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Category: Economy

  • Nigeria’s economic sectors underperforming – KPMG

    Almost every economic sector of the country is currently underperforming, and that is the reason why Nigeria is unable to achieve its potential for economic growth, said Yemi Kale, Chief Economist of KPMG.

    He stated this during the Nairametrics Q2 2023 Economic Outlook Webinar which took place over the weekend.

    The former head of the National Bureau of Statistics (NBS), said, “I think almost every economic activity in Nigeria is underperforming and that is why we are not able to grow anywhere close to our potential, our real potential to achieve the double digits in Gross Domestic Product (GDP). You will find out that the sectors that are underperforming and the ones that are performing that there is a direct correlation with the ones that the government hasn’t too much of its hand in.


    “I would say that it’s easier to pick the sectors that are not underperforming, there are fewer of them, and most of the sectors are underperforming. One of them is Agriculture, although the reason why agriculture contracted in the first quarter, the first time since 1982 was largely tied to the Naira redesign policy.


    “And apart from that, agriculture has always grown, but that growth in agriculture is understated. Agriculture is growing but is largely a small-scale and subsistence-based traditional method.


    “You can imagine if we are growing tow to three per cent using traditional methods of production.

    “You can imagine if we scale up, mechanization using more improved seeds, we get these smallholder farmers to work and expand agricultural production. 


    “So even though agriculture has been responsible for holding the Nigerian economy, I think it’s still underperforming. If you look at the industrial sector, in particular manufacturing, you will see that only two or three sub-sectors in manufacturing account for about 70% of manufacturing growth, that’s food and beverage, cement, and textiles. 


    “Just three of them account for this 70% then we have about 9 that account for 30%. These sectors are extremely important for their growth, but they account for less than one percent of our GDP.


    “So, you have situations like that, even if you go into the service sector, insurance, for example, is significantly underperforming, and a sector like mining as well is underperformance.
    “If you look at economic activities of the 46 sectors you will find out that probably about 40 of them are underperforming,” he said.


    Kale stated that political instability for a long period is a major limiting factor affecting economic growth, adding that Nigeria has not experienced an extended period of growth and development.


    “Unforced errors, things that we did to ourselves, bad policies, bad strategies, and when the government is told that strategy is not working, they just continue.


    “The most obvious is our dependence on oil, the major difference between countries we were better in the 1960s and left us today, and that is because they faced proper agenda”, he added.


    He emphasized that inadequate planning is a significant challenge, evident in the poor infrastructure, availability of unskilled labour jobs, improper port categorization, and reliance on subsistence farming.


    Additionally, the use of oil revenue for imports, the proposed consideration by the Federal Government to move solid to the concurrent list, the need for a developed supply chain model for heavy industries, the lack of land use act reform, and other factors further compound the issues.

  • OPEC lowers Nigeria’s 2024 production quota by 20%

    The Organization of Petroleum Exporting Countries and its allies (OPEC+) members have agreed to maintain their current supply curbs to the end of 2024, following a weekend of intense oil meetings in Vienna.

    Similarly, quotas for 2024 were lowered for production strugglers, Nigeria, Angola, Azerbaijan, Malaysia, Congo and a few more countries.


    Under the arrangement Nigeria’s quota was lowered to 1.38 million barrels a day in 2024.


    The alliance’s total quota cuts were deepened to 4.7 million barrels a day b/d for July some five per cent of global capacity though in reality, many members have failed to hit their targets for years, making the actual physical reductions far less.


    Under the agreement Saudi Arabia will slash its crude output by an extra 1 million b/d for at least July on top of its existing production cuts, energy minister Prince Abdulaziz bin Salman announced June 4 in a deal with OPEC+ counterparts, under the kingdom’s latest aggressive bid to reverse a tide of bearish trade sentiment and tighten the oil market.

    The cuts come as many forecasts including OPEC’s own predict much higher global oil consumption in the months ahead, but Prince Abdulaziz described the decision as “precautionary.”


    “We’re hedging,” he said at a press briefing. “We’re using the fundamentals to hedge. We will continue to hedge as long as we don’t see clarity and stability in the market.”


    Analysts at S&P Global Commodity Insights expect 2.3 million b/d of annual demand growth in 2023, much of it back loaded to the second half of the year.


    The OPEC’s latest monthly oil market report projects 2.3 million b/d of increased demand as well.


    The deal also involves a complicated rebalancing of the alliance’s 2024 production baselines from which quotas will be calculated, redistributing allocations in favor of the UAE, with its higher spare capacity.


