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Economy & Politics

Nigerian Economy: What to expect this week by @ugodre

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The Nigerian economy started the week ended August 26th with a prime-time broadcast from President Muhammadu Buhari, who had just returned from over 100 days away on medical trip abroad.  A lot of Nigerians who expected some commentary on the economy, were left visibly disappointed as he focused mostly on National Security.

However, as we enter the last week in August, the economy will be looking to close August on a positive, going into the Salah holiday which starts on Friday September 1st. Here is a summary of what to expect this week.

Government & Policy

The Federal Executive Council meets nearly every week to deliberate on very important economic and political decisions. Last week’s meeting did not hold because the President was busy getting a debrief by his Vice President. Since this was much criticized, we expect a meeting to take place this week. There could be some statements around disbursement of cash to prosecute some projects in the 2017 budget. This could also be a fallout of the FEC meeting.

Data release

The National Bureau of Statistics is expected to release its inflation rate data for the month of July 2017. The data was delayed for about a week but looks set to be published on Monday, 28th of August. We expect inflation rate to decline further and drop below 16% for the first time since May 2016. The Bureau is also going to release its 2017 Q2 domestic and foreign debt profile as well as the Producers Index.

Treasury Bills Sale

The CBN will be selling about N193 billion in treasury bills sale on Thursday 28th of August, according to its Calendar. This will be its last sale for the third quarter of 2017, suggesting that no treasury bills will be sold in September 2017. About N26.1 billion, N62 billion and N105 billion will be sold in 91 days, 182 day and 364 days treasury bills sales.

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Capital market

The last week of August is typically the beginning of the end of the earning season. Most of the major companies have released their half year results, so we expect to see market sentiments wane a little bit. In terms of dividends payment, we only expect to get payment from Rak Unity and McNichols, who should pay their shareholders this week. There are no major mark downs this week also. The market will also likely close flat this week, if not lower as the market prepares for the Salah Holiday.

Forex

The naira was under a bit of pressure last week as demand for dollars from those going on Salah holiday put some pressure on the exchange rate. We could likely see further pressures against the naira and won’t be surprised if it closes at around N372 by the end of the week. The CBN will however have a lot to say in what happens, especially if it decides to pump in dollars.

 

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Ugo Obi-chukwu "Ugodre" is a chartered accountant with over 16 years experience in financial management, corporate finance and financial analysis. He is also a retail investor and a personal finance advocate with over a decade experience investing in the Nigerian stock market.Ugo is the founder/Publisher of Nairametrics and blogs regularly on the website.

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Economy & Politics

Insecurity: FG to implement town hall meetings to reach a national consensus

The meetings are set to address the twin issues of insecurity and its concomitant effect on national unity and cohesion.

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Insecurity: FG to implement town hall meetings to reach a national consensus

The Federal Government announced the launch of town hall meetings to address the twin issues of insecurity and its concomitant effect on national unity and cohesion.

This was disclosed by the Minister of Information, Lai Mohammed, at the Town Hall Meeting in Kaduna on Thursday, themed “Setting Benchmarks for Enhanced Security and National Unity in Nigeria.”

What the Minister is saying

“The correct starting point towards addressing these myriads of problems is the building of an “elite consensus” on the security, unity, indissolubility, and peaceful existence of Nigeria.

“Such elite consensus had worked in the past. Can we make it work now and proffer solutions in order to stave off the threats to our unity as a nation?” he said.

The Minister disclosed that the meetings are necessary to bring all critical stakeholders together to deliberate on the issues and possibly reach a consensus on the way forward.

“We expect this Town Hall meeting to develop concrete, implementable resolutions because a lot of talks and postulations had taken place with little or no requisite outcome.”

In case you missed it 

  • Former Vice President, Atiku Abubakar warned that the rising insecurity in Nigeria is a result of rising youth unemployment. He urged Nigeria to tackle out-of-school children cases, pay a monthly stipend to poorer families, incorporate youths who are above school age into massive public works programmes and others.
  • Senator Ali Ndume insisted that the Federal Government needs to increase its total military spending to be able to tackle the rising insecurity in Nigeria which has seen a number of school students in 2021 kidnapped by bandits.

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Business

IMF lifts 2021 global GDP growth to 6%

The group also warned that economic recoveries are diverging dangerously across and within countries.

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Kristalina Georgieva, IMF boss hints at 'synchronized slowdown' in global growth , IMF: 40% of African countries can't pay back their debts , Nigeria worse off, posts grows lower than LIDC benchmark - IMF, Measures introduced by Nigeria to ensure transparent use of the $3.4b IMF loan

The International Monetary Fund has lifted its global growth outlook to 6% in 2021 (0.5% point upgrade) and 4.4% in 2022 (0.2 percentage point upgrade), after an estimated historic contraction of -3.3% in 2020 due to the effects of the COVID-19 pandemic. This disclosure was made on the organisation’s website on Tuesday.

The group also warned that economic recoveries are diverging dangerously across and within countries, as economies with slower vaccine rollout, more limited policy support, and more reliance on tourism do less well.

READ: Corruption erodes the constituency for aid programmes and humanitarian relief – IMF

What the IMF is saying

“The upgrades in global growth for 2021 and 2022 are mainly due to upgrades for advanced economies, particularly to a sizeable upgrade for the United States (1.3 percentage points) that is expected to grow at 6.4 percent this year.

This makes the United States the only large economy projected to surpass the level of GDP it was forecast to have in 2022 in the absence of this pandemic.

China is projected to grow this year at 8.4 percent. While China’s economy had already returned to pre-pandemic GDP in 2020, many other countries are not expected to do so until 2023.”

READ: Nigeria needs structural and monetary policy reforms to unlock potential – IMF

On divergent recoveries 

The IMF stated that divergent recovery paths are likely to create wider gaps in living standards across countries compared to pre-pandemic expectations.

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“The average annual loss in per capita GDP over 2020–24, relative to pre-pandemic forecasts, is projected to be 5.7 percent in low-income countries and 4.7 percent in emerging markets, while in advanced economies the losses are expected to be smaller at 2.3 percent,” they said.

“Faster progress with vaccinations can uplift the forecast, while a more prolonged pandemic with virus variants that evade vaccines can lead to a sharp downgrade. Multispeed recoveries could pose financial risks if interest rates in the United States rise further in unexpected ways.

For Africa, IMF forecasts economic growth of 3.4% in 2021 and 4% by 2022, Nigeria is expected to grow by 2.5% in 2021 and 2.3% by 2022, while South Africa is projected to hit growths of 3.1% and 2.0% for the respective years in focus.

READ: The 4th industrial revolution and the birth of a new international monetary system

In case you missed it 

The International Monetary Fund (IMF)  identified some factors that hamper the economic recovery of low-income countries from the devastating impact of the coronavirus pandemic, factors including access to vaccines, limited policy space to respond to the crisis, the lack of means for extra spending, pre-existing vulnerabilities such as high levels of public debt in many low-income countries and sometimes weak, negative, total factor productivity performance in some low-income countries. These factors continue to act as a drag on growth.

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