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Business

Inflation rate to keep rising by 2021- LCCI

The LCCI has stated that Nigeria’s inflation rate will continue rising following Covid-19 disruptions and poor economic trend.

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LCCI projects continuous weak investments in 2020, fiscal authorities

The Lagos Chamber of Commerce and Industry (LCCI) has announced that Nigeria’s inflation rate, which has risen for 15 consecutive months so far, will continue its climb by 2021.

This was disclosed by LCCI DG, Dr. Muda Yusuf, at its Economic Review for 2020 and Outlook for 2021 on Sunday in Lagos.

Dr. Yusuf said the forecasted inflation rate would be a result of rising food prices due to food value chain disruptions caused by insecurity, energy costs, lack of FX liquidity and others. He said:

  • “We, however, believe a broad-based harmonisation of fiscal and monetary policies towards addressing the identified structural constraints will significantly help to moderate inflationary pressure in  the medium term.”

On the general economic performance, the LCCI DG said Nigeria’s economic performance was deeply affected by Covid-19 disruptions, citing that the poor economic trend would persist till the first quarter of 2021.

However, he warned that the rising second wave of the pandemic would lead to disruptions in Nigeria’s oil and non-oil economy.

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He said the LCCI expected growth in ICT and Financial services for the 3rd quarter 2020 GDP figures.

  • “We expect Information and Communication Technology, financial institutions, and agriculture to drive growth in the non-oil sector in the short-term; while the country’s commitment to Organisation of Petroleum Exporting Countries (OPEC) agreement is expected to dampen recovery prospects of the oil sector.”

LCCI 3Q 2020 estimates:

  • Oil Sector – 13.89%
  • Agriculture +1.39%
  • Manufacturing -1.51%
  • Trade -12.12%
  • ICT+14.56%
  • Financial & Insurance +3.21%
  • Construction -2.84%
  • Arts, Entertainment & Recreation -4.67%
  • Real Estate -13.4%
  • Transportation & Storage -3.45%

Agriculture

On Agriculture, LCCI warned that some Agric products might face the risk of competing with smuggled products, and disclosed that the AfCFTA might make Nigeria a destination for imported food.

  • While the ban on importation of rice, poultry and other agricultural commodities still subsists amid border reopening, there is risk of resurgence of smuggling of agricultural products into the country considering the porous nature of Nigeria’s land borders.
  • “This, combined with the commencement of Africa Continental Free Trade Area (AfCFTA), could see Nigeria being a destination for imported food products in the absence of adequate border monitoring measures.
  • “Additionally, heightened security concerns around the country, especially in the northern part and resurgence in herder-farmer conflict in the Middle Belt, the southwest and southeast, if unaddressed, will hamper local food production in the near term. Nonetheless, we expect a modest growth performance in year 2021.”

What you should know 

Nairametrics reported that Nigeria’s inflation rate spiked by 14.89% (year-on-year) in November 2020, which is 0.66% points higher than the rate recorded in October 2020 (14.23%).

  • The food index rose sharply by 18.3% in November 2020 compared to 17.38% in October 2020, representing 0.92% points higher than the preceding month.
  • According to the Centre for Economics and Business Research (CEBR), Nigeria’s economy will grow by 2.4% on average in 2021-25 but will slow to 2.2% in the 2026-35 period.

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Business

One killed, 15 kidnapped by pirates on Turkish ship off Gulf of Guinea

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shipping tariffs, Nigeria

A Turkish ship was attacked off Nigeria’s Gulf of Guinea coast, killing an Azerbaijani citizen, and kidnapping 15 sailors, with reports stating the attack, happened way offshore compared to other attacks.

This was disclosed in a report by Reuters on Sunday, as the attack happened on Saturday and has been confirmed by the Turkish government.

The Liberian-flagged vessel was headed to Cape Town from Lagos when it was attacked 160 kilometers (100 miles) off Sao Tome island on Saturday, maritime reports showed.

READ: FG to launch policy to prevent smuggling of mineral resources

The ship which was Liberian Flagged was on its way to Cape Town from Lagos, was attacked 160 kilometers off Sao Tome, crew members added that the attack was well planned as the pirates stormed the Ship’s protective citadel.

Specta

The Gabonese government has confirmed the Ship has reached its waters as 3 Sailors remain on the ship, Mozart,

“The ship is in our waters and our sailors are assisting a few nautical miles from Port Gentil,” Gabon’s presidency spokesman Jessye Ella Ekogha, said.

READ: Blockchain technology expected to tackle Africa’s challenges across industries

Turkish President Tayyip Erdogan’s office said Erdogan spoke with the fourth captain of the ship, Furkan Yaren, and assured them that he will “rescue of kidnapped ship personnel”.

 Furkan Yaren, disclosed that the Ship had been “cruising blindly” towards Gabon as Pirates damaged most of the ship’s controls leaving only radar working.

 Nigerian Navy commander, Edward Yeibo, revealed that Nigeria was not aware of the attack as to when it happened but would seek more details about it.

