It is no longer news that the Monetary Policy Committee, MPC, of the Central Bank of Nigeria, CBN, left the Monetary Policy Rate, MPR, unchanged at 13.5 per cent, as announced by the Governor, CBN, Mr. Godwin Emefiele. But, below are the details of the apex bank’s decisions.
.Retained the MPR at 13.5 per cent
.Retained the asymmetric corridor of +200/-500 basis points around the MPR
.Retained the CRR at 22.5 per cent
.Retained the Liquidity Ratio at 30 per cent.
Why MPC retains rates:
The decline in output growth in the second quarter of 2019, partly attributable to the delay in implementation of the 2019 budget.
The broad slowdown across key economies and the response of major central banks to revise their policy rates downwards.
Low consumer, mortgage and corporate credit, aggregate demand, output growth, and high unemployment.
CBN’s thumb’s up: On price developments, the Committee commended the progressive moderation in consumer prices and urged the Bank to sustain its intervention in the real sector of the economy to reduce the output gap.
The MPC noted the improvements in the financial soundness indicators and urged the Management of the Bank to sustain its regulatory surveillance to ensure continued financial system stability.
The Committee, particularly noted the growth in the size of industry loans from N15.4 trillion in June to N16.23 trillion in September 2019.
The MPC further noted the increased supply of micro credit to key Micro Small and Medium Enterprises (MSMEs) and efforts through the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) Microfinance Bank to extend the reach of its credit facilities across the country.
The Committee commended the introduction of the Global Standing Instruction (GSI) initiative aimed at de-risking credit in the industry by committing bank customers to repay their loans to banks.
The recent proposed increase in Value Added Tax(VAT) from 5% to 7.2% would improve fiscal revenue and reduce the government’s deficit financing.
The bond market experienced increased activities reflecting the global preference for fixed income.
Market Capitalization grew by 15.37% to N13.62 trillion on September 13, 2019, from N11.72 trillion at end-December 2018. This increase was attributed to the listing of 2.75 billion ordinary shares by Airtel Africa in July 2019.
Improved performance and resilience of the banking sector, evidenced by the continued moderation in the ratio of Non-Performing Loans (NPLs) from 11.2 to 9.4 per cent in May and August 2019, respectively.
The growth in credit to the private sector remained significantly low, relative to the absorptive capacity of the economy.
The MPC underscored the need to grow consumer, mortgage and corporate credit to drive aggregate demand and ensure a reduction in unemployment and increase in output growth.
Management of the Banks should fast-track the development of the credit scoring system, to 7 promote increase.
[READ MORE: DMO discloses FG’s plan to auction N100bn bonds]
Federal Government should build fiscal buffers through freeing up of national assets, by way of privatization, thereby improving fiscal liquidity.
National Assembly should exercise restraint in increasing the crude oil benchmark in the country, considering the uncertainty in the global oil market.
State Governments should reactivate their respective public works programs that can gainfully employ youths to curb high unemployment and high insecurity
Global Economic Developments:
Output growth across major advanced economies remained subdued, confronted by legacy headwinds, including the subsisting trade war between the US and China, regional hostilities in the Middle-East, rising debt levels, growing uncertainties around BREXIT and increasing political tensions between the US and Iran, including fragilities in the financial markets.
In the EMDEs, output growth remained broadly mixed with some economies performing stronger than others. 2 Consequently, the International Monetary Fund (IMF) revised its projected global growth forecast to 3.2 per cent in 2019 from 3.6 per cent.
Price developments continued to soften across the major advanced and EMDEs as aggregate demand continually weaken, resulting in softening monetary policy by major central banks to address downward trending prices and to strengthen aggregate demand.
Domestic Economic Developments:
Data from the National Bureau of Statistics (NBS) showed that real Gross Domestic Product (GDP) grew by 1.94 per cent in the second quarter of 2019, compared with 2.10 and 1.50 per cent in the preceding and corresponding quarters, respectively. This mediocre growth, we believe, is consistent with global trends of dampening output growth and was driven mainly by the oil sector, which grew by 5.15 per cent while the non-oil sector grew by 1.64 per cent.