    The UAE will now be permitted to pump 200,000 b/d more in 2024 than it is restricted to in 2023, satisfying its long-standing complaints about having to hold so much of its production capacity offline.

    Independent upstream analysis from three organizations, including S&P Global, will be used to assess production capacities to set baselines going forward, the alliance said.

    The next OPEC+ meeting is scheduled for November 26, though a nine-country monitoring committee co-chaired by Saudi Arabia and Russia will continue to gather every two months, with the authority to call for an emergency OPEC+ session if needed.


    The OPEC Seminar, a usually triennial industry conference that has been delayed for two years due to the pandemic — is also due to be held July 5-6, providing another potential opportunity for ministers to review the decision and readjust quotas.


    The 23-country OPEC+ coalition is currently holding production quotas 2 million b/d below October levels. In April, nine members, including Saudi Arabia, Russia, Iraq, the UAE and Kuwait, also pledged voluntary additional cuts totaling some 1.7 million b/d, which will now remain in place through the end of 2024.


    Prince Abdulaziz said the new extra 1 million b/d Saudi cut deemed a “Saudi lollipop” as a sweetener to fellow producers could be extended beyond July, though he declined to say when that might be announced.


    “We’ll do whatever is necessary to bring stability to this market,” he said.

    “We are there to do as things progress and more certainty comes out.”

    The decision is the culmination of two days of furious negotiations in Vienna, in the group’s first in-person meeting since October.


    Ministers had to weigh desires by some countries to fight for greater market share against the fiscal pressures many members face from slumping prices. OPEC+ officials have been frustrated by what they feel is negative sentiment in the market that does not reflect actual fundamentals.


    Platts, part of S&P Global, assessed Dated Brent at $76.06/b on June 2, down from a four-month high of $88.21/b on April 12.


    Prince Abdulaziz had signaled at an industry conference on May 23 that short-sellers in the market should be on guard, raising market speculation that a production cut could be in order.

    But getting to a deal required delicate diplomacy. Bilateral and multilateral talks went overnight into the early hours of the morning to hash out the quota math and find political appeasement for all sides.


    Timings for the June 4 OPEC+ meeting were repeatedly changed to accommodate a flurry of negotiations on the sidelines, starting some six hours after originally scheduled.


    The UAE, in particular, has felt aggrieved at how much production capacity it has been forced to hold offline over the past few years of the OPEC+ agreement, people familiar with the matter have said. Capable of pumping more than 4 million b/d but held to a quota of just 3.02 million b/d, it was rewarded with the 2024 quota boost to 3.22 million b/d after heavy lobbying.


    Meanwhile, many African members have struggled mightily to reach their production targets, the result of underinvestment, civil unrest or internal dysfunction. They saw their baselines chopped significantly, a harsh pill for many to swallow. Angola and Nigeria proved the toughest countries to convince, sources said.


    “We have discussed this before, to adjust the production of the UAE,” Emirati energy minister Suhail al-Mazrouei told reporters, adding that the decision was equitable to all members. “All accepted a level of production that is representative, and also they have been given … the chance by the end of November to demonstrate a [higher] level of production.”


    Nigeria’s Gabriel Tanimu Aduda, for his part, said Nigeria’s reduced baseline reflected a “very realistic assessment” of its current production capacity, which it hopes to improve with more investment.


    War-embroiled Russia, the key non-OPEC producer in the group, also came under pressure to improve its compliance with its pledged 500,000 b/d cut, with its recent crude exports hitting record highs to maximize its oil income in the face of western sanctions and a price cap.

    Brokering it all was OPEC kingpin Saudi Arabia, the world’s largest crude exporter, and Prince Abdulaziz, who has been tasked with managing the kingdom’s enormous oil wealth to support major economic diversification efforts and investments championed by his half brother, Crown Prince Mohammed bin Salman.


    “This is a market that needs stabilization,” Prince Abdulaziz said.

  • AfDB to boost Africa’s infrastructure with $20m investment

    The Board of Directors of the African Development Bank (AfDB) Group, has approved an equity investment of $20 million to mobilise private capital for infrastructure development across the continent.

    The fund, according to the Bank in a statement, is part of Africa’s 50 Infrastructure Acceleration Fund I. The Fund is a pan-African infrastructure private equity fund that is mobilising up to $500 million for investment. It is also meant to ensure value creation in strategic infrastructure sectors which include power, energy, digital and social infrastructure, transportation, logistics, and water and sanitation.

    According to the statement, the fund is sponsored by Africa50, an infrastructure investment platform established by governments and the bank.