READ: Fish production, demand, piracy and the required strategies to boost supply

What you should know 

  • Nairametrics reported that West Africa’s Gulf of Guinea recorded an unprecedented increase in piracy attacks in 2020, according to the International Maritime Bureau in its 2020 Annual Piracy report.
  • The IMB reported that 135 crew members were kidnapped from their vessels in 2020, with the Gulf of Guinea accounting for over 95% kidnapped. A record of 130 crew members was kidnapped in 22 separate incidents.
  • The FG launched the $195 million Deep Blue Project which is a NIMASA initiative aimed at the prevention of illegal activities in the maritime domain. Minister of Transportation, Rotimi Amaechi stated that all equipment needed for the Deep Blue Project will be ready by March 2021.
  • Maersk, the world’s largest shipping company, has called for military intervention in the piracy problem in the Gulf of Guinea, which has made the gulf the new global headquarters for piracy.

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FG refunds Bayelsa State N27 billion as amount spent on federal projects

The Bayelsa Government has received N27 billion approved as refund by FG for federal projects executed by the state.

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The Federal Government has refunded N27 billion to Bayelsa State as the money the State government spent on federal projects since 2005 to date.

This was disclosed by the Bayelsa State government on Sunday, as it said the amount is not up to the N38 billion approved by the FG as refunds for federal road projects.

READ: Adamawa Governor signs 2021 Appropriation Bill worth N140 billion into law

State Governor, Douye Diri said that the state only received an N27 billion cash refund, meanwhile, the Technical Adviser on Treasury and Accounts to the governor, Timipre Seipulo, disclosed that the debt instrument issued by the federal government had a tenor of between four to five years maturity.

Seipulo added that the refund was implemented such that the states would wait between four to five years to access the full amount approved by the FG, therefore States could only get discounted refunds from the FG.

Specta

He added that the N27 billion amount was discounted 71% from the total N38 billion expected value.

READ: Governor Sanwo-Olu says 24,000 students yet to resume in public schools

What you should know

Nairametrics reported in November 2020, that Promissory notes worth N148.141billion were approved by the Senate as a refund to Bayelsa, Cross River, Ondo, Osun, and the Rivers States for projects executed on behalf of the Federal Government.

The amount due to the five states was N148.14billion and broken down as follows:

  • Bayelsa was allotted N38.40billion
  • Cross River was allotted N18.39billion
  • Ondo was allotted N7.82billion
  • Osun was allotted N4.57billion
  • Rivers was allotted N78.95billion

READ: Lagos State already making contacts with vaccine manufacturers – Sanwo-Olu

Nairametrics also reported that the Governor of Rivers State, Nyesom Wike, stated that the Federal Government refunded the South-South State the sum of N78 billion, representing the amount spent on federal roads by the state.

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African leaders should support MSMEs for rapid recovery of economies – Report

African leaders would help speed up the recovery process in most African economies if they can continue to support the MSMEs.

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Development Bank of Nigeria , Companies Allied Matters Act (CAMA)

African leaders have been enjoined to promote and support policies that would strategically support the Micro, Small and Medium-sized Enterprises (MSMEs) and speed up the recovery process in most African nations.

This was stated in the Foresight Africa 2021 report, a publication of African Growth Initiatives of the Brookings Institution, a non-profit organization devoted to independent research and policy solutions.

According to the report:

  • “Policymakers must continue to support businesses—both smaller enterprises and larger firms—that have been disrupted by the crisis.
  • “Arguably, the greatest priority must be to bolster the micro-, small-, and medium-sized enterprises (MSMEs) that are key to African commerce and account for 83 percent of private-sector employment in Africa.
  • “Such businesses, which number between 85 million to 95 million, are especially vulnerable to COVID-19 mitigation measures given they are often characterized by person-to-person contact. By just May 2020, 75 percent saw their revenue decline by over 30 percent.
  • Finance will continue to be one of the greatest needs for African businesses; indeed, only 5 percent of MSMEs across the continent feel they have received adequate support from lenders. Provided governments navigate Africa’s fiscal challenges with skill and determination, they can continue offering suitable financial support to small enterprises; in addition to indirect support through value chains and banks, such assistance might include loans, debt forgiveness, low-interest rates, assistance with payments to suppliers, and reduction in utility costs.”

 Ways Governments can provide financial support to MSMEs

  • There are several steps that governments can take to provide financial support to MSMEs. One option is to assist MSMEs through larger firms in their value chains, which might include upstream suppliers and downstream buyers.
  • “Governments can provide easier liquidity and working-capital terms to these larger players, and they can make such support conditional upon these firms’ providing favourable financial terms to MSMEs.
  • “Governments can also consider providing risk guarantees or first-loss mechanisms while requiring banks to on-lend under the chosen set of criteria and guidelines in order to encourage banks to lend to MSMEs.
  • “Policymakers must not lose sight of the region’s informal sector, as 84 percent of African MSMEs are unregistered. Policymakers can take advantage of the opportunity created by the crisis to convince larger numbers of informal enterprises to register, and thus gain better access to finance and markets. Moreover, to promote registration, governments could shape bold campaigns and attractive packages, potentially including multi-year tax holidays and capacity building for MSMEs.”

Why this matters

  • Micro, Small and Medium-sized Enterprises (MSMEs) are widely recognized for the important contributions they make to sustainable development, in terms of contributions to economic growth, creation of jobs, provision of public goods and services, as well as poverty alleviation and reduced inequality.
  • The pandemic has seriously impacted the MSMEs in all African nations as it has exacerbated economic hardship and may have pushed more than 40 million Africans into extreme poverty.
  • It is imperative that the African leaders focus on enabling businesses to respond effectively to these new and unfavourable conditions to which most MSMEs have been exposed to.

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