The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has kept the Monetary Policy Rate (MPR) constant at 13.50%. Also, other parameters such as Credit Reserve Ration (CRR), Liquidity ratio, and asymmetric corridor were equally held constant.
The Governor of CBN, Mr. Godwin Emefiele, read the communique at the end of the two-day MPC meeting on Tuesday in Abuja. According to Emefiele, the decision of the MPC to hold all rates was informed by the conviction of members that key macroeconomic indicators are trending in the right direction. Recall that Nairamterics had predicted MPR to leave all rates unchanged.
Highlights of Committee’s decision
- MPR was kept at 13.50%
- The asymmetric corridor of +200/-500 basis points around the MPR was retained.
- CRR was held at 22.5%
- The Liquidity Ratio was also kept at 30%
Reasons for MPC’s decision: While considering decisions to either alter rates or keep them constant, the committee noted that there is a need to boost output growth through a sustained increase in consumer credit, mortgage loans and granting loans to Small and Medium Enterprises companies.
To this effect, in determining the specific policy options to adopt; to hold, loosen or tighten, the MPC made the following observations:
- The committee noted that whilst the focus on growth was imperative, the mandate of price stability remains sacrosanct
- MPC emphasised the fact that inflation is moderating, and this means the tightening of monetary policy should not be an option at this time. The MPC further explained that restriction of the capacity of the DMBs to create money could curtail their credit creation capabilities.
- On the contrary, the MPC was of the view that, whilst loosening could increase the money supply, stimulate aggregate demand and strengthen domestic production.
- However, the committee stated that the economy could be awash with liquidity especially if loosening drives growth in consumer credit without commensurate adjustment in aggregate output.
Keeping Rates Constant: On holding the current policy rate, the MPC observed that given the recent actions of the Bank’s management involving the prescription of minimum lending thresholds by the deposit money banks (DMBs), it is safe to assume that this action, targeted at stimulating credit growth to the real sector would increase credit delivery to the real sector and accelerate investment and economic growth.
- It also observed that since interest rates were currently trending downwards, it is safer to await the full impact of these policy actions on the economy before a review of the
position of monetary policy.
- Meanwhile, to mitigate credit risk, the Committee enjoined the CBN to de-risk the financial markets, via the development of a reliable credit scoring system, similar to what applies in the advanced countries as this will encourage DMBs to safely grow their credit portfolios.
Nigeria’s economic outlook: The MPC stated that the overall medium-term outlook for the global economy remains mixed. According to the MPC, this shows an indication of continued softening of global output due to persisting policy uncertainties and sustained macroeconomic vulnerabilities.
- On Nigeria’s economy, it was stated that output growth in 2019 is expected to remain weak, peaking at 2.27%, while inflation is projected at 11.37%.
- The MPC indicated that the underlying arguments in favour of the growth forecast include favourable oil prices; stable exchange rate; moderate inflationary pressures and enhanced flow of credit to the private sector
- Other factors include sustained CBN interventions in the real sector; effective implementation of the Economic Recovery and Growth Plan (ERGP); building fiscal buffers; and improved security in the food-producing areas of the country.
Petrol supply drops by over 23% due to decline in consumption
Consumption of petroleum products to decline to 27.2 billion litres in 2020.
The total volume of petrol supplied in Nigeria declined by 23.88% in July, when it fell from 1.34 billion litres in June 2020 to 1.02 billion litres.
This was disclosed by the Nigerian National Petroleum Corporation (NNPC), in its monthly performance data for July.
According to the report, the 1.02 billion litres translated to 32.95 million litres per day, down from 44.62 million litres per day in June, when 1.34 billion litres were supplied.
The performance data also stated that 0.95 billion litres (30.67 million litres/day) were supplied in May, and 0.94 billion litres (31.37 million litres/day) in April.
In March and February, the volume of petrol supplied stood at 1.73 billion (59.72 million litres/day), up from 1.20 billion litres in January (38.68 million litres/day)
It stated, “The corporation has continued to diligently monitor the daily stock of Premium Motor Spirit, to achieve smooth distribution of petroleum products and zero fuel queue across the nation.”
Agusto projects further decline
Experts in Agusto & Co, in a report, have noted that the impact of the COVID-19 pandemic on economic activities in the country resulted in a decline in the consumption of petroleum products.
The report said, “Agusto & Co. expects the consumption of petroleum products, particularly PMS and Aviation Turbine Kerosene, to decline to 27.2 billion litres in 2020, given the severely restricted travel and transportation activities during the second and third quarters of the year.