    The AfDB’s Director for the Industrial and Trade Development Department, Abdu Mukhtar, said the Bank’s investment in the Fund underlined its strategic nature.

    “Africa50 brings infrastructure project development and financing under one umbrella. It has a strong track record of investments in the private sector and of projects undertaken under the Public Private-Partnership (PPP) framework.

    “The mobilisation of private capital is critical to closing the infrastructure financing gap in Africa.

    The approval, Mukhtar said, is an indication that the Bank prioritises investment in strategic infrastructure sectors that will ensure the continents’ bridges its infrastructure financing gap.

    The AfDB’s Director for Energy Financial Solutions, Policy and Regulations, Wale Shonibare, said the Bank’s support for the Africa50 Infrastructure Acceleration Fund I aligned with its High Five objectives.

    “It also strengthens the Bank’s already existing partnerships with the Africa50 Group on initiatives such as the African Sovereign Investors Forum and the Alliance for Green Infrastructure in Africa,” Shonibare added.

    The Chief Executive Officer (CEO) of the Africa50 Group, Alain Ebobissé, said: “We are highly appreciative of the AfDB’s support for the Africa50 Infrastructure Acceleration Fund I.

    Ebobissé said the fund is projected to create 3,278 full-time equivalent jobs over the period 2023-2035, including 1,676 jobs for women.

    “By leveraging private capital for infrastructure investment, the Africa50 Infrastructure Acceleration Fund I can help create jobs, strengthen healthcare access, and improve education access through digital technologies.

  • We’ll no longer fix petrol prices– NMDPRA

    The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said it will no longer fix prices or release templates for Premium Motor Spirit (PMS).

    Authority Chief Executive (ACE), Mr Farouk Ahmed, who said this at a news conference in Abuja on Friday, said that market forces would henceforth dictate prices under the liberalised market.

    “As far as we are concerned in the NMDPRA, this is not like before when the PPPRA fixes the price; in a deregulated market, it is the market force that dictates the price,” he said.

    The development was sequel to the removal of subsidy on PMS known as petrol.

    President Bola Tinubu had in his inaugural speech on Monday said fuel subsidy regime had ended with the commencement of his administration.

    Ahmed, however, said the market was now open for everybody that would import as far as they met all the requirements.

    “So, it is not about the Nigerian National Petroleum Company Limited (NNPC Ltd) alone.

    “We put the regulation in place, we make sure quality control is complied with, we make sure the product is there and we give licence to prospective importer.

    “We make sure we guide the operations of everyone in the sector whether at the depot or wherever the product is but we will not put a cap to say this is what the price must be,” he said.

    According to Ahmed, the role of the NNPC is to fix prices of the petrol it imported and not take over the responsibilities of the Authority.

    “In the case of the NNPC, the organisation is the sole importer at this point. We told the NNPC to recover its costs because they know how much it cost them to import the product and sell it.

    “Of course, we also know how much shipping, offshore, ex-depot and ex-pump are. But we cannot tell them to sell at a price because the market is deregulated,” he added.

    The NMDPRA boss also disclosed that the Federal Government has officially scrapped petroleum equalisation as well as the national transport allowance.

    He said the NMDPRA, the federal government and Consumer Protection Commission (FCCPC) would mount aggressive monitoring of activities in the downstream sector to prevent profiteering by petroleum marketers.

    Ahmed further disclosed that marketers are now free to source their foreign exchange anywhere around the world to import petroleum products and recover their costs without impediments.

    On where the importers will source their forex from, Ahmed said the CBN would not give dollar to anyone because of open market, adding that anyone willing to import should get the dollars from anywhere to import.

    According to him, anyone willing to open a letter of credit from any part of the world can do that to import.

    “That marketers can source their forex from anywhere is the beauty of the liberalised market that the NMDPRA has introduced based on the provision of the law”.

    Ahmed said that the market would henceforth be modulated to allow the fluidity of prices, adding that though no template spelt out the pricing components of petrol price.

    He said that, “based on this, the price would no longer be static rather depend on the international price of the gasoline market.

  • Perm Sec pledges to strengthen mines, steel development

    The new Permanent Secretary, Ministry of Mines and Steel Development, Dr Mary Ogbe, has pledged to strengthen the mines and steel industry in Nigeria by providing solutions to existing challenges.

    Ogbe made the commitment in Abuja on Friday, at a valedictory session organised by the ministry for the former Permanent Secretary, Dr. Oluwatoyin Akinlade.

    She called on the staff to support her to achieve the mandate and objectives of the ministry.

    “I am ready and committed to strengthening the ministry toward proferring solutions to the challenges facing the nation.

