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COUNSELLING RESEARCH CONSULTING INVESTMENT

Economic News Update

Nigeria Launches $1.5 Billion USD Development Bank of Nigeria (DBN)

President Goodluck Jonathan yesterday inaugurated the Development Bank of Nigeria (DBN) at the Presidential Villa, Abuja.
It will commence operations with a startup capital of $1.5 billion (about N300 billion), and is projected that the capital will increase to $5 billion (N1 trillion) in the medium term and, ultimately, to N2 trillion in 10 years.
DBN will support the medium to long-term lending needs of Micro, Small and Medium Enterprises (MSMEs) with duration of about 10 years and moratorium period of about 18 months.
It will also allow MSMEs a breathing period before they start repaying and also allow them to match loans terms with longer term investment cycles.
The DBN will lend to specialised institutions of the Bank of Industry (BoI) and the Bank of Agriculture, (BoA) and the commercial banks for lending to small and medium enterprises (SMEs).
In the first five years of operation, the DBN is expected to disburse over 200,000 new loans to MSMEs, and with each SME creating an average of five new jobs, it is expected that the DBN will result in one million direct jobs being created, as well as several more indirect jobs.
President Jonathan said he was passionate about the DBN as it represents a milestone in his administration’s efforts to empower MSMEs, saing it forms the backbone of Nigeria’s economy.
He said: “The recent re-basing of our economy exercise confirms the importance of MSMEs sector for our national economy. Currently Nigeria has 17 million of these businesses which contributes about 45 per cent of our GDP and employ about six per cent of our labour force.
The Finance Minister and the Coordinator of the Economy, Dr. Ngozi Okonjo-Iweala, said that the establishment of the bank was for a robust finance backing for small and medium enterprises.
She said that the wholesale developmental institution plans to offer loans to at least 20,000 beneficiaries in the first one year of its operations and to start business in the next nine months.
The Minister of Industry, Trade and Investment, Olusegun Aganga, said the BoI gave out over N400 billion loans in the last four years to businesses in the country ...

Source: The Nation [March 20, 2015]

Parking charges could boost Nigeria’s income by $10bn

Currently, the Nigerian government is running low on revenue due to the steep decline in oil prices to less than 50 dollars a barrel. This has led many analysts to question how the national and state governments are going to fund their development when 90 percent of their revenue is derived from oil exports. Many have called for a diversification of exports, which is indeed a major issue, since 70 percent of Nigeria’s export revenue comes from crude oil. Looking beyond a diversification of exports, since 90 percent of government revenue still comes from oil revenue, the real issue is that public officials and lawmakers throughout the country have failed to develop alternate ways the state can increase revenue and diversify its funding structure so that they rely far less on oil revenue. Even the ministry of finance with all their claims of efforts was only able to increase tax revenue by half a billion dollars in taxes. There is a measure floating among state lawmakers to double VAT taxes, but this measure will do little more than put a tiny band aid on the gushing wound caused by declining oil revenue. But one key overlooked area is parking revenue. Throughout the entire developed world, governments at all levels generate substantial amounts of rents and fees from charging motorist fees to park on public streets. Those who travel abroad know, that meters are placed almost everywhere to collect parking fees, even in towns as small as 7,000 residents. Today in a city as large as Lagos, it is mind boggling that motorists are still able to park for free on some of the most prominent well traversed public streets on the planet. Motorists are the primary users of the road, and are known in Nigeria to deliberately ram and speed into pedestrians with no regard to the right of pedestrians to traverse the streets alongside them. Accordingly they should have no issue with paying parking fees to maintain those same streets and help sustain the state that helps to regulate them. By not charging motorists appropriately Nigeria’s states and local governments are robbing themselves of billions of added revenue that they could generate instead of relying ...

Source: VENTURES AFRICA [March 19, 2015]

FG Reduces Petrol Price to N87/Litre

THE Federal Government last night announced a reduction in the price of premium motor spirit (petrol) from N97 to N87 per litre. The reduction follows the crash in the price of crude oil in the international market. The Minister of Petroleum, Mrs. Diezani Allison-Madueke, made the announcement on the Nigerian Television Authority, NTA, last night. She spoke from the presidential villa apparently after consultations with President Goodluck Jonathan.
She said: “I will like to announce the reduction in the price of Premium Motor Spirit by N10. Therefore, the reduction would be from N97 per litre to N87 per litre and this would be effective from midnight Sunday, January 18, 2015. In line with this I have directed the Petroleum Products Pricing Regulatory Agency, PPPRA, and the Directorate of Petroleum Resources to ensure that there is strict adherence of this regime as it takes effect from midnight Sunday, January 18. I do hope that the entire country will benefit immensely from this reduction of the pump price.”
The price of petrol was fixed at N97 in January 2012 after the administration made an abortive move for the full deregulation of the downstream sector which initially saw petrol price rocket to more than N140 per litre. The move was challenged by a general uprising across the country led by the Occupy Nigeria movement which organised city shutdowns across some of the major cities in the country.
The move by the civil right activists was coupled by a general strike by organised labour.
The strike was called off on January 16 after the administration drew back from full deregulation and agreed to a reduction of the price to a fixed N97 that would be varied according to a template based on the price of crude in the international market.

