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Minister discloses major driver of inflation rate in Nigeria

The inflation rate in Nigeria is largely driven by the cost of transportation.

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Minister discloses major driver of inflation rate in Nigeria

The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has revealed that the inflation rate in Nigeria is largely driven by the cost of transportation.

This disclosure was made by the Minister during a virtual consultation and stakeholders engagement to discuss the economic and fiscal policy drivers underpinning the Finance Bill 2020, on Friday, November 13, 2020.

The recent increases in the retail pump price of petrol, which is used by most of the commercial transporters as energy for the vehicles, have led to sharp increases in transport costs.

READ: Lower disposable income and rising food inflation is a potential crisis

READ: FG rejects calls for tax reduction, offers tax relief for donors to intervention funds

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According to the latest report from the National Bureau of Statistics (NBS), the average transport fare paid by commuters for bus journeys within a city increased by 7.92% month-on-month and 63.88% year-on-year to N309.73 in September 2020.

Ahmed revealed that the finance bill contained some interesting new proposals like fiscal relief for mass transit, which is designed to provide support to mass transit by reviewing the duties regime. She said this is because the Federal Government recognizes transportation as one of the major cost drivers in the economy.

READ: NCC boosted Federal Government revenue by N344.71 billion in 5 years

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READ: Africa: Ghanaian inflation rate drops for the 3rd straight month to 10.1%

She said, “If you look at the rate at which our inflation is going, and you disaggregate the components, you will find that inflation is largely driven by transport cost. So, the essence here is to reduce transportation cost so that businesses will have ease and pass benefits to eventual consumers.”

Nairametrics had reported that Nigeria’s inflation rate rose to 13.71% (year-on-year) in September 2020, indicating 0.49% point higher than 13.22% recorded in August 2020, according to Consumer Price Index (CPI) report, released by the National Bureau of Statistics (NBS).

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READ: Nigeria’s inflation rate hits 13.71% as food prices soar

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The report also states that Nigeria has endured a persistent increase in inflationary rate, growing from 12.13% in January to 13.71% in September, which is the highest recorded in 30 months.

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Analysts at Financial Derivatives Company Limited, led by foremost economist Bismarck Rewane, said last week that headline inflation was projected to rise to 14.5% in October from 13.71% in September.

READ: Nigeria’s food Inflation rises by 110.5% in five years

They said it meant that inflation would be rising for the 14th consecutive month and would also be the highest level in 33 months. Food inflation will be the most affected as it is estimated to climb to 17.05%.

READ: FAAC disburses N682.06 billion to 3 tiers of govt in September [Full-List]

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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E-Citizenship automation has generated N2 billion for FG – Interior Ministry

The e-citizenship automation platform has generated N2.17 billion for the FG since it was launched in 2018, says the Ministry of Interior.

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The Ministry of Interior has disclosed that the ECITIBIZ (e-citizenship) automation platform has generated N2.17 billion for the Federal Government since it was launched in 2018.

This was revealed by Mr. Shuaib Belgore, the Permanent Secretary, Ministry of Interior, on Thursday in Abuja at the Fourth Quarter 2020 Public-Private Partnership Consultative Forum.

Mr. Belgore disclosed that the platform has processed over 38,000 applications for citizenship and 45,000 applications for the Ministry since its launch.

The platform is a PPP automated operation of the Ministry, which runs the citizenship and business department responsible for the issuance of expatriate quota and related services, and issuance of business permits to all companies either wholly or partially foreign-owned.

(READ MORE: CardinalStone’s Debut Commercial Paper Issuance records 148% subscription)

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He added that the platform has boosted transparency in the Ministry and also reduced waiting time for applicants.

“It is also responsible for the supervision of all federal marriage registries in the nation and the issuance and renewal of licenses to public places of worship that conduct statutory marriages in line with the Marriage Act,” he said.

The Perm Sec. added that other PPP projects by the Ministry include: borderline management, production of emergency passports, and expansion and development of the Nigerian Correctional Service.

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What you should know: Nairametrics reported last month that the Minister of Interior, Mr. Rauf Aregbesola, announced that the Federal Government had commenced a digitalization process of registration, legal representation, and other processes of inmates at the Nigerian Correctional Service (NCoS) to improve data management of inmates.

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FEC okays FMBN’s request to purchase banking application software for N487.39 million

The FEC has approved the request made by the FMBN to purchase core banking application software from FINTAX at about N487.39million.

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Fashola to fix 44 roads across Nigeria with Sukuk funds, The FederalThird Mainland Bridge, Housing: Tackling Nigeria’s huge housing deficit, Nigerian roads are not that terrible, Fashola says 

The Federal Executive Council has approved the request made by the Federal Mortgage Bank of Nigeria to purchase core banking application software from Messrs FINTAX, worth N487.39million.

