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SBM Jollof Index reveals how Covid-19 has forced food items to skyrocket

The SBM Jollof Index for Q1 2020, which was recently released, has shown that Nigerians are spending more on food items amid the Coronavirus lockdown.

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SBM Jollof Index

The SBM Jollof Index for Q1 2020 has shown that Nigerians are being forced to spend more on essential food items, due to the Coronavirus pandemic and subsequent lockdowns that ensued.

According to the report, the prices of both local and foreign rice spiked in Abuja, Anambra, Calabar, and Lagos state after President Muhammadu Buhari declared lockdowns in some parts of the county. The lockdowns brought about panic buying by many Nigerian consumers, thereby causing the prices of those food items to skyrocket.

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A bag of foreign rice, which initially sold for an average of N26,000 at Wuse market in Abuja, had spiked by 7.69% to N28,000 by March ending. The report also noted that there was an 8.11% increase in the price of local rice which went up from an average of N18,500 to N20,000. Note that these dramatic price increases have also been attributed to the disruption of the supply chain. This is because the big markets in Lagos, Abuja and Port Harcourt are all closed, thereby forcing stores to source for goods directly from the hinterland.

(READ FURTHER: KPMG Nigeria outlines the impacts of a Twin Shock on Nigeria)

The prices of other commodities such as garri and tomatoes also increased by 122% in Ibadan, 100% in Anambra, and 114% in Port Harcourt, as itemized in the report. Some parts of the report said:

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“In the seventeen quarters in which we have compiled the Jollof Index, it is clear that the Coronavirus pandemic represents the single most disruptive determinant affecting food prices in the country. While prices followed an upwind, but mostly gentle trend, the month if March was very different. In anticipation of a shutdown as a result of the Covid-19 epidemic, the extent of panic buying by Nigerian consumers was clearly observed in the significant rises of such products as garri, rice, and tomatoes all across the surveyed markets, including a 122% increase in Ibadan, a 100% increase in Anambra, and 114% in Port Harcourt.”

It is worth noting that the SMB Jollof Index had earlier experienced a spike in August 2019, as a result of the border closure policy. But the spike stabilized overtime, as Nigerians gradually adjusted to locally-made products. Unfortunately, the pandemic has changed everything, albeit for the worst.

In the meantime, there are concerns over further increases in the prices of essential food items. This is because the pandemic seems to be getting worse by the day, with no immediate end in sight. To this end, consumers are advised to brace themselves for what is yet to come.

About the SBM Jollof Index: The report, which is compiled and published on a monthly by SBM Intelligence, tracks the prices of food items, particularly the main ingredients used in preparing a pot of Jollof rice for a hypothetical family of five. Jollof rice was selected as the focus of the research because of its near unrivaled distinction of being a delicacy in virtually every part of Nigeria. SBM Intelligence said it believes that the index can give a true representation of Nigeria’s inflationary trends.

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You may download the SBM Jollof Index by clicking here.

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Business News

Financial Institutions still the fastest growing sector in Nigeria

Banks and other financial institutions posted a 24% GDP Growth Rate for the First Quarter of 2020.

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Nigerian Banks,Impact of coronavirus pandemic on asset quality of Nigerian banks

Financial Institutions in Nigeria reported a GDP Growth rate of 24% for the first quarter of 2020 compared to 22.3% in the last quarter of 2019 and a contraction of 9.21% in the corresponding quarter of 2019. This is according to data from the National Bureau of Statistics.

Financial Institutions sub-sector include commercial banks, merchant banks, micro-finance banks, and FinTechs, and other non-banking financial institutions.

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2020 Q1 GDP
Source: NBS/Nairametrics Research

Based on the data, Financial Institutions retain their position as the fastest-growing sub-sector in the Nigerian Economy. Growth in the sector remains miles ahead of every other sector in the economy and higher than the overall GDP growth rate of 1.87% for the quarter. The closest to Financial Institutions Telecommunication and Information Sub-sector at 9.71%.

Bank Q2 Results

Apart from data from Commercial Banks, other financial institutions not quoted on the Nigerian Stocks Exchange do not publish their reports in public. However, available data from some of the largest banks in Nigeria reveal growth in gross earnings was recorded across board.

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About 8 of the banks that published their first-quarter results posted about N836.2 billion in gross earnings compared to N755 billion representing a 10.8% growth. Most of the growth was from the merger between Diamond Bank and Access Bank.

Effects of Covid-19

Several reports published in Nairametrics suggest banks face headwinds from the Covid-19 Pandemic. An Augusto & Co report assessed the impact of the coronavirus pandemic on the asset quality of the Nigerian banks. According to details in the report, banks are significantly exposed to several sectors which include the oil and gas sector, manufacturing, real estate, public sector, construction, and general commerce.

It mentions that about 47% of the banking industry’s gross loans are in foreign currency. The report suggests that the coronavirus pandemic will weaken the asset quality of Nigerian banks in view of the impact on State Governments’ finances, purchasing power of households and the performance of businesses. Although the degree of impact will vary across different sectors, the key sectors that will bear the brunt are oil and gas (upstream), real estate, construction, transportation (aviation), and manufacturing (non-essentials).

CEO of one of Nigeria’s top banks, Zenith Bank Plc, Ebenezer Onyeagwu, also commented on the effect of the Coronavirus on the sector. Speaking to CNBC Africa, Onyeagwu stated that one of the most immediate impacts of the Pandemic is the fact that the oil price crash will have negative implications for banks’ revenue targets.

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“In terms of banking, the drop in the price of crude is affecting directly the exposure that banks have created in the oil and gas sector. Revenues are challenged now, no doubt. And you have a situation where revenues are challenged, the obvious next step will be for you to restructure,” Onyeagwu stated.