Source: Vanguard(19/01/2015)

World Bank News Today [December 1, 2014]

ECONOMIC AND BUSINESS NEWS FOR WEEK ENDED 29th AUGUST, 2014
  1. NIGERIA’s ECONOMY STRONG AMIDST SECURITY CONCERNS — NIPC

    Despite the insurgency problem facing the country, the Nigerian Investment Promotion Commission (NIPC) has said the nation’s economy still thrives after all. The Executive Secretary of the NIPC, Mrs. Saratu Altine Umar, who stated this in a keynote address entitled: “Translating Nigeria’s Foreign Direct Investment (FDI) Benefits into a Reality,” at the Nigerian Economic Summit Group (NESG) Trade, Investment & Competitiveness Policy Commission (TICPC) meeting in Abuja, said the country’s economy has shown a strong resilience in spite of the security concerns while stressing that the NIPC is reviewing the Pioneer Incentives currently being granted to investors to cover only critical activities. She assured that NIPC is ever poised and positioned to give a hand-holding support to investors (both local and foreign) that have decided to make the country their preferred investment destination, adding that the Commission is putting various strategies in place to make it more pro-active to investors’ needs and demands.

    Source: Vanguard(25/8/14)

  2. GOODS WORTH N5.3 BILLION CLEARED THROUGH ECOWAS TRADE DEAL

    Goods worth N5.3 billion were cleared through the ECOWAS Trade Liberalisation Scheme (ETLS) and Joint Committee on Commerce (JCC) in the first half of the year. Nigeria Customs Service (NCS), Customs Area Controller (CAC)-Seme Border Command, Comptroller Willy Egbunin disclosed this while reviewing the performance of the Command for the first half of 2014. The ETLS/JCC is a sub-regional effort of the Economic Community of West African States (ECOWAS) to facilitate trade and foster regional integration among member states. It is one of the instruments used by member nations in the sub-region to boost their economies through free movement of goods and services. According to Egbunin, ETLS compliant goods with a cost, insurance and freight (CIF) valued at N5.3 billion were cleared through this Command.

    Source: ThisDay(25/8/14)

  3. FOOD IMPORT BILL DROPS BY N400 BILLION – FG.

    Nigeria’s food import bill dropped by over N400 billion (US$2.55 billion) to N684.7 billion (US$4.35 billion) by December 2013 from N1.1 trillion (US$6.9 billion) in 2009, the Federal Government has said. The Federal Government also said that the sum of N50 billion had been set aside as agricultural mechanisation fund. The Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina, said the country’s food import bill had continued to decline since 2009. Dr. Adesina while speaking in Abuja during the week stated that, “Today marks another milestone in the drive and journey of Nigeria to modernise its agricultural sector”. There is no doubt that agriculture is growing rapidly in Nigeria. Private sector investments in agriculture are expanding. “All across the nation, smallholder farmers are witnessing a refreshing new dawn”. He noted that despite the gains in the sector, there were still challenges, one of such challenges is the “low level of mechanisation of the agriculture sector”.

    Source: Punch(26/8/14)

  4. FG TO PHASE-OUT HEAVY ENERGY CONSUMING DEVICES

    The National Council on Power (NCoP) has mandated the Ministry of Power to collaborate with relevant agencies to develop a national policy on energy efficiency and conservation. This is aimed at phasing out heavy energy consuming devices from homes, offices and industries in the country. The proposed policy will be geared towards ensuring that all electrical equipment and households electrical items are in compliance with international low energy consumption guidelines. The Council also recommended that a minimum of N160 billion be made available to the Transmission Company of Nigeria (TCN) to take care of its annual expenditure on operations.

    Source: Vanguard(26/8/14)

  5. FAAC ALLOCATES N4.63 TRILLION IN SEVEN MONTHS

    Between January and July this year, the Federation Account Allocation Committee (FAAC) withdrew and shared the sum of N4.63 trillion from the Federation Account to the three tiers of government. The monthly allocation document revealed that within the same period, the sum of N4.66 trillion was collected as gross federally collected revenue from oil and non-oil sources. The amount was generated from two major revenue sources, which are: mineral revenue, made up of crude oil sales, oil and gas royalties, rent, gas flared penalty, petroleum profit tax and gas tax; and non-mineral revenue such as Value Added Tax (VAT), corporate taxes, Customs import, excise and fees. This is despite the serious disruptions to oil production and lifting operations occasioned by multiple leaks, pipeline vandalism and theft that occurred within the first seven months of the year.