    “Therefore, all hands must be on deck as the nation looks up to the ministry in solving its socio-economic problems,” she said.

    The permanent secretary said she would run an open door policy, to enhance consultations for the effective and efficient running of the sectors.

    Ogbe said that her target was to ensure the holistic exploitation of available minerals to diversify the nation’s economy.

    Earlier, Akinlade described Ogbe as a seasoned administrator with an impressive track record of delivering high-quality performance.

    She pledged her unalloyed support for the growth of the ministry as well as promoting the mining industry.

    The former permanent secretary called on the management and staff of the ministry to assist Ogbe in discharging her duties and completing of outstanding projects.

    She said that the projects would create wealth and jobs for the teeming youths and generate revenue for the nation.

    Also, the Director, Human Resources, Dr Mohammed Suleiman expressed the readiness of the ministry’s workforce to work efficiently with the new permanent secretary.

    Suleiman said that they were committed to taking the ministry to higher heights and boost the economy.

    He thanked Akinlade for her immense contributions to the successes recorded by the ministry, especially the growth of the mining industry in the country.

    The ministry at the occassion, unveiled its Electronic Document Management System (EDMS), which would store, organise and manage official documents electronically and enhance performance.

  • NOGOF 2023: NIMASA calls for review of freight terms  

    The Director-General of the Nigerian Maritime Administration and Safety Agency, NIMASA, Dr. Bashir Jamoh, has urged stakeholders to consider a change of trade terms in the Oil and Gas sector from the Free on Board (FOB) to the Cost, Insurance and Freight (CIF) model.

    Speaking at the 2023 Nigerian Oil and Gas Opportunity Fair (NOGOF) in Yenagoa, Bayelsa State, the NIMASA DG, said policies of the current administration at the Agency are tailored to complement efforts of the Nigerian Content Development and Monitoring Board (NCDMB) to grow the Nigerian economy through the Oil and Gas sector.

    In a statement, Assistant Director, Public Relations, NIMASA, Osagie Edward, Jamoh, who was represented by the Agency’s Director of Cabotage Services, Mrs. Rita Uruakpa, said the efforts of the NCDMB at helping in the development of the indigenous maritime sector had not gone unnoticed.

    He said: “We appreciate the efforts of the Nigerian Content Development and Monitoring Board at growing the indigenous maritime sector, such as the proposed Brass Shipyard. We at NIMASA will continue to strive for the development of our maritime sector by pursuing policies that will ensure the indigenous capacity is grown, which in turn will impact on our fleet expansion to position them to be able to participate in the affreightment of the products”.  

    Speaking on opportunities for indigenous businesses in maritime, he had this to say, ‘I want to reiterate that we must also create a suitable and sustainable business and investment environment that will afford indigenous operators’ opportunities to participate in the oil & gas industry with a view to accelerating Nigeria’s income for the Oil Industry which in turn will impact our GDP”.

    On his part, Executive Secretary of NCDMB Mr. Simbi Wabote, charged firms operating in the sector to prepare themselves adequately, restating that the oil and gas industry is highly technical and does not compromise safety and standards.

    In his words, “If someone gives you projects he intends to execute in the next two years; Nigerian companies, having listened to the opportunities, should go back and continue to build their capacities in readiness to actively participate.”

    He also challenged relevant agencies to address the worrisome security challenges, particularly oil theft in the Niger Delta, as this would enable the production of hydrocarbons at reasonable costs and profitability.

  • Market realities driving up petrol price – Kyari

    *Says prices will normalize within two weeks

    The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, Mele Kyari, has said that the sudden hike in pump price of petrol in filling stations across the country is a reflection of the realities of the market.

    Despite having supplies, the filling station still went ahead to hike the price of their products.

    Speaking on a television program monitored by NIGERIAN ANCHOR on Thursday, Kyari said that the situation applies to all commodities and that it portrays the reality of the market.     

    “It could have been the other way round; prices could have collapsed downwards and those holding the old stock would have to sell at lower prices to arrive at market condition.

    “It is not something serious or strange, this is a stock management issue and it is very typical, no one can do anything different about this.

    “The prices we are seeing today at our stations are the current price of the commodity. This means that prices in the market can go down at any time and of course, the market will adjust itself,” Kyari said.

    The GCEO however assured that the fuel hike currently being experienced will normalize in the next 2-3 weeks because competition among major players in the oil sector would force down the price of petrol.  

    He added that the subsidy removal would allow new entrants into the market, a move he said, would aid competition and phase out monopoly.

    “