At 57.7 and 58.0 index points, the Manufacturing and Non-Manufacturing Purchasing Managers’ Indices (PMI) grew moderately for the 30th and 29th consecutive months, respectively, in September 2019.
The headwinds to the growth prospects remain high unemployment, rising public debt and heightening insecurity across the country.
The Committee noted the continued moderation in headline inflation (year-on-year) to 11.02 per cent in August 2019 from 11.08 per cent in July 2019, driven by decline in the food and core components to 13.17 and 8.68 per cent in August 2019 from 13.39 and 8.80 per cent in July 2019, respectively. The development in the food and core components of inflation was partly due to improved agricultural production in the current harvest season, supported by the Bank’s sustained intervention in the agricultural sector as well as the continued stability in the foreign exchange market.
Upward pressure imposed on prices due to rising insecurity in the food producing areas of the country, increased liquidity injection from FAAC disbursements and late budget cycles. It also highlighted the imperative to address the economy’s infrastructural deficits, such as power supply, upgrade of transport and production infrastructure as a means of reducing cost-push inflation.
The broad money supply (M3) grew by 5.65 per cent in August 2019, compared with the level at end of December 2018, annualized to 8.48 per cent, but remaining below the 2019 indicative benchmark of 16.08 per cent. The growth was largely driven by the increase in Net Domestic Credit (NDC), which grew by 24.36 per cent in August 2019 from the level at end of December 2018. The growth in NDC was accounted for by the 4 significant increase in credit to Government, which grew by 94.33 per cent while credit to the private sector grew by 9.36 per cent in August 2019.
In the review period, money market rates oscillated within the standing facilities corridor due to prevailing liquidity conditions in the banking system. The monthly weighted average Inter-bank Call and Open Buyback (OBB) rates increased to 8.00 and 13.37 per cent in August 2019 from 6.52 and 11.01 per cent in July 2019, respectively.
On the domestic economy, output growth in 2019 is expected to peak at 2.1 per cent (IMF), 2.2 per cent (World Bank) and 2.27 per cent (CBN). These forecasts remain underpinned by expectations of favourable oil prices which would lead to higher external reserves, stable exchange rate, moderate inflationary pressure as government increases capital expenditure, including enhanced flow of credit to the private sector to stimulate investment, sustained CBN interventions in the real sector, effective implementation of the Economic Recovery Growth Plan (ERGP), build-up of fiscal buffers, as well as improved security in the country.
Staff projections indicate that real GDP in Q3 and Q4 2019 would average 2.11 and 2.34 per cent, respectively, driven primarily by the non-oil sector. This optimism in growth prospects is anchored on the new momentum of rising credit to the private sector.
Buhari meets with AfDB President, Akinwumi Adesina, promises support
President Muhammadu Buhari on Tuesday, June 2, 2020, met with the President of the African Development Bank (AfDB), Akinwumi Adesina, at the presidential villa.
The meeting will not be unconnected with the current travails of Adesina, who was accused by a group of whistleblowers for official misconduct and the pressure by the United States Government for an independent probe of all allegations.
This was disclosed in a tweet posted on the president’s official Twitter handle.
The meeting which lasted for about 45 minutes was also attended by the Minister of Finance, Budget and National Planning, Zainab Ahmed; Minister of Foreign Affairs, Geoffrey Onyeama, and the Chief of Staff to the President Ibrahim Gambari.
The President in his statement said, ‘’Nigeria stands solidly behind Akinwumi Adesina in his re-election bid as the President of the African Development Bank (ADB). We will work with all leaders and stakeholders in AfDB to ensure that he re-elected on the strength of his achievements during this term.
‘’In 2015, when you were to be elected for the first term, I wrote to all African leaders, recommending you for the position, I didn’t say because you were a PDP Minister, and I belonged to the APC, so I would withhold my support.’’
Adesina has continued to deny the allegations and maintain his innocence.
“I maintain my innocence with regard to trumped-up allegations that unjustly seek to impugn my honour and integrity, as well as the reputation of the African Development Bank,” Adesina said recently while responding to the accusations.
