager, AquaShoots, said in a telephone response to questions.

“The demand-supply gaps and cheaper imported products are what is constantly fuelling smuggling of agricultural produce. What we need to do is to make our agricultural commodities competitive,” Olorundenro said.

He noted that Nigerians were worse off than they were before the introduction of the protectionist policy owing to the upsurge of food prices.

Similarly, differences in policies across West African countries, prices of goods, and preference for imported commodities by Nigerians also shore up smuggling in the region.

Nigerians prefer to source certain products from Benin Republic because the prices are cheaper compared to the locally-produced ones.



Boost For Business In Off-Grid District.

Boost For Business In Off-Grid District As Mass Solar Power Debut.

Small, Medium and Large Scale business owners in the off-grid environment may now be relieved following the launch of Solar Power Naija Programme which will take care of their electricity need.

READ ALSO: Regulate SMEs with human face, CEO urges govt

Vice President, Yemi Osinbajo weekend flagged off the pilot phase of the programme in Jangefe Community in Roni Local Government Area, Jigawa State, from where it will get to all geopolitical zones in the country.

The project is coming under the Economic Sustainability Plan, as part of the promises made by President Muhammadu Buhari to provide renewable energy for over 25 Million Nigerians.

The epileptic power situation in the country has inspired the collapse of numerous businesses and pushing many into joblessness.

Following the launch in Jigawa State, Laolu Akande, the Senior Special Assistant on Media and Publicity to the Vice President said the rollout will continue across the six geopolitical zones in Edo, Lagos, Adamawa, Anambra, Kebbi and Plateau.

The Solar companies are also in the pipeline for the Solar Power Naija facility to continue the march to 5 million connections during the life of this present administration.

The scheme is targeted to go to the entire 36 States and the FCT covering 25 million Nigerians in the end.

The commencement of the Solar Power Naija programme means the community and business will get 1,000 Solar Home Systems connections for its about 5,000 population.

The Jangefe community in Jigawa State, which is the first location to be covered by the A-Solar company, will pay monthly energy payments until the systems are fully paid for at the point in which there will be a transfer of ownership to each consumer in the community.

The Vice President noted that the “President had emphasised that we could no longer rely solely on the grid if we were to electrify the whole country. Which meant that we had to develop an effective strategy for decentralizing the power supply. Two obvious things to do were, first to think of implementing more off-grid solutions and to use renewable energy especially solar power.”



Regulate SMEs with human face, CEO urges govt

Chief Executive Officer, CEO of a leading multipurpose investment organisation, Blue Diamonds, Mr. Raphael Chukwujekwu, has stated that only regulation with a human face can create an enabling environment for small and medium businesses SMEs to thrive in the country.

READ ALSO: Nigerian economy: We are in huge financial trouble – Obaseki

Mr. Chukwujekwu who made this remark at the in Abuja at the unveiling of a new product, Smart Blue Money Mobile App, advised government at all levels not to introduce counter-productive regulations capable of stifling small businesses and killing young people’s initiatives.

According to Chukwujekwu, government can make the environment business-friendly such that small businesses would be able to grow, adding that part of the activities of Blue Diamonds is to provide project financing to young people with viable SMEs plans.

He said the Smart Blue Money Mobile App helps people to save, invest, manage and grow their income with a view to securing their future.

On other benefits of the new product, he said, “In saving money, it creates a certain level of employment opportunities, because there is provision for agency in the app. Through it, people can be gainfully employed by downloading the app and helping people to transfer money, helping people to buy data, buy recharge cards or airtime, pay for cable subscriptions and electricity bills. By so doing, it reduces unemployment and it adds to the nations GDP. ”



Nigerian economy: We are in huge financial trouble – Obaseki

“We say remove fuel subsidy, they say no. This April, next week again, we will go to Abuja to share. By the end of this year, our total borrowing is going to be in excess of 15 to 16 trillion”. Obaseki.

Governor Godwin Obaseki of Edo State, an economist and former investment banker, at a public forum recently painted a gloomy picture of the Nigerian economy. Below are his exact words:

READ ALSO: FAAC: Nigerian states share N9trn in 4 years, yet some owe salaries

At the end of the month we all just go to Abuja, we collect money and we come back and we spend. My brothers and sisters, I am an economist, and I am an investment banker; we are in trouble. Huge financial trouble!

We say remove fuel subsidy, they say no. This April, next week again, we will go to Abuja to share. By the end of this year, our total borrowing is going to be in excess of 15 to 16 trillion. My worry is that we would wake up one day, like Argentina, the naira would be 1000, 2000 to a dollar, and it would keep moving. You can imagine a family, you don’t have money coming in, and you just keep borrowing and borrowing without any means or idea of how to pay back.

