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Business News

World Bank revises projection for Nigerian economy, puts growth at 2.1%

The World Bank in its latest report has downgraded Nigeria’s growth prediction for 2019 to 2.1% as against the earlier growth forecast of 2.2%. The disclosure was made in the June 2019 edition of the World Bank’s Global Economic Flagship Report.

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World Bank, Mineral,World Bank approves $2.2 billion loan as the country’s debt rises to over $80 billion 

The World Bank in its latest report has downgraded Nigeria’s growth prediction for 2019 to 2.1% as against the earlier growth forecast of 2.2%. The disclosure was made in the June 2019 edition of the World Bank’s Global Economic Flagship Report.

Similarly, the World Bank stated that slower-than-expected mining and oil production, combined with domestic policy uncertainties have delayed the growth recovery in some of the largest commodity exporters in Sub-Saharan Africa (Angola, Nigeria, South Africa).

Sub-Saharan Growth: The World Bank stresses that the economic environment in Sub-Saharan Africa (SSA) remains challenging, stating that the external and domestic headwinds that caused the slowdown in 2018 are dissipating more slowly than previously envisaged.

Specifically, the World Bank group stresses that the growth of the three largest African economies (Angola, Nigeria, and South Africa) in the region has remained subdued in 2019.

The Bank explained that the ease in external financing conditions and recovering  commodity prices have only partly offset the Weak external demand from major economies, persistent policy uncertainty, and domestic growth bottlenecks.

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Some largest economies – The World Bank stated that South Africa’s continued policy uncertainty and rolling power blackouts have slowed economic activity in the first half of 2019. However, the Bank expects the country’s economy to be strengthened through easier external financing conditions and as the new administration fast-tracks reforms to transform the business environment.

Meanwhile, the World Bank stressed that excluding Angola, Nigeria, and South Africa, SSA growth is expected to be more robust through other countries.

  • Angola is expected to emerge from three years of contraction
  • Cameroon and Ghana’s investment in new oil and natural gas capacity will aid in growth recovery in the region
  • Rise in mining production in the Democratic Republic of the Congo and Guinea will spur growth
  • Ethiopia, Rwanda, Tanzania and Uganda will record growth due to the rise in the private sector’s participation.

Bottom Line: In April 2019, the World Bank retracted its forecast by stating that its growth projection for Africa is now 2.8 percent. The latest prediction brings the World Bank and CBN predictions to 2.1%, while the IMF still stands at 2.2%.

Explaining the reasons for a decline in Nigeria’s growth forecast, the World Bank stated the downward review of the country’s growth is due to continued constraints from foreign exchange restrictions, supply disruptions in the oil sector, and a lack of much-needed reforms to spur new capacity.

According to the World Bank Group President David Malpass,

“Stronger economic growth is essential to reducing poverty and improving living standards. Current economic momentum remains weak, while heightened debt levels and subdued investment growth in developing economies are holding countries back from achieving their potential. 

“It’s urgent that countries make significant structural reforms that improve the business climate and attract investment. They also need to make debt management and transparency a high priority so that new debt adds to growth and investment.”

What this means: The 2.1% growth forecast for the Nigerian economy implies activities may slow down further in the course of the year. The Central Bank of Nigeria (CBN) emphasized in its recent Monetary Policy communique that the economy is underperforming its capacity.  However, if the 2.1% growth is achieved, it means the economy will have improved its growth by only 0.17% in a year.

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Financial Services

Union Bank Nigeria Plc issues disclaimer against purported sale of owner’s stake

Union Bank has rejected claims that its majority shareholder, Atlas Mara is considering selling its 50% stake.

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Union Bank's statement

The Union Bank of Nigeria Plc has today issued a disclaimer against an unsubstantiated publication by one of Nigeria’s leading online news site, that its principal owner is considering selling its 50% stake in the firm.

The disclaimer was signed by the bank’s secretary, Somuyiwa Sonubi and sent to the Nigerian Stock Exchange, as seen by Nairametrics.

Recall that a few days ago, some online news website had reported that Union Bank’s principal owner, Atlas Mara is considering selling its stake in the firm, after receiving bids from local banks. The report has it that Atlas Mara engaged the services of a financial advisor, Rothschild & Co to consider the deal.

In a bid to shed more light on the issue and allay the fears of stakeholders, Union Bank dismissed the claims, describing it as a mere ‘rumour and speculation’. It went further to advise relevant stakeholders which comprises of the members of the public, its customers, NSE and other regulatory bodies to disregard the speculation in its entirety.

Corroborating the stand maintained by the bank, Atlas Mara also rejected the report. It clarified the issue of contracting external advisers, noting that it was in line with the Board’s decision to explore a wide range of strategic options.

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An excerpt of the disclaimer issued by the firm reads: “While it is the Company’s practice to refrain from comment on market rumours or speculation, we believe it is important to note that Atlas Mara has not received any offers from any local Nigerian bank or other bank wishing to acquire the Company’s stake in Union Bank of Nigeria (“UBN”). As previously announced to the market in 2019, the Board of the Company has been exploring a wide range of strategic options with the assistance of external advisers. That process is still underway and the Company’s strategic objectives have not changed.’’