The Federal Government has, however, continued to rally support for Adesina as the Minister of Finance, Budget and National Planning, Zainab Ahmed in a letter urged the board of the AfDB to ignore calls for an independent investigation of Mr Adesina.
Nigeria stands solidly behind @akin_adesina in his re-election bid as President of the African Development Bank (AfDB). We will work with all leaders, and stakeholders in AfDB, to ensure that he re-elected, on the strength of his achievements during this first term. pic.twitter.com/OSl6S99DW8
— Muhammadu Buhari (@MBuhari) June 2, 2020
Nigeria’s Former President Olusegun Obasanjo had earlier in his statement, and as a show of support, called on the board of AfDB to ignore calls for an independent investigation of Adesina by the US treasury secretary.
“In 2015, when you were to be elected for the first term, I wrote to all African leaders, recommending you for the position. I didn’t say because you were a PDP Minister, and I belonged to the @OfficialAPCNg, so I would withhold my support.”—@MBuhari to @akin_adesina, today. pic.twitter.com/0GMtH7F89K
— Presidency Nigeria (@NGRPresident) June 2, 2020
Lagos commends religious leaders in the state, churches and mosques to remain closed
The Lagos State Government has commended religious leaders in the state for their cooperation and active participation in the ongoing fight against the COVID-19 pandemic
The Lagos State Government has commended religious leaders in the state for their cooperation and active participation in the ongoing fight against the COVID-19 pandemic, saying that the cooperation received from the leaders of the two major religious groups, especially in the area of zero-congregational gathering, assisted in lowering the curve of the pandemic.
The commendation was given on Tuesday, June 2, 2020, by the state’s Commissioner for Home Affairs, Prince Anofiu Elegushi, during a Ministerial Press briefing commemorating the first year in office of Mr Babajide Sanwo-Olu at Alausa, Ikeja.
On plans to reopen the economy of the State including worship centres, Elegushi pleaded for continued collaboration with the State government and adherence to the government’s directives that would still be presented to the various churches and mosques when they are eventually allowed to gather for their services.
According to Elegushi, “When we got a hint on the current Coronavirus disease across the globe, we immediately went into action by organising a sensitisation and briefing workshop on Tuesday, March 3rd, 2020 at the Chapel of Christ the Light Hall, Alausa. This was followed by another meeting where a joint decision was reached by all religious bodies to reduce the attendance of worshippers to 50 worshipers at a time”.
“In addition to this, our Religious Leaders came together again on 18th March 2020 after reviewing the situation to agree on a total lockdown of Religious Worship Centres across the State before President Muhammad Buhari came up with an announcement locking down Lagos, Ogun and Abuja“, he said.
Elegushi said that the shutdown of all religious gatherings, activities and programmes by churches and mosques was quite timely and helped in the containment of the virus from escalating beyond control, considering the huge numbers that do gather periodically for religious purposes in the State.
He also acknowledged the discomfort which the pandemic brought on both the Muslims and Christians in Lagos, specifically during the Lenten season and the Ramadan period.
He said: “For a very long time in human history, Christians celebrated the Lenten period and Easter celebrations at home, while our Muslim brothers and sisters were also restricted to observe Sallah at home throughout the Ramadan period, including the Eid-El Fitri celebrations”.
Elegushi attributed the mutual understanding that exists between the State government and the religious groups to a long-term religious harmony and peaceful coexistence, saying that creating rapport is one of the critical functions of the Ministry.
Lagos State Government has commended religious leaders in the State for their cooperation and involvement in the ongoing fight against the COVID-19 pandemic@jidesanwoolu @drobafemihamzat #LASG #ForAGreaterLagos
Read More.. https://t.co/txGKGCZy2H pic.twitter.com/bKHaUG1XTT
— The Lagos State Govt (@followlasg) June 2, 2020
Meanwhile, information from a monitored report suggests that the churches and mosques in the state might not be opening anytime soon for worshippers. This was disclosed by Elegushi on the sideline of the Ministerial briefing commemorating the first year in office of Governor Babjide Sanwo-Olu.