And nobody is looking at that; everybody is looking at 2023. Everybody is blaming Mr President as if he is a magician, Obaseki.

So, that change in the world economy which is now affecting Nigeria is going to be one of the major factors that will affect our politics going forward; whether we like it or not.



Why SEC banned investment technology platforms from offering foreign stocks to Nigerians

  • Some big-name investment technology platforms that allow Nigerians to invest and trade in stocks listed on the Nigerian and foreign stock exchanges have been declared illegal by the Federal Government.
  • A circular issued on April 8 2021, by the Nigerian Securities and Exchange Commission warned unregistered investment tech platforms against providing foreign securities.
  • Chaka, Trove, Bamboo, and Risevest are among the investment tech platforms required to secure a license before continuing operations.

What’s the issue?

The Securities and Exchange Commission (SEC) on Thursday issued a directive on the “proliferation of unregistered online investment and trading platforms” in the country, declaring that only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public.

In other words, foreign stocks such as Microsoft, Tesla, Amazon, Netflix, which are currently not listed within Nigerian jurisdiction, should not be offered to Nigeria-based residents and businesses.

Why did SEC ban investment technology platforms from offering foreign stocks to Nigerians?

The SEC is using its jurisdiction to remind participants and investors that only approved securities can be sold to the Nigerian public.

Sections 67-70 of the Investments and Securities Act (ISA), 2007 and Rules 414 & 415 of the SEC Rules and Regulations, states that only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public.

In the circular issued, the SEC added that “CMOs who work in concert with the referenced online platforms are hereby notified of the Commission’s position and advised to desist henceforth.

The Commission enjoins the investing public to seek clarification as may be required via its established channels of communication on investment products advertised through conventional or online mediums.”

According to Techcabal, the SEC’s action is within its powers, and in fact, these rules show that the investment-tech model of offering foreign stock to Nigerians is illegal. But this is hardly an indictment of these startups; it’s instead a reflection of how fast innovation moves.

Critics also say that the new directive by the SEC is because of the surging shares of big tech companies such as Amazon, Microsoft, Apple, Netflix and Google-parent Alphabet that have all led the market higher in recent weeks. Young Nigerians have been leveraging these new investment tech service providers to help diversify their portfolios, and with as little as $5, anyone can get in on the action happening outside the Nigerian Stock Exchange.

Who would be affected?


Manufacturing sector

Nigeria sets ambitious target for manufacturing sector

Nigeria has an ambitious target of raising the share of manufacturing to a whooping 20% of GDP according to Niyi Adebayo, the federal minister for industry, trade and investment.

READ ALSO: Price War: Dangote Petitions Trade Ministry, Wants BUA Sugar Refinery Shut Down

He told a virtual event on 30 March that the sector’s size should reach 20% share in GDP by 2023.

In this report analysts at FBN Quest say this would mark an impressive step up from the 12.8% attained at current prices in 2020.

Adebayo also told the event, co-chaired by the Nigerian Economic Summit Group (NESG), that his ministry will work out strategic plans for three segments (clothing and textiles, oil palm and auto assembly) in place by end-year.

Alongside the strategy, the government offers selective incentives (such as those offered by the special economic zones) and funding (including its NGN75bn package of support for MSMEs to counter the COVID-19 virus).

Recall that the Central bank approved a more substantial NGN1trn programme of credit interventions for the sector for the same purpose, of which NGN800bn had been disbursed by mid-March.

· The minister highlighted a number of areas where manufacturing needed to raise its game: these included marketing, brand strength, research and development. Others would add training and quality control.

· Manufacturing in Nigeria, as elsewhere, had a very difficult 2020, contracting by -8.8% y/y in Q2 due to the lockdown and by -2.8% over the full year.

· Performance did improve in H2. The CBN’s index of manufacturing production rose by 1.5% q/q in Q4 to 181.1 (2010=100). The national accounts show more rapid growth of 5.6% for the sector in the same quarter, led by 18.6% for textiles, apparel and footwear.


dangote group

Price War: Dangote Petitions Trade Ministry, Wants BUA Sugar Refinery Shut Down

A major war has been raging in the Nigeria sugar industry for some time now and the bubbles seemed to have burst with Dangote s decision to petition the Federal Government asking the Ministry of Trade to shut down BUA Group’s Sugar Refinery located in Port Harcourt.

READ ALSO: GTB Others Crash NSE Banking Index By 3.12%

In the letter dated 28th January 2021 signed by Aliko Dangote himself as the Chairman Dangote Industries Limited, the billionaire claimed that when the BUA Sugar refinery was opened , he warned the Government and they told him that no new refinery would be allowed to operate in Nigeria’. Dangote accused BUA of operating with impunity by contavening the laws as laid down in the National sugar policy by selling it’s products locally instead of producing for export alone.