“This is expected to translate to a decline in revenue to N4.3tn in 2020.”
NNPC has, until recently, been the sole importer of petrol into the country for more than two years, after private oil marketers stopped importing the commodity, due to crude price fluctuations, among other issues.
The refineries, located in Port Harcourt, Kaduna and Warri, have a combined installed capacity of 445,000 barrels per day, but have continued to operate far below the installed capacity.
President Trump approves Oracle, Walmart deal with TikTok
Trump approved in principle a deal in which major Oracle and Walmart would partner with TikTok.
President Trump on Saturday night disclosed that he had approved in principle a deal in which major Oracle and Walmart would partner with TikTok in the U.S, thereby allowing the fast-growing social app to maintain operation in the world’s largest economy.
“I have given the deal my blessing if they get it done that’s great if they don’t that’s okay too,” Trump told reporters on the White House South Lawn before departing for North Carolina. “I approved the deal in concept.”
Trump further disclosed the new firm will likely be registered in Texas.
Shortly after Trump’s comments, Oracle announced it was chosen as TikTok’s secure cloud provider and will become a minority investor with a 12.5% stake. Walmart and TikTok could not be immediately reached for comment. Trump said the companies would unveil the full scope of the deal soon.
Oracle CEO Safra Catz spoke elaborately on the deal saying; “We are a hundred percent confident in our ability to deliver a highly secure environment to TikTok and ensure data privacy to TikTok’s American users, and users throughout the world.
“This greatly improved security and guaranteed privacy will enable the continued rapid growth of the TikTok user community to benefit all stakeholders.”
Nairametrics, a few days ago broke the news on the proposed plan, awaiting President Trump’s approval, which included Oracle owning a minority stake that will be lower than 20% of the new global TikTok. Walmart, the world’s biggest retailer by revenue will also take a stake, though its amount remains unknown.
While the Chinese authorities have asserted it’s right to obstruct the sale of vital technologies, it is likely to approve the deal as long as it doesn’t involve the transfer of the artificial intelligence algorithms that drive TikTok’s service.
COVID-19 Update in Nigeria
On the 19th of September 2020, 189 new confirmed cases and 1 death was recorded in Nigeria.
The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to record increases as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 57,145 confirmed cases.
On the 19th of September 2020, 189 new confirmed cases and 1 death was recorded in Nigeria, having carried out a total daily test of 2,609 samples across the country.
To date, 57,145 cases have been confirmed, 48,431 cases have been discharged and 1095 deaths have been recorded in 36 states and the Federal Capital Territory. A total of 482,321 tests have been carried out as of September 19th, 2020 compared to 479,712 tests a day earlier.
COVID-19 Case Updates- 19th September 2020,
- Total Number of Cases – 57,145
- Total Number Discharged – 48,431
- Total Deaths – 1,095
- Total Tests Carried out – 482,321
According to the NCDC, the 189 new cases were reported from 15 states- Lagos (70), Plateau (37), FCT (24), Kaduna (19), Rivers (12), Oyo (5), Ogun (4), Ebonyi (3), Katsina (3), Ondo (3), Osun (3), Imo (2), Yobe (2), Ekiti (1), Nasarawa (1).
Meanwhile, the latest numbers bring Lagos state total confirmed cases to 18,897, followed by Abuja (5,550), Oyo (3,231), Plateau (3,229), Edo (2,611), Kaduna (2,345), Rivers (2,232), Delta (1,799), Ogun (1,762), Kano (1,734), Ondo (1,597), Enugu (1,234), Ebonyi (1,038), Kwara (1,013), Abia (881), Katsina (848), Osun (813), Gombe (799), Borno (741), and Bauchi (689).
Imo State has recorded 559 cases, Benue (473), Nasarawa (448), Bayelsa (394), Jigawa (322), Ekiti (314), Akwa Ibom (288), Niger (250), Anambra (232), Adamawa (230), Sokoto (161), Taraba (95), Kebbi (93), Cross River (85), Zamfara (78), Yobe (75), while Kogi state has recorded 5 cases only.
Lock Down and Curfew
In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.
The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.
On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020. Also, on Monday 27th July 2020, the federal government extended the second phase of eased lockdown by an additional one week.
On Thursday, 6th August 2020 the federal government through the secretary to the Government of the Federation (SGF) and Chairman of the Presidential Task Force (PTF) on COVID-19 announced the extension of the second phase of eased lockdown by another four (4) weeks.