    Source: Punch(27/8/14)

  6. NBCC PROJECTS £20 BILLION TRADE VALUE BETWEEN NIGERIA AND UK BY 2020

    Bilateral trade value between Nigeria and the United Kingdom is expected to hit £20 billion in the next six years, President and Chairman of Council, Nigerian-British Chamber of Commerce (NBCC) Prince Adeyemi Adefulu, has said. Prince Adefulu said the value of business between the two countries has grown rapidly in the last four years, increasing from £4 billion to £8 billion, but noted that this growth has “merely scratched the surface”. The NBCC President was speaking at a media briefing in Lagos on the activities to mark the centenary of Anglo-Nigeria trade relations by the Chamber, in conjunction with the United Kingdom Trade & Investment Agency (UKTI).

    Source: Guardian(27/8/14)

  7. FG BOOSTS MECHANISED FARMING WITH N50 BILLION

    The Federal Government has approved N50 billion to boost mechanised farming. Consequently, President Goodluck Jonathan has directed the Central Bank of Nigeria (CBN) to set aside the fund for full scale mechanised farming in the country. The President disclosed this at the commissioning of the new 100,000 metric tonnes silo complex and the flag-off of the private sector-driven agricultural equipment hiring enterprises at Sheda, Kwali Area Council, Abuja. President Jonathan, who was represented by the Vice President, Namadi Sambo, stated that he had already directed that 590 units of tractors, 500 power-tillers and harvest and post-harvest equipment be used to support women and youths in agriculture.

    Source: Vanguard(25/8/14)

  8. GROWTH IN NON-OIL EXPORT HITS US$2.970 BILLION — NEPC

    The Nigerian Export Promotion Council (NEPC) has disclosed that Nigeria realised US$2.970 billion from non-oil export in 2013 which is a 15.9% increase over US$2.561 billion in 2012. Disclosing this at a business meeting tagged, “A New Dawn for Nigerian Export” organised by the Nigerian-British Chamber of Commerce (NBCC), the Executive Director/CEO of the NEPC, Mr. Olusegun Awolowo, said Nigeria’s export is dominated by oil, but that there has been steady growth in non-oil export to US$2.970 billion in 2013. He said that non-oil export potentials have not been fully exploited despite endowed natural resources from solid minerals and agriculture; adding that, some of the challenges are poor infrastructure, energy, finance, skills and capacity.

    Source: Vanguard(28/8/14)

  9. NAIRA GAINS AS OIL FIRMS SELL DOLLARS

    The Nigerian Naira firmed against the greenback on 27/8/14, lifted by Dollar sales from local units of International Oil Companies (IOCs) seeking to fund their month-end obligations. The local unit closed at N162.05 to the U.S. Dollar, stronger than Tuesday’s close of N162.20. Dealers said the local units of Exxon-Mobil sold US$50 million and Italy’s Eni sold US$5 million on 27/8/14 to boost Dollar liquidity, in addition to Total and Chevron, which both sold a combined US$117 million on 26/8/14. “We expect the Naira to stay within this range this week as more oil firms sell Dollars,” one dealer said, adding that the liquidity provided support for the Naira at the 162 level.

    Source: BusinessDay(28/8/14)

  10. NIGERIA CONDUCTS US$600 MILLION TRANSACTIONS VIA MOBILE MONEY IN TWO YEARS

    Between 2012 and now, about US$600 million transactions have been carried out through the mobile money platform in Nigeria. This figure, according to the Minister of ICT, Mrs. Omobola Johnson was attained from 11 million transactions. Johnson, while making a presentation at the American Business Council in Lagos, noted that there are over 18 mobile money operators registered in Nigeria by the Central Bank of Nigeria (CBN) since commencement of operations with over 1 million subscribers and about 67,000 registered agents across the country.

    Source: Guardian(28/8/14)

  11. NIGERIA TARGETS 30% GENERATION OF ELECTRICITY FROM COAL

    The Minister of Mines and Steel Development, Mr. Musa Sada, has said that the Federal Government has targeted coal to contribute 30% of power generation in the country by 2015. Sada stated in Abuja that the Federal Government was determined to address the country’s power challenge through coal. He said the Ministry was taking steps towards meeting the target by making effort to determine the amount of coal deposit in the country. The Minister explained that the quantity and life span of coal deposit in the country would determine the basis for designing the coal power plant to generate power supply.