BUA in its own defence sent to the Honourable Minister of Trade however clarified issues by stating that the law allows it to sell inside Nigeria.

BUA also warned that DANGOTE group and the other major player have not been involved in any backward integration project, rather they depend on 80% raw sugar allocation which is detrimental to the Nigerian economy in long term analysis.

BUA on the other hand has been involved in backward integration project with BUA’s Lafiagi Sugar BIP set to be completed in 2022.

Over 250million dollars is believed to have been spent on the export focused BUA sugar refinery already and it is also employing over 1,000 Nigerians.

Meanwhile, BUA also noted that at the centre of this fight to force FG to close BUA Sugar refinery down is the price war.

Insiders said last year, before Ramadan, sugar sold for around 18,000 Naira per bag. But as Ramadan fasting started the price jumped to 30,000 per bag. The people had no choice but to buy it because they needed a lot of it during the period.

So the manufacturers were smiling to the bank. BUA group noticed the trend and decided that it had to change. There was no reason to increase the price during Ramadan simply because the demand is high.

Usually the increase happens about one month to commencement of fasting.

When the other manufacturers got across to BUA, Samad Rabiu refused. They put pressure on him, saying it was the right time to make good money but he put his feet down.

After failing to do that, they petitioned the Federal Government that he was breaking the law by selling sugar locally instead of for export.

A source however claimed that already, BUA group has dragged the Trade Minister to court to ensure that the operations of the sugar refinery is not tampered with all because of the desperate attempt by Dangote Group to monopolize the sugar trade in Nigeria

Our reporter has seen copies of the letters from Dangote to the Minister, the Minister’s letter to BUA as well as BUA’s reply to the Minister.


NSE Demutualization

GTB Others Crash NSE Banking Index By 3.12%

Zenith Bank, GTB, Access Bank Others Crash NSE Banking Index By 3.12%

The banking Index fell 3.12 percent Wednesday, ranking the biggest losing sector on the Nigerian Stock Exchange (NSE).

READ ALSO: Shoprite’s exit, like 10 others, signals more job crisis for Nigerians

The index which measures performance of the banking sector closed at 339.43 index point down from 350.36 index point of the previous day.

All of Guaranty Trust Bank (GTB), Zenith Bank, Access Bank, Fidelity Bank and Sterling Bank Plc.contributed to the poor performance of the banking index

A cursory look into the trading activities of these banks on Wednesday reveals that Sterling Bank Plc was the biggest decliner in terms of percentage, when the lender dropped 9.47 percent in the value of its share price. The share value declined from N1. 69 Kobo per share to close a N1. 53 Kobo per share.

Zenith Bank Plc followed in second place losing 4.11 percent, as its share price fell to N21 per share from N21.90 Kobo per share it posted the previous trading session.

Fidelity Bank Plc was also in the negative territory on the Bourse, dropping 3.47 percent, from N2.59  Kobo per share to N2.50 Kobo per share.

Guaranty Trust Bank was also among the losers on the NSE, as its share price shed 3.28 percent to stand at N28 per share down from N28. 95 Kobo per share, while

Access Bank Plc completed the top five losers, to dip by 2.47 percent. The value of its share stands at N7. 9 Kobo per share from N8. 10 Kobo per share.

Overall, the Nigerian Stock Exchange recorded a marginal growth on Wednesday as the All-Share Index and Market Capitalization rose by 0.02 percent.

The ASI appreciated by 7.42 index point to close at 38,774.03 basis point up from 38,766. 61 basis point, while the market capitalisation jumped by N3.878 billion to close at N20.286 trillion up from the N20.282  trillion it commenced trading with on Wednesday.

A total turnover of 356.461 million shares valued at N4.193 billion in 6,130 deals exchanged hands, while the market breadth was positive, with 27 advanced stocks and 12 laggards.

On the market activity chart, Zenith Bank returned as both the most active and valuable equity on the exchange, trading at 55.030 million worth of shares valued at N1.156 billion.


Shoprite, 10 others exit

Shoprite’s exit, like 10 others, signals more job crisis for Nigerians

With at least 20,000 jobs at risk, Shoprite’s decision to join 10 other major multinationals exit out of Africa’s largest market after 16 years is a clear signal of how bad Nigeria’s unemployment rate will be in the coming months ahead.

READ ALSO: Naira weakens further as FX turnover declines by 70.95%

The decision comes at a time Nigeria’s economy is struggling as jobless rate has more than quadrupled over the last five years while the minority who have the spending power to shop at Shoprite have seen their finances take a battering because of orthodox government policies and impact of the coronavirus pandemic.

