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.
Top States in Nigeria with highest IGR per population in 2020
Nairametrics ranks the 36 states of the Federation, including the Federal Capital Territory, based on their IGR per population.
Nigeria’s states generated a sum of N1.31 trillion internally in 2020, representing a marginal decline compared to N1.33 trillion recorded in 2019, and an increase compared to N1.17 trillion in 2018.
The downturn is attributable to reduced state revenue as a result of disruptions caused by the covid-induced lockdown, while the crash in crude oil prices also hampered economic growth.
Internally generated revenue is regarded as income generated by various states in the country, independent of their share of revenue from the Federation account. However, apart from the clear exception of Lagos State, all others depend largely on statutory allocations to run their state affairs.
Nairametrics ranks the 36 states of the Federation, including the Federal Capital Territory, based on their IGR per population, taking into account the estimated population size of each state as at 2016 and 5% growth rate between 2016 and 2020.
In terms of IGR per population for the six geo-political zones in Nigeria, South West takes the lead with an average of N13,966, having generated a sum of N561.01 billion and an estimated population of 40.17 million people. The South-South region followed with an average of N8,694 and a total aggregate IGR of N263.17 billion.
On the flip side, the North-Eastern region, which houses states like Bauchi, Borno, Yobe, etc. recorded the lowest IGR per population of N2,061 closely followed by North West with an average of N2,855.
Here are the top 5 states with the highest IGR per population in 2020.
Lagos State – N31,794
Lagos State, regarded as the economic hub of the nation, with a total estimated population of 13.18 million people as of 2020, generated a sum of N418.99 billion as IGR in 2020. This represents an increase of 5.1% compared to N398.73 billion recorded in 2019.
- In terms of IGR per capita, Lagos State generated an average of N31,794 from each member of the population in 2020, as against N30,257 generated in the previous year.
- It is no surprise that Lagos State tops the rank, being a major epicentre for economic activities in the country. Lagos State is the largest city in Africa in terms of GDP, and the State is widely known for its large industries, with most corporations in the country headquartered within the state.
- It also houses major seaports in the country as well as the State Government’s aggressive taxation policies. These, amongst others, ensure the state makes more revenue internally compared to other states of the Federation.
- According to data obtained from the National Bureau of Statistics, Lagos State received a total of N115.93 billion as Federal allocation in the year 2020, representing 21.67% of the total revenue available to the state in the year.
- This shows the exceptional ability of the state to run its affairs, using its internally generated revenue with little or no support from the Federal purse.
Abuja – N24,600
The Federal Capital Territory generated a sum of N92.06 billion in 2020, the third-highest state IGR in the year. However, based on IGR per population Abuja seats in second position with an average of N24,600.
- This represents a 23.5% increase when compared to N19,925 recorded in 2019.
- Abuja is the capital territory of Nigeria, with a total estimated population of 3.74 million people across a 7,315km square area.
- The state houses a lot of Federal ministries, having been made the country’s capital in 1991. Abuja is also a major conference centre in the country, as it hosts various meetings and summits annually.
- A cursory look at the data showed that the state’s IGR only accounted for 57.85% of the total available revenue, indicating that 42.15% of its revenue was gotten from the Federation account.
Rivers State – N15,281
Rivers State, being a major oil-producing state in the country, generated a sum of N117.19 billion as internally generated revenue in 2020.
- However, with an estimated population of 7.7 million people, its IGR per population stood at N15,281 in 2020, representing a decline of 16.5% when compared to N18,307 recorded in 2019.
- Rivers State is in the Niger Delta region of the country with much of the businesses in the state being oil exploration companies.
- Evident from the data obtained from the NBS, Rivers State relies heavily on statutory allocations from the Federal Government as well as their share of the 13% oil derivatives as it received a total of N141.19 billion from FAAC, representing 54.64% of the total available revenue in the review period.
Delta State – N10,045
Delta state, another state in the Niger Delta region of the country, with an estimated population of 5.9 million, generated a sum of N59.73 billion as IGR, and an average of N10,045 as IGR per population.
- Delta State is a major oil-producing state and ranks second to Rivers State. The State supplies about 35% of Nigeria’s crude oil and some considerable amount of natural gas.
- Delta State in the period received a sum of N186.83 billion as statutory allocation.
- Its IGR only accounted for 24.2% of the available revenue in the period, while N46.11 billion was generated as PAYE.
Ogun State – N9,263
Ogun State, a neighbouring State of Lagos State, generated a sum of N50.75 billion. In terms of IGR per population, the State generated a sum of N9,263.
- The State’s average income per population decreased by 28.4% compared to N12,945 recorded in 2019.
- The State is strategically located, bordered to the East by Ondo State, to the North by Oyo and Osun States, to the South by Lagos State and the Atlantic Ocean, and to the West by the Republic of Benin.
- Ogun State also joins the list of states that are much dependent on FAAC allocations as statutory payments stood at N37.7 billion, representing 42.61% of the total revenue.
Katsina – N1,386
Jigawa – N1,416
Benue – N1,736
Niger – N1,804
Bauchi – N1,821
SpaceX says it’s pursuing necessary licenses to bring Starlink to Nigeria
Broadband penetration of 70% which covers 90% of the population is the FG’s target in its National Broadband Plan (NNBP), 2020-2025.
American private space exploration company founded by Elon Musk, SpaceX says it is working to pursue all necessary licenses needed to bring the Starlink Satellite internet services to Nigeria.
This was disclosed by Mr Ryan Goodnight, SpaceX’s Starlink Market Access Director for Africa in a meeting with NCC’s Executive Vice-Chairman (EVC), Prof. Umar Danbatta on Friday in Abuja.
What SpaceX is saying about Starlink in Nigeria
“SpaceX has been in discussion with NCC virtually over the past several months to begin the process of pursuing all necessary licences to bring Starlink, its satellite-based broadband services, to Nigeria.
Having made substantial progress in the discussion, the commission granted SpaceX’s request for a face-to-face discussion to gain better insights on the prospects,” they said.
The NCC stated that it has listened to SpaceX’s presentation and will review it vis-à-vis its regulatory direction of ensuring an effective and sustainable telecoms ecosystem where a licensee’s operational model does not dampen healthy competition among other licensees.
“As the regulator of a highly dynamic sector in Nigeria, the commission is conscious of the need to ensure that our regulatory actions are anchored on national interest,” they said.
NCC added that broadband penetration of 70% which covers 90% of the population is the FG’s target in its National Broadband Plan (NNBP), 2020-2025. This is also in line with its National Digital Economy Policy and Strategy (NDEPS), 2010-2030.
What you should know
Starlink is an internet service launched by SpaceX to improve internet coverage in rural and underserved areas globally. Starlink satellites are over 60 times closer to Earth than traditional satellites, resulting in lower latency and the ability to support services typically not possible with traditional satellite internet.
Nairametrics also reported this month that the Federal Government announced a deal with Microsoft through the Federal Ministry of Communications and Digital Economy for the development of high-speed internet infrastructure across the six regions in the country.
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