    Source: ThisDay(28/8/14)

  12. NIGERIA’S FIRST NON-BANK CREDIT CARD LAUNCHED

    Effort by the Central Bank of Nigeria (CBN) to make the Nigerian economy cashless, received a boost on 28/8/14, with the introduction of the nation’s first non-bank credit card. Following the launch, O3 Capital Nigeria Limited, promoters of the product became the first non-bank credit card issuer in Nigeria. Chief Executive Officer of O3 Capital Nigeria Limited, Mr. Abimbola Pinhiero said the Nigerian economy cannot move to the next level without consumer effective lending. He said the World Bank and IMF economic growth forecast for Nigeria will not be sustained if all Nigerians do not work together to sustain the growth.

    Source: ThisDay(29/8/14)

  13. FG PAYS N25 BILLION GENCOS’ GAS DEBTS TO BOOST ELECTRICITY SUPPLY

    President Goodluck Jonathan, during the week,, said the Federal Government had paid-off power Generation Companies (GENCOs) N25 billion debts owed to gas companies for gas supplies in order to boost electricity generation and transmission nationwide. The Federal Government has also pledged to reduce the cost of borrowing for manufacturers in the country.

    Source: Vanguard(29/8/14)

  14. FG TO CUT COST OF FUNDING FOR MANUFACTURERS, TARGETS 15% REAL SECTOR CONTRIBUTION TO GDP

    President Goodluck Jonathan on 28/8/14 said the Federal Government had concluded plans to bring down the cost of funding the real sector of the economy through its new programme called “the Financing Value Chain Initiative (FVCI)”. The President explained that this move by the Federal Government would give manufacturers in the country the opportunity to extend their loan repayment periods and also create access to new opportunities for the industrial sector. President Jonathan, during the 42nd Annual General Meeting of the Manufacturers’ Association of Nigeria (MAN), stressed that the initiative, when fully implemented, will provide small and large businesses in the country reasonable and affordable long-term funding opportunities.

    Source: ThisDay(29/8/14)

  15. REBASING: NIGERIAN ECONOMY NOW WORTH N81 TRILLION

    The National Bureau of Statistics (NBS) has revised the size of Nigerian economy to about N81.009 trillion following it latest final rebasing of the country's Gross Domestic Product (GDP), using the Expenditure Approach between 2010-2013. This represented a marginal increase from the projected N80 trillion in 2013 when the output method was used to compute the rebased GDP in May. According to the GDP Report (Expenditure Approach) 2010-2013 released by the NBS, the final consumption of Household Items Expenditure accounted for the largest chunk of the rebased GDP figures at about N58.13 trillion in 2013, up from the N42.115 trillion of the preceding year.

    Source: ThisDay(29/8/14)

OTHER ECONOMIC & BUSINESS INDICATORS

Inflation Rate

-

8.3% (July, 2014)

Monetary Policy Rate (MPR)

-

12% (As at 29th August, 2014)

Prime Lending Rate

-

16.44% (July, 2014)

External Reserve

-

US$ 39,605billion (As at 28th August, 2014)

CBN Exchange Rate (Official)

-

N155.73/$1 (As at 29th August, 2014)

Interest Rate (Loans)

-

Hovers between 18% and 28%

Capacity Utilisation

-

52.7% as at December 2013 (MAN Survey)

Liquidity Ratio

-

30% (As at 5th May, 2014)

Treasury Bill Rate (91 days)

-

9.9% (As at 20th August, 2014)

Currency in Circulation

-

N 1.57 trillion (As at 31st July, 2014)

Cash Reserve Requirement for

-

75% (As at 20th May, 2014)

Public sector deposits Cash Reserve Requirement for

-

15% (As at 20th May, 2014)

Private sector deposits

-

External debt stood at US$9.377 billion (As at 30th June, 2014)

Local debt stood at

-

N7.421trn or US$46.1bn (As at 30th June, 2014)

Bank Credit to Private Sector

-

17,252,292.3(as at July 2014)

Demand Deposits at Banks

-

N5,424,902.81 (30th June, 2014)

Nigeria’s Merchandise Trade

-

N5.51 trillion (As at 31st March, 2014)

Crude Oil:

-

Price (Bonny Light) US$/Barrel

-

101.7 (As at 29th August,2014)

Domestic Production (mbd)

-

2.21 (As at March, 2014)

Export (mbd)

-

1.76 (As at March, 2014)

Source : CBN, NBS AND DMO

Compiled By:
Research & Economic Matters Department
NACCIMA
1st September 2014