Shoprite’s decision to leave Nigeria means over 3,000 direct jobs and over 17,000 indirect jobs are at risk, a development that means doom to the country’s misery index, which has deteriorated beyond crisis levels, and ought to be the government’s top concern as it has social implications.

For Africa’s largest grocery retailer Shoprite, established 40 years ago with over 500 stores across the continent, Nigeria has neither favourable business climate, nor high purchasing power to sustain their business operations so much that they can no longer cover Shoprite’s cost of doing business.

“Shoprite sees Nigeria’s economy as a sinking ship,” Remi Adekoya, a Polish-Nigerian writer and commentator on politics and current affairs, focusing on Europe and West Africa tweeted on Wednesday.

The company first announced in August 2020 that it was discontinuing operations in Nigeria, citing a revaluation of its operating model.

The planned exit of Shoprite and other major multinationals means more existential risks for millions of jobless young Nigerians, who are victims of an economic crisis that is driving up poverty and sowing insecurity across Africa’s most populous country, which has just barely emerged from its second recession in five years.

About 19million Nigerians entered the labour force in the past five years or 300,000 every month, according to World Bank estimates, but just 3.5million jobs were created during the period, meaning 80 per cent of new workers ended up unemployed.

“Defensive we-don’t-cares attitude can’t change that reality, only sound economic policy,” Adekoya tweeted.

Nigerian Economic Summit Group (NESG), an independent, non-partisan, non-sectarian organisation, says Nigeria needs a high, robust and sustained economic growth that delivers a significant reduction in unemployment and poverty.

The group noted that “to address the challenge of unemployment, Nigeria’s private sector has to be the engine room while the government sets the agenda and addresses key bottlenecks facing the business environment.”

“The devastating impacts of the twin phenomenon of poverty and unemployment are being felt across several parts of the country as manifested in the level of insecurity – kidnappings, theft, and other social vices,” NESG noted.

BusinessDay analysis took a closer look at international companies who have completely shut down their operations in Nigeria and their reasons for leaving.

Mr Price



Naira weakens further as FX turnover declines by 70.95%

Nigeria’s currency, Naira on Wednesday weakened further by 0.12 percent following strong demand for and shortage of dollars at the Investors and Exporters (I&E) Forex window. (FX)

READ ALSO: Jobberman to develop Nigeria’s e-commerce sector through behavioral profiling

The foreign exchange daily turnover declined significantly by 70.96 percent to $11.85 million on Wednesday compared with $40.80 million recorded on Tuesday.

Consequently, after trading on Wednesday naira/dollar exchange rate closed at N411.00k as against N410.50k quoted on the previous day at the FX I&E window, data from the FMDQ showed.

Currency traders who participated in the trading on Wednesday maintained bids at between N405.00k and N438.00k/$.

Exchange rate remained flat at N485 at the Bureau De Change (BDC) segment of the foreign exchange market and the parallel market.

Read Also: Improved forex inflow strengthens naira

At the money market, the Nigeria treasury bills secondary market closed on a flat note on Wednesday, with the average yield across the curve remaining unchanged at 3.97 percent, according to a report by FSDH research. Average yields across short-term, medium-term, and long-term maturities closed at 2.40 percent, 3.30 percent, and 5.46 percent, respectively.

The Overnight (O/N) rate decreased by 0.25 percent to close at 13.50 percent on Wednesday as against the last close of 13.75 percent on Tuesday, and the Open Buy Back (OBB) rate decreased by 0.83 percent to close at 12.67 percent from 13.50 percent on the previous day. FX

“We expect money market rates to remain at elevated levels due to a possible OMO auction by the CBN,” analysts at FSDH said.

In the Open Market Operation (OMO) bills market, the average yield across the curve increased by 13 bps to close at 6.46 percent on Wednesday as against the last close of 6.33 percent the previous day.

Selling pressure was seen across medium-term and long-term maturities with average yields rising by 22 bps and 13 bps, respectively. However, the average yield across short-term maturities closed flat at 4.20 percent.

Yields on 15 bills advanced with the 28-Sep-21 maturity bill registering the highest yield increase of 62 bps, while yields on 11 bills remained unchanged.

The Debt Management Office (DMO) has released its FGN Bonds Issuance Calendar for the second quarter of 2021, indicating plans to raise funds in the range of N450 billion-N540 billion to finance the budget deficit over the next three months.

Furthermore, the DMO is expected to offer bonds during the quarter through re-opening of 10-year (N150 billion – N180 billion), 15-year (N150 billion – N180 billion), 25-year (N100 billion – N120 billion), and 30-year (N50 billion – N60 billion) tenors.

FGN bonds secondary market closed on a mildly negative note on Wednesday as the average bond yield across the curve cleared higher by 3 bps to close at 6.80 percent from 6.77 percent on the previous day.

Naira FX