What you should know

  • Atlas Mara is currently the biggest shareholder in Union Bank of Nigeria, with a stake of 49.97% (approximately 50%).
  • Union Bank Nigeria Plc share price closed trading today, January 27, 2021 at N5.7, down by 3.39%. It also has a market capitalization of about N165.99 billion.
  • Based on the current market capitalization, the stake of Atlas Mara translates to approximately N82.9 billion.

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Economy & Politics

House of Reps Speaker assures that the PIB will be passed in April 2021

Femi Gbajabiamila has revealed that the lower legislative chamber intends to pass the PIB in April 2021.

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House of Reps determined to resolve ASUU issues and empower youths - Gbajabiamila , #EndSars: House of Reps to draft new Police legislation in 30 days, Speaker Gbajabiamila asks NLC to suspend strike, offers palliatives, #EndSARS: House of Representatives will do everything to deliver a policing system that works - Gbajabiamila

The Speaker of the House of Representatives, Femi Gbajabiamila, has revealed that the lower legislative chamber intends to pass the Petroleum Industry Bill (PIB) in April 2021.

The assurance by the Speaker follows so many years of delay in the passage of the bill, which is expected to encourage investment into the oil industry, due to political disagreements and objections from International Oil Companies.

This disclosure was made by Gbajabiamila, while speaking at the 2-day public hearing organized by the house Adhoc committee on PIB on Wednesday, January 27, 2021.

The Speaker pointed out that although the timeframe for the passage of the Bill is short, he assured that it will receive the thoroughness it deserves and as well, made a commitment on behalf of the house to pass the legislation in April.

What the Speaker House of Representatives is saying

Gbajabiamila, in his statement, said, ‘’I thank the Chairman and the committee for the dedication and efforts thus far. I have confidence that they will deliver on this critical National Assignment within the time we have set. I look forward to presiding over the consideration of the committee’s report.’’

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“We intend to pass this bill by April. That is the commitment we have made. Some may call it a tall order, but we will do it and we will do it with every sense of responsibility without compromising the thoroughness of the work that will be done.’’

‘’A lot of work has gone into the preparation of this bill but it’s not straight-jacketed, the idea of the public hearing is to have interests that may have not been accommodated prior to the introduction to the Bill to lend their voices,’’ he added.

While speaking at the occasion, the Chairman of the Adnoc Committee on PIB, who is also the Chief Whip of the House of Representatives, Mohammed Tahir Monguno, said that as we gather here today, we may differ in opinions and background but the truth is the passage of this Bill is long overdue.

What you should know

  • It can be recalled that the Senate President, Ahmad Lawan, had a few days ago while speaking at the 2-day public hearing organized by the senate on the PIB, said the upper legislative chamber is looking at passing the Bill in April or May.
  • He noted that the non-passage of the PIB had been a major drag on the industry over the years, significantly limiting its ability to attract both local and foreign capital at a time that when other countries are scrambling to exploit their oil and gas resources.
  • The PIB is a Bill that seeks to provide Legal, Governance, Regulatory Fiscal Framework for the Nigerian Petroleum Industry.
  • On November 24, 2020, the PIB was debated, it passed the second reading and then referred to the Adhoc, Committee on the Bill.

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Coronavirus

NASS directs Health Ministry to suspend disbursing N10bn on Covid-19 vaccine production

NASS has ordered the Ministry of Health to suspend expenditures regarding the N10 billion released for funding of Covid-19 vaccines.

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AstraZeneca suspends COVID-19 vaccine final stage trial over safety concerns, COVID-19: J&J starts vaccine trials on humans after success on monkeys

The National Assembly has asked the Federal Ministry of Health to suspend further action on plans to spend the sum of N10 billion released by the Federal Ministry of Finance to fund the production of Covdi-19 vaccines.

This follows the dissatisfaction of the National Assembly Joint Committee on Health with the explanation of the Minister of Health, Osagie Ehanire, on how to utilize the N10 billion.

According to a report from Channels, this disclosure was made by the Chairman Senate Committee on Health, Ibrahim Oloriegbe, during an interaction between members of the committee and the representatives of the Federal Ministry of Health.

Ehanire was at the meeting with other representatives which includes the Minister of State for Health, Olorunnimbe Mamora; the Permanent Secretary of the Ministry, and the Director-General of the National Primary Healthcare Development Agency Faisal Shuaib.

What the Chairman National Assembly Joint Committee on Health is saying

Oloriegebe said the committee is dissatisfied with the explanation of the Minister and has directed that the money should not be spent until the Ministry can state clearly, what the money will be used for.

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He said, “This N10billion is just given to you, with due respect, with what you have given to us, you don’t have a specific detailed plan for it. Our decision, for now, is that you can’t spend it (the money) until you provide us with a satisfactory answer. Once you provide us with the details then we will invite all the necessary persons.’’

What you should know

  • It can be recalled that the Minister of Health, Osagie Ehanire, a few days, during one of the briefings of the Presidential Task Force on Covid-19 revealed that the sum of N10 billion had been released for the local production of Covid-19 vaccine.
  • He said the money was part of an agreement between the Federal Government and a foreign partner, May and Baker plc for the production of bio vaccines and added that the health ministry is acting on a Memorandum of Understanding (MoU) between the Federal Government and the foreign partner for the production of the bio vaccines.
  • Director-General of the Budget Office, Mr. Ben Akabueze, representing the Finance Minister during a meeting with the Joint Committee said that the N10 billion it released for vaccine development is not only for the production of Covid-19 vaccines.

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