He said that the reopening was not possible as Lagos State is the epicentre of the coronavirus pandemic in the country and that after several meetings with religious leaders in the state, the possibility of reopening religious houses was ruled out.
Elegushi said that they claim that they cannot take responsibility for ensuring that only 20 or 50 people are in attendance.
He said that the governor will come out with further directives.
It can be recalled that the Federal Government, on Monday, June 1, 2020, announced the relaxation of the ban on religious gatherings. They, however, said that each state government can devise measures that suit them, thereby looking at the possibility of doing so in their respective states.
The economics of climate change
The Western economies were built by burning “dirty” fuel i.e. coal and later crude oil to generate power for industrial complexes and cars.
When I read “climate change” …I do not see polar ice caps melting and deserts growing. I see the economics of it.
To really do climate change, is to reduce or cap carbon emissions and boost the use of renewables such as solar and wind. These are good objectives, so why has a comprehensive climate change plan not been reached?
Simple, it is the economics
Let us look at reducing or capping emissions, what emits carbon? Factories and cars do, so to cap or reduce emissions is to cap or reduce growth in factories and to stop families driving cars. You are capping jobs and asking families not to drive. The reality is this, the Western economies were built by burning “dirty” fuel, i.e. coal and later, crude oil to generate power for industrial complexes and cars. Then the West moved to nuclear and cleaner sources of power, but this was after the Western economies had achieved a high and inclusive economic standard of living for their citizens. Owning a car in America was a rite of passage, still is.
The world’s two largest economies outside the Western World are China and India. In all measures, the citizens in these nations are not as rich as the middle class in Pennsylvania. How do you make poor people rich? You create opportunities. How do you create opportunities? You build economies that create jobs. Where do you find jobs? In factories and offices. What do those factories burn? Diesel, petrol, and of course, coal.
In other words, for India to move her citizens from poverty to prosperity, she must generate enough power supply to factories and businesses in India who hire Indian workers and pay them a middle-class wage. It is really that simple. So, climate change summits always fail because the West wants a cap on carbon emission and the developing nations do not, at least until they are “developed”.
It is important we understand this cold hard reality. Climate change is good. I want a great climate for my kids, but my kids must eat first. Nigeria must not in the name of “climate change” sign away our rights to build coal-fired power plants in Kogi and Enugu…. No. (Japan is restarting coal plants)
So, what should Nigeria do? Do we keep polluting and flaring gas?
Nigeria must have a strategy, and I propose a simple strategy called, “Let Them Pay” LTP. If Nigeria has coal deposits, then let the West pay Nigeria not to build a coal Power Plant using that coal. They can pay Nigeria by investing in developmental credits to fund the building of a solar power plan, or even writing off Nigeria’s debts.
There is a precedence to this, the West pays the Armed Forces in Africa to fight terrorists, and they pay Police in North Africa to stop people smugglers crossing the Mediterranean. Nigeria pays Niger Republic by supplying them power so that they do not build their dam on the River Niger to reduce water supply to Kainji Dam. China led Africa strategy on this with the Chinese President flying to Southern Africa from the COP 21 in Paris to discuss the developing world’s response with African leaders.
Nigeria should push that gas flaring be reduced by a massive investment by the Western nations via FDI to build LNG plants in the Niger Delta.
Nigeria should also tie the Climate Change narrative to terrorism by making the strong case that Boko Haram is feeding off the lack of jobs and opportunities caused in part by the drying of Lake Chad. This has reduced agric and trade and pushed many young boys to Boko Haram. Lake Chad has shrunk by 95% between 1963 to 1998, the UN Food and Agricultural Organization has called it an “Ecological Catastrophe”. Lake Chad provides water to almost 20million people, including frames, fishermen, and herders.
The solution to a drying Lake Chad is already there, a pipeline to take water from the Congo to Lake Chad, it’s bloody expensive – about $14.5b but allowing Boko Haram to exploit the lack of commerce from lake chad also is expensive.
Nigeria must tie this climate thing to economics