This disclosure was made by the Honourable Minister of Works and Housing, Mr. Babatunde Raji Fashola (SAN), as revealed by the Government of Nigeria, and seen by Nairametrics.

What they are saying

Commenting on the recent development, the Minister said: “The other memorandum I presented, which was approved for the procurement of a core banking application software for the Federal Mortgage Bank in the sum of N487, 394,285.71 to enable the bank provide all of the frontline services that other banks now provide in all of its branches.

“Unlike other banks, the Federal Mortgage Bank is still unable to send automated notices, statements, and all those things to National Housing Fund contributors; all the types of alerts you get and operating accounts from any branch irrespective of where you maintain your accounts.’’

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(READ MORE: Federal Mortgage Bank disburses additional 8,700 homes, N112 billion in three years)

Why it matters

The recent announcement is a welcome development, especially as it aims to digitalize the operations of the bank and reposition it to be more effective and efficient in carrying out its tasks.

Empirical studies have also shown that with technology, the growth boundary of any firm is limitless. As a result, Nairametrics believes that if adequately employed, the purchase and subsequent use of the software could be a game-changer for the bank.

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What you should know

  • The Federal Executive Council approved the sum of N120.72billion to facilitate sundry projects and purchases for effective delivery.
  • Of this amount, Nairametrics had earlier reported that the Federal Government of Nigeria had approved the sum of N117 billion for road rehabilitation nationwide.
  • The sum of N2.1 billion contract was awarded to Julius Berger to furnish the NIS Technology building, which houses the service’s data communication command and control center.

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Intels is operating above the law due to its political influence – NPA Boss

The MD of the NPA has stated that Intels has been using its political influence to disregard government policies.

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NPA discovers new method Apapa businessmen use to avoid port duties

The Managing Director of the Nigerian Port Authority, Hadiza Bala-Usman has said that Integrated Logistics Services (Intels), has been using its political influence to operate outside of the legal framework of the Nigerian maritime regulations.

The NPA boss disclosed this in an interview with Arise TV on Thursday, in response to the contractual and TSA issues between the FG and Intels.

In her interview with Arise News, she said there is nothing political about the FG telling a company to pay what it owes to the TSA.

She said, “I don’t see what is political about a company complying with TSA. So, if government says all revenue of government should go into the Treasury Single Account and a private company refuses to comply, and government says you must comply, what’s political about that?

“In fact, who’s being political here? it is Intels, which has always had political advantage and always difficult to get them to comply with government’s directives. So, can we look at it that way, because I am curious as to what’s political about the fact that your contract ended and the NPA is reclaiming back its service.

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“How is it political that your contract ended on August 9 and government said now that your contract has ended, we will continue that service you rendered and pay that your sister company for any revenue that arises and you say ‘No, I must be the service provider’. So, what’s political about that?

She said the political angle to the dispute was caused by Intels’ thinking that it is above regulatory scrutiny, because of its political influence.

“For me, what’s even political is the fact that a company thinks it is above the law, because it has been using its own political influence to operate outside of the legal framework. So, we should be asking Intels why it’s been political with its operations,” she said.

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She added that the Service Boats relationship was another added layer to the conflict between the FG and Intels, citing that Intels sued the FG to remain as 3rd party service provider for Service Boats.

On Intels, we have layers of relations. The noncompliance to TSA after a lot of pushback, and now their contract relationship with us on Service Boats has expired.

“They have gone to court to request for them to remain as the 3rd party provider, which is ridiculous. You can’t force government to allow you provide a service.

“Of course, we have another project to do with them regarding an amortization project. Revenues made from Service Boats is meant to pay for the amortization. But, the point is that Intels need not be the service provider for that service, to enable government repay them for that amortization.

“But of course, they have gone to court, and we are challenging it to ensure the FG gets value for their money,” she added.

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What you should know 

  • Nairametrics reported in 2018 that Ms. Hadiza Bala-Usman revealed how the revenue from the pilotage agreement between the Federal Government, Ports Authority, and Integrated Logistics Services was shared.
  • According to Bala-Usman, the agreement allowed Intels to take 28 percent of the generated revenue for its services, while noting that the agreement was silent on the sharing formula for the 72 percent balance between Intels and NPA. This loophole made Intels remit arbitrary payments to the government through NPA at its discretion.
  • Intels, in October 2017 had been drawn into a battle with the NPA over the termination of the pilotage agreement with the firm, based on advice by Abubakar Malami, the Attorney General of the Federation (AGF).
  • The company had threatened legal action, but later backed down and made assurances that it would comply with the Treasury Single Account (TSA) rules. This led to the issuance of ultimatum to Intels to pay $48million into the TSA.
  • The NPA boss said the $48 million is the amount Intels ought to have remitted to the government between November 2016 and December 2017.

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