Category Archives: ECONOMY

IMF Projects 2.1% GDP Growth for 2018, Welcomes Reforms

The international Monetary Fund (IMF) has stressed the need for urgent macroeconomic and structural reforms in Nigeria, in order to place the country on a sustainable growth path as well as help achieve its quest for economic diversification.

This formed part of the recommendations by an IMF staff team led by Amine Mati, that visited Nigeria between December 6-20th, 2017, to conduct the 2018 Article IV consultation.

Following the conclusion of the visit, Mati, who is a Senior Resident Representative and Mission Chief for Nigeria at the IMF, in a statement that was posted on the multilateral institution’s website yesterday, noted that overall growth in the country was slowly picking up, but that recovery remained challenging.

“Economic activity expanded by 1.4 per cent year-on-year in the third quarter of 2017—the second consecutive quarter of positive growth after five quarters of recession—driven by recovering oil production and agriculture.

“However, growth in the non-oil-non-agricultural sector (representing about 65 percent of the economy), contracted in the first three quarters of 2017 relative to the same period last year,” said the IMF.

It pointed out that difficulty in accessing financing and high inflation continued to weigh on companies’ performance and consumer demand. “Headline inflation declined to 15.9 percent by end-November, from 18.5 per cent at end-2016, but remains sticky despite tight liquidity conditions.

“High fiscal deficits—driven by weak revenue mobilisation—generated large financing needs, which, when combined with tight monetary policy necessary to reduce inflationary pressures, increased pressure on bond yields and crowded out private sector credit.

“These factors contributed to raising the ratio of interest payments to federal government revenue to unsustainable levels.

“Reflecting the low growth environment and exposure to the oil and gas sector, the banking industry’s solvency ratios have declined from almost 15 to 10.5 percent between December 2016 and October 2017, and non-performing loans have increased from 5 percent in June 2015 to 15 percent as of October 2017, although with provisioning coverage of about 82 percent.

“The authorities have begun addressing macroeconomic imbalances and structural impediments through the implementation of policies underpinning the Economic Recovery and Growth Plan (ERGP),” it added.

Supported by recovering oil prices, the IMF states that the Investors’ and Exporters’ foreign exchange window had increased investor confidence and provided impetus to portfolio inflows, which have helped to increase external buffers to a four-year high, and contributed to reducing the parallel market premium.

Furthermore, it noted that “important actions under the Power Sector Recovery Program increased power supply generation and ensured government agencies pay their electricity bills.”

The Fund also welcomed steps “taken to improve the business environment and to address longstanding corruption issues, including through the adoption of the National Anti-Corruption Strategy in August 2017.”

It however stressed that in the absence of new policies, the near-term outlook remained challenging.

“Growth is expected to continue to pick up in 2018 to 2.1 per cent, helped by the full year impact of greater availability of foreign exchange and higher oil production, but to stay relatively flat in the medium term.

“Risks to the outlook include lower oil prices, tighter external market conditions, heightened security issues, and delayed policy responses.

“Containing vulnerabilities and achieving growth rates that can make a significant dent in reducing poverty and unemployment requires a comprehensive set of policy measures.

“On the fiscal front, the mission welcomes the recent tax reforms aimed at improving tax administration, planned increases in excises, and latest steps taken to lower debt servicing costs and lengthen maturities.

“However, with oil prices expected to remain lower than in the past, upfront actions to mobilise non-oil revenues, including through reforming the VAT and removing exemptions, are needed while safeguarding priority expenditures, including scaling up social safety nets and infrastructure investment.

“Fiscal consolidation should be accompanied by a monetary policy stance that remains tight to further reduce inflation and anchor inflation expectations. Moving toward a unified and market-based exchange rate as soon as possible while continuing to strengthen external buffers would be necessary to increase confidence and reduce potential risks from capital flow reversals.

“Such a policy package – along with structural reform implementation, including by building on recent successes to improve the business environment, closing infrastructure gaps, and implementing the power sector reform plan – would lay the foundation for a diversified private sector-led economy.

“Strengthening governance and transparency initiatives, and lowering gender inequality and fostering financial inclusion would also be important,” it added.

The IMF team stated that they held productive discussions with senior government and central bank officials. They also met with members of parliament, representatives of the banking system, private sector, civil society, and international development partners. The team thanked the authorities and those with whom they met for the open and productive discussions, excellent cooperation, and warm hospitality.


FG unveils plan for economic diversification, growth


The Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, has stated that the strategic focus of the ministry’s master plan for diversification and growth of the Nigerian economy is to work with private and development capital firms to leverage resources in order to achieve set target.

Enelamah disclosed this in Abeokuta, Ogun State on Monday while presenting the plan for economic diversification and growth by his ministry to the 8th National Council on Industry, Trade and Investment.

The minister, in a statement signed by his Strategic Communications Adviser, Constance Ikokwu, stated that with limited resources, the diversification and growth plan, otherwise known as the MITI Plan, was based on a partnership with the private sector.

Continue reading FG unveils plan for economic diversification, growth

Sanusi Wants Flexible Exchange Rate System Fully Implemented | THISDAYLIVE


The Emir of Kano and former Central Bank of Nigeria (CBN) Governor, Alhaji Muhammad Sanusi II, has said the flexible exchange rate regime recently introduced by the central bank is not being fully implemented, just as he warned that targeting a pegged rate will not resolve the current forex problem.

