Financial Freedom Nigeria

News Update

Recap of major Financial Events this week ending November 25, 2016

By Comfort Barida

Aviation sector

  • The Senate Committee on Aviation on Monday urged agencies in the industry to be more transparent in the procurement of equipment and implementation of projects in view of the economic recession. It also vowed to unveil the cartel behind the lingering scarcity of aviation fuel which had crippled flight operations of many domestic airlines and left many air travellers stranded in recent times. Senator Bala Na’Allah, Vice-chairman of the committee, made the plea during an inspection visit to some agencies in Lagos. The committee met with top officials of the Nigerian Civil Aviation Authority (NCAA), Federal Airport Authority of Accident Investigation Bureau (AIB). Na’Allah said that the Senate President, Dr Bukola Saraki, had expressed concern over the state of the industry and mandated the committee to urgently find lasting solution to the challenges.

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  • The Senate House Committee on Aviation criticised oil marketers on Wednesday, describing them as the cartel behind recurrent fuel shortage in the industry. The committee, at an emergency meeting in Lagos with the Nigerian Civil Aviation Authority (NCAA), Federal Airports Authority of Nigeria (FAAN) and the Nigerian Airspace Management Agency (NAMA), said time had come to unbundle the cartel and free the air travel sector from imminent collapse. Aviation fuel, otherwise called Jet-A1, accounts for about 40 per cent of airline’s operational cost and has often been in short supply, causing reduction in domestic airlines operations by 50 per cent.

 

Oil and gas sector

  • Nigeria spent N958.3 billion importing Premium Motor Spirit (PMS), also known as petrol, in five months. The amount could build five 20,000-barrels-per-day mini refineries, industry experts, who argued that one of such refineries would cost government between $75 million and $250 million. The new petrol imports, according to the National Bureau of Statistics (NBS), represents more than 120 per cent increase five months earlier and an increase of more than N80 billion within the same period last year. Regulator to retain high benchmark rate over high prices.

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Banking and Financial institutions

  • The Central Bank of Nigeria (CBN), Monetary Policy Committee (MPC) on Tuesday said that its monetary policy tool has run out of options and that the economy could only get the needed support from effective implementation of fiscal policies. The verdict formed the basis for the committee’s decision to retain benchmark rate at 14 percent.

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  • The Central Bank of Nigeria (CBN) left its main lending rate unchanged for a second consecutive meeting as it tries to balance the needs of an economy that has shrunk every quarter this year with an inflation rate that’s at the highest in more than a decade. The Monetary Policy Committee held the benchmark rate a record-high 14 percent, the president of CBN, Godwin Emefiele told reporters on Tuesday in Abuja.

 

Nigeria Economy Update

  • The Senate on Tuesday agreed to invite the Minister of State for Petroleum Resources, Ibe Kachikwu, to explain the three oil and gas related deals worth $115 billion he signed with China and India on behalf of Nigeria. The upper chamber said the minister had to appear before its joint committee on Petroleum Upstream, Gas and Foreign Affairs, to provide detailed explanation on the subject matter of each of the Memorandum of Understanding (MOU) signed in China, and the proposed MOU with India, and the anticipated impact on the country’s economy.

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  • The National Bureau of Statistics (NBS) said Gross Domestic Product (GDP) for third quarter (Q3) of the year again shrank by -2.24 percent after recording -2.06 per cent in the preceding quarter ending June 30, 2016. The GDP is one of the primary indicators used to gauge the health or size of a country’s economy. It represents the total dollar value of all goods and services produced over a specific period. The persistent decline in growth means that government’s fiscal and monetary policies are failing and its promise of returning active trade and industrial activity to the economy will not be achieved soon. Labour and the organised private sector operator blamed persistent negative growth on a lack of clear fiscal and monetary policy direction and urged the Federal Government to resolve the challenge of access to foreign exchange by the productive sector of the economy.
  • The Federal Government said it would soon present a coherent summary of the country’s short- and medium-term economic plans between 2017 and 2020. The Minister of Budget and National Planning, Udoma Udo Udoma, disclosed this during a meeting for Chief Finance Officers (CFO) of companies in Lagos. Udoma stated that putting government strategies, directions, policy priorities and intended plans together in a single document will enable stakeholders in various sectors to make strategic economic decisions.
  • The Federal Government is set to begin the deployment of the first 200,000 unemployed graduates selected in its plan to hire 500,000 Nigerians. According to the Senior Special Assistant to the Vice President, Laolu Akande, names of the graduates had been sent to state governments and the FCT who are expected to deploy them to their specific programme assignments. Akande, in a statement yesterday, said names of the graduates would also be published this week on the N-Power Internet portal, while the beneficiaries would start receiving SMS messages informing them of their selection as from today.

