Economy
Nigeria’s Economic Recovery Slow – IMF
.By Tony Obiechina, Abuja.
The International Monetary Fund (IMF) has declared that the pace of Nigeria’s economic recovery has remained slow as depressed private consumption and investors’ attitude kept growth in the first half of the year at 2 percent, a rate significantly below population growth.
In a Report released in Abuja on Wednesday, the IMF said “headline inflation has fallen, reaching its lowest level since January 2016, helped by lower food price inflation”.
The Report followed an IMF staff team led by Amine Mati, Senior Resident Representative and Mission Chief for Nigeria, which visited Lagos and Abuja from September 25 to October 7, 2019 to discuss recent economic and financial developments, update macroeconomic projections, and review reform implementation.
The statement by IMF Team at the end of the visit, reads:
“The pace of economic recovery remains slow, as depressed private consumption and investors’ wait-and-see attitude kept growth in the first half of the year at 2 percent, a rate significantly below population growth. Headline inflation has fallen, reaching its lowest level since January 2016, helped by lower food price inflation.
“Spurred by one-off increases in imports, the current account turned into a deficit in the first half of 2019 after three years of surpluses. Gross international reserves have fallen to below $42 billion at end-August 2019, mainly reflecting a decline in foreign holdings of short-term securities and equity. The exchange rate in various windows remained stable, helped by steady sales of foreign exchange by the Central Bank of Nigeria (CBN).
“Carryover from 2018 to 2019 helped increase public investment spending in the first half of 2019, but revenue underperformed significantly relative to the budget target in the first half of 2019. Over-optimistic revenue projections have led to higher financing needs than initially envisaged, resulting in overreliance on expensive borrowing from the CBN to finance the fiscal deficit. Federal Government interest payments continue to absorb more than half of revenues in 2019.
“The outlook under current policies remains challenging. Growth is expected to pick up to 2.3 percent this year on the strength of a continuing recovery in the oil sector and the regaining of momentum in agriculture following a good harvest. Revenue initiatives planned under the 2020 budget—including a VAT reform that increases the rate, introduces a minimum registration threshold and exempts basic food products—will help partially offset declining oil revenues and the impact of higher minimum wages, thus keeping the overall consolidated fiscal deficit elevated. The current account’s shift to a deficit is expected to persist while the pace of capital outflows continues to weigh on international reserves. Inflation will likely pick up in 2020 following rising minimum wages and a higher VAT rate, despite a tight monetary policy.
“A comprehensive package of measures—whose design and implementation will require close coordination within the economic team and the newly-appointed Economic Advisory Council—is urgently needed to reduce vulnerabilities and raise growth.
“The increasing CBN financing of the government reinforces the need for an ambitious revenue-based fiscal consolidation that should build on the initiatives laid out in the Strategic Revenue Growth Initiative. A tight monetary policy should be maintained through more conventional tools.
” Managing vulnerabilities arising from large amounts of maturing CBN bills—including those held by non-residents—requires stopping direct central bank interventions, the introduction of longer-term government instruments to mop up excess liquidity and moving towards a uniform market-determined exchange rate.
“Banking sector prudential ratios are improving. However, new regulations to spur lending—which has recently increased—should be carefully assessed and may need to be revisited in view of the potential unintended consequences on banks’ asset quality, maturity structure, prudential buffers and the inflation target. Continued strengthening of banks’ capital buffers would enhance banking sector resilience.
“Structural reforms, particularly on governance and corruption and in implementing the much-delayed power sector recovery plan, remain essential to boosting prospects for higher and more inclusive growth.”
“The team held productive discussions with senior government and central bank officials. It also met with representatives of the banking system, the private sector, and international development partners. The team wishes to thank the authorities and all those it met for the productive discussions, excellent cooperation, and warm hospitality.”
‘Reacting to the IMF Visitation Report, Yunusa Tanko Abdullahi Spokesman for the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed said, “overall , the report is good because it acknowledged the effort of government in improving the economy through transparency and inclusiveness ”
He said the IMF team also particularly acknowledged the “decreasing inflation rate” which has continued for nine consecutive quarters.
The report also emphasized that “growth is expected to pick up to 2.3% this year on the strength of a continuing recovery in the oil sector and the regaining momentum in agriculture following a good harvest”, he noted.
Mr Adegboyega Oyetola, the Minister of Marine and Blue Economy says upgrading the Maritime Academy of Nigeria (MAN), Oron to a university, will unlock opportunities in the maritime economy.