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Twisted Irony

The data is symptomatic of a twisted economy altered by several heterodox policies that have kept interest rates high for banks and lending short for SME’s and Real Sectors of the economy. With several sectors in the country posting a negative GDP growth rate in the first quarter of 2020, the outlook for the second quarter portends an even worse outcome for the rest of the economy. While banks have weathered tougher challenges in the past a weaker than expected economy will likely stunt its growth in the coming quarter.

More recent CBN Policies of stiffer CRR and 65% loan to deposit ratios imposed on banks to lend to the private sector. The CBN was meant to meet on Friday for its monetary policy meeting for May but postponed till Thursday. Some analysts point to a softer monetary policy stand that could see it relax its CRR and LDR requirements. This is assuming the latest GDP numbers do not reinforce its resolve to get backs to support the economy following the impressive GDP growth rate.

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Economy & Politics

Skills Africa needs for sustainable development

Over a billion people with 5 official working languages – Arabic, English, French, Portuguese and Swahili , will again celebrate Africa Day this year.

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From Addis Ababa to Durban, Lagos to Cairo, from the Sahara Dessert to the Nile River, over a billion people with 5 official working languages – Arabic, English, French, Portuguese and Swahili – will again celebrate Africa Day this year.
A day to remember, reminisce and celebrate successes recorded against the struggles for independence, freedom from apartheid and colonization. Although, with the new normal brought about by Coronavirus, the 2020 celebrations would be quite unlike previous years.

The Africa Union (Formerly OAU) has recorded good milestones in terms of political independence and self-governance. So now is a good time for Africa to reflect on our independence.

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On reading the objectives of the Africa Union (AU), words like independence, territorial integrity, human rights, security, cooperation are splattered across the pages. Significantly, none of the AU objectives seeks economic autonomy for Africa or her member states. This is a fundamental flaw which speaks directly to Africa’s issue of having a large population without the requisite skills for growth.

Our education is largely dependent on the western curriculum and narrative. There is hardly any major infrastructure, industrial or development project in Africa with 100% African content in manpower, materials or capital.

(READ MORE: Nigerian economy going into recession, might contract by -8.9% – Finance Minister)

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It is now well established and more evident that political independence without economic independence is like a car without an engine. Economic empowerment is the nucleus of national development. No fewer than 14 West African countries currently use CFA Franc, with some having used the currency for at least 75 years. This goes beyond nameplate as the Bank of France holds half of those countries’ currency reserves. This is effectively cutting their growth capacity by 50%.

Skill Up Africa for Sustainable Development

8 of those 14 countries will relinquish the CFA franc for the new ECOWAS currency, ECO (to be launched in July 2020). However, there is no indication that the affected African leaders would ask France for compensation for the years of economic sabotage to their countries. The introduction of the ECO was to bring a ray of hope, but we hope the real difference would not just be in the colour of the currency. This is because the ECO will not be autonomous but would be pegged against the Euro.

France is not alone in the economic sabotage of Africa, they are in the good company of the United Kingdom, the US and Belgium, to mention a few. However, are these foreign countries to blame? Africa got her independence, but African leaders refuse to be independent and the dependent mentality is also enshrined in the AU objectives.

One of the AU objectives states “to work with relevant international partners in the eradication of preventable diseases and the promotion of good health on the continent.” The statement looks good superficially, but it is enlaced with aid orientation, the lack of drive for self-reliance, and a beggarly mindset.

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(READ MORE: Sahara Group donates medical equipment to support fight against COVID-19)

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Let us educate Africa to pursue the development of its people, with core skills that are necessary to deliver the quality of the progress and growth that Africans desire. African construction companies should make African infrastructure and 100% African content should be the target in automobile engineering, healthcare, information technology,

Necessity is said to be the mother of invention. The need for Africans to lead Africa out of poverty, tyranny and underdevelopment is a matter of great importance, far beyond just necessity. Every African must desire to get skilled, and not just education, as we currently have it. We must have the competence to develop our agriculture system, mine Africa’s natural resources and add value by processing them locally.

Africa Day would only be truly worthy of celebration when African people and countries are skilled enough to accomplish our dreams of self-reliance and economic independence.

Article written by Olatunde Akintola. Olatunde is a Fellow of the Institute of Chartered Accountant of Nigeria and alumni of Manchester Business School. He writes from Lagos.

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Tech News

Tiktok’s In-App revenue surges amid lockdown

ByteDance Ltd’s brainchild, TikTok, together with Douyin ranking tops globally on mobile apps with the highest revenue generated for the month of April.

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TikTok announces $250 million pledge to aid combat coronavirus, Does YouTube stand a chance against TikTok?

The meme-making business has proven to be worth all the fuss, with TikTok, as well as its Chinese twin app, Douyin, ranking tops globally on mobile apps with the highest revenue generated for the month of April.

Sensor Tower, notes that just in the first quarter of this year, ByteDance Ltd’s brainchild, TikTok, together with Douyin which caters to the Chinese market, generated 315 million downloads globally, from the 187 million it had just a year earlier.

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The ranking, which was based on their in-app purchases, reveal a tenfold increase, as the companies garnered a whopping $78 million in revenue. The Chinese market is said to have contributed 86.6% of Douyin’s revenue, followed by the U.S market which contributed 8.2%.

This places them ahead of older names like Netflix & YouTube. As opposed to using subscriptions like these established brands, TikTok and Douyin allow users to purchase virtual currency to spend on their favorite content creators.

(READ MORE: Does YouTube stand a chance against TikTok?)

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While ByteDance is exploring the world of online commerce, it continues to rely on advertising as its primary income source. However, Emarketer projects that more than 75 million US social network users will make at least one purchase from a social channel in the year 2020.

 

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