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  • The Federal Government said it could not afford the N284 billion earned allowances being demanded by the Academic Staff Union of Universities (ASUU). Earned allowances are the emoluments the lecturers are entitled to enhance academic productivity and increase research output. The Minister of Labour and Employment, Chris Ngige told reporters after the Federal Executive Council (FEC) meeting presided over by Vice President Yemi Osinbajo in Abuja.
  • The Court of Appeal has removed a factional candidate of the People’s Democratic Party (PDP) for the November 26, 2016, governorship election, Jimoh Ibrahim, and affirmed another candidate, Eyitayo Jegede, as the rightful candidate of the party.

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  • Senators took turns on Wednesday to fault several aspects of the 2017-2019 Medium Term Expenditure Programme (MTEF) and the Fiscal Strategy Paper (FSP). They however, expressed their determination to make it realistic and implementable. Senate Minority Leader, Godswill Akpabio, had while seconding the motion that the MTEF document be referred to the Senate committees on Finance, Appropriation and Finance for a thorough overhaul, disclosed that the President had sent a message to the Senate leadership through the Senate President that he would present the 2017 budget proposal to the National Assembly on December 1, 2016.
  • The Nigeria Union Pensioners (NUP) is seeking for a N25,000 monthly pension for pensioners in the country, saying that many pensioners are still paid less than N5,000 pension monthly despite the high rate of inflation and economic recession. President of NUP, Comrade Abel Afolayan, who spoke at the union’s National Executive Council (NEC) also talked about months of unpaid pensions by state governors, declaring that many state pensioners were being owed over 12 months, while many of across the country had remained for many months without any payment.

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  • The Director-General of the National Pension Commission (PenCom) Mrs Chinelo Anohu-Amazu while speaking at Journalists’ conference in Calabar, Cross Rivers State disclosed that pension assets had climbed to over N5.9 trillion, invested in structured and safe financial instruments. She stated that workers that have enlisted into the Contributory Pension Scheme (CPS) are not less than 7.2 million and that at least 170,000 pensioners now receive their monthly pensions from the scheme.
  • The Chief Executive Officer of the Nigerian Shippers Council (NSC), Hassan Bello said that the International Finance Cooperation (IFC) of the World Bank will provide a $40 million aid geared towards ending gridlock in Apapa, Lagos State. He disclosed this while speaking to journalists in Abuja. He further said that he regretted situations where over 5000 trucks gather at the port when only 1500 should be there. He stressed the need for electronic passage where trucks come to the port only when they are needed to pick or drop cargoes.

 

Foreign Exchange

  • Foreign exchange crisis, rising consumer prices and artificial lending rates set by commercial banks will remain the priority of monetary policy makers as they resume meetings on Wednesday. The Central Bank of Nigeria (CBN) says it is not considering reduction of the two-digit benchmark rate it set 12 months ago — 12 per cent in March 2016 and 14 per cent since July. The meeting, which is the last for the year, with an 18.3 per cent inflation on hand, will set the tone for the financial system until January 2017, when it would be reviewed. Inflation, as reflected in rising prices of goods and services, has been blamed on pass-through cost from high exchange rates on importation of items and associated raw materials. Real sector operators complain of poor funding and high cost of borrowing money from banks. The average interest on loans stand at 22 per cent – eight per cent more than what banks pay to the regulator for money, and 19 per cent higher than what depositors get for keeping funds with commercial banks.

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