Oyetola made the expression at the 2024 MAN cadets graduation ceremony in Oron, Akwa Ibom on Saturday.
Represented by Mr Babatunde Bombata, the Director, Maritime Safety and Security, the minister said the Federal Government was working assiduously to unlock opportunities within the marine and blue economy.
He said that the ministry was already collaborating with the Ministry of Education and the Nigerian Universities Commission to ensure MAN’s seamless transition to a university.
“It is our hope that this upgrade will unlock new opportunities for advanced learning, cutting edge research and innovation within the marine and blue economy fields,” he said.
Oyetola urged the graduating cadets to be innovative, resourceful and forward looking in their future endeavours.
“The maritime and blue economy sectors are filled with opportunities, so your contributions to the sector will be instrumental in ensuring a brighter future.
“The government is committed to fostering excellence and innovation in these fields, and we eagerly anticipate the positive impact you will make in your careers,” he said.
He further said that the Federal Government was working on developing a national policy on marine and blue economy.
“This policy will serve as a strategic framework to drive economic diversification, attract investments, create jobs and youth empowerment.
In his remarks, Gov. Umo Eno of Akwa Ibom, said the state government would continue to collaborate with the academy to develop the maritime sector.
Represented by the Commissioner for Internal Security and Waterways, Gen. Koko Essien, (Rtd), Eno urged the graduating cadets to utilise their training in developing the maritime sector.
“I am hopeful that you will utilise the training you have acquired here to further your career as seafarers and in the development of our blue economy,” he said.
Eno commended the Acting Rector, Dr Kevin Okonna and his management team for their commitment towards repositioning the academy for greater results.
Earlier, Okonna said that graduates of the institution had contributed immensely to the growth of Nigeria’s maritime and blue economy.
“Today, we have an opportunity to celebrate a new set of well-trained personnel to the maritime and allied industries.
“We pride ourselves as the pioneer maritime training institution, this is because of the institution’s contributions to national development,” he said.
The acting rector urged the graduating cadets to made effective use of the knowledge gained during their training to make meaningful impact on the growth of the maritime sector.
Report says that awards were given to graduating cadets who distinguished themselves in character and learning. (NAN)
The Nigerian Exchange Ltd. (NGX) continued its bullish trend on Wednesday, gaining N183 billion.
Accordingly, the market capitalisation, which opened at N59.532 trillion, gained N184 billion or 0.31 per cent to close at N59.715 trillion.
The All-Share Index also added 0.31 per cent or 303 points, to settle at 98,509.
68, against 98,206. 97 recorded on Tuesday.Consequently, the Year-To-Date (YTD) return increased to 31.
74 per cent.Gains in Aradel Holdings, Zenith Bank, United Bank For Africa(UBA), Oando Plc, Nigerian Breweries among other advanced equities drove the market performance up.
Market breadth closed positive with 34 gainers and 17 losers.
On the gainers’ chart, Africa Prudential, Conoil and RT Briscoe led by 10 per cent each to close at N14.30, N352 and N2.42 per share, respectively.
Golden Guinea Breweries followed by 9.95 per cent to close at N7.18, while NEM Insurance rose by 9.74 per cent to close at N10.70 per share.
On the other hand, Julius Berger led the losers’ chart by 10 per cent to close at N155.25, Secure Electronic Technology Plc trailed by 9.52 per cent to close at 57k per share.
Multiverse lost 7.63 per cent to close at N5.45, Haldane McCall dropped 6.07 per cent to close at N4.95 and Honeywell Flour shed 5.62 per cent to close at N4.70 per share.
Analysis of the market activities showed trade turnover settled lower relative to the previous session, with the value of transactions down by 49.44 per cent.
A total of 320.10 million shares valued at N6.48 billion were exchanged in 7,943 deals, compared with 939.41 million shares valued at N12.81billion traded in 9,098 deals posted in the previous session.
Meanwhile, ETranzact led the activity chart in volume with 70.27 million shares, while Aradel led in value of deals worth N1.22 billion.(NAN)
The central parity rate of the Chinese currency renminbi, or the Yuan, weakened 22 pips to 7.1870 against the dollar on Monday.This is according to the China Foreign Exchange Trade System.In China’s spot foreign exchange market, the Yuan is allowed to rise or fall by two per cent from the central parity rate each trading day.
The central parity rate of the Yuan against the dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day. (Xinhua/NAN)
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