He urged the central bank to allow the forces of demand and supply to determine the true value of the nation’s currency, in line with the flexible exchange rate policy.

He said this at the Risk Managers Association of Nigeria’s (RIMAN) annual conference in Lagos yesterday.

Continue reading Sanusi Wants Flexible Exchange Rate System Fully Implemented | THISDAYLIVE

Economy: The floodgates have been breached – by Henry Boyo in opposition to the flexible forex policy.


The Central Bank of Nigeria’s decision to float the naira in response to dollar demand and supply, in such austere times as this, will probably be ultimately remembered as another policy shift that breached the gates and unleashed devastating floods that swept away any flickering hope of economic diversification or credible inclusive growth. The serial devaluation dictated by the 1986 Structural Adjustment Programme was another such event that disenabled our economy, traumatised our people and challenged our traditional value system in many ways.

Continue reading Economy: The floodgates have been breached – by Henry Boyo in opposition to the flexible forex policy.

Results Are In: Nigeria’s New Official Exchange Rate After Currency Float


The official floating of the Naira opened at the Interbank on Monday, 20th of June after decades of a Naira peg by successive Nigerian Governments and Central Bank Governors.

The CBN Governor, Godwin Emefiele had last Wednesday announced to the world that Nigeria would be introducing a new exchange rate policy that will see the price of the dollar dictated by market forces rather than a fixed exchange rate.

We have been monitoring activities all day and after several speculations can now reveal a summary of what transpired at the market.

Continue reading Results Are In: Nigeria’s New Official Exchange Rate After Currency Float

Fitch Just Gave Its Verdict On Nigeria’s New Flexible Exchange Rate Policy


Rating Agency Fitch has waded in on the new Flexible Exchange Rate Policy issued by the Central Bank of Nigeria (CBN) on Wednesday June 15, 2016.

Fitch says Nigeria’s planned shift to a more flexible foreign-exchange regime could aid the sovereign’s adjustment to lower oil prices and support growth, although implementation may present challenges. We highlighted key points in the article which you will notice in the course of your reading.

Continue reading Fitch Just Gave Its Verdict On Nigeria’s New Flexible Exchange Rate Policy

How New Exchange Rate Policy Will Unshackle The Consumer Goods Industry


The new foreign exchange regime adopted by the Central Bank of Nigeria (CBN) will unshackle consumer goods firms that have hitherto been in bondage as restrictions prevented them from accessing dollars to import raw materials and pay suppliers.

Godwin Emefiele, the governor of the apex bank, last week reopened the interbank foreign exchange market and have the naira, completely determined by the market forces.

The Naira had been held at the N197-N199 since mid 2015, a policy that caused capital flight as investors fret that the currency may be overvalued and an abrupt devaluation could culminate in loss of significant investment.

But with the new Forex regime kickstarting today, and with its attendant of liquidity flow in the system, consumer goods firms that had been pained by the old policy will have the leeway to  embark on the  desired expansion drive as access to dollar will enable them buy plants and machineries for the purpose of bolstering production.

  Continue reading How New Exchange Rate Policy Will Unshackle The Consumer Goods Industry

Full Text: CBN Governor’s Speech On The New Forex


Good afternoon ladies and gentlemen and welcome to the Central Bank of Nigeria (CBN). The Management of the Bank has called this Press Conference in response to one of the commitments contained in the Communiqué of the Monetary Policy Committee (MPC) of 24th May 2016.

Having consulted widely and prepared carefully, the committee of Governors of the CBN is delighted to unveil to relevant stakeholders and the general public, the broad framework and guidelines of the Flexible Exchange Rate Inter-bank Market, which we alluded to at the end of that MPC Meeting. Before I proceed into the details of this new policy, please permit me to provide you with a brief context.

Continue reading Full Text: CBN Governor’s Speech On The New Forex

Niger Delta Avengers: Here Is What The Conflict Is About


Attacks on pipelines in Nigeria’s oil-rich Niger River delta region have slashed crude output to the lowest level in 27 years and shut all but four of the country’s 23 gas-powered generators, leaving much of the West African nation without electricity. A group calling itself the Niger Delta Avengers has claimed responsibility. Here’s what the conflict is about:

Continue reading Niger Delta Avengers: Here Is What The Conflict Is About

CBN sells $2.188bn to banks in three months


As the Central Bank of Nigeria (CBN) continues with its demand management policy in foreign exchange (forex) allocation to financial institutions, the returns on foreign exchange utilisation have shown that it sold a total of $2,177,999,996 to commercial and merchant banks as well as the Bank of Industry (BoI) between March 1st and May 31st 2016.

A breakdown of the weekly returns on forex utilisation compiled by THISDAY showed that while in March 2016, the banking sector regulator sold a total of $921,352,549 to banks, and $669,405,241 in April, the financial institutions were allocated a total of $587,242,206 in May. The report however showed a gradual decline in the monthly forex sale by the central bank.

Continue reading CBN sells $2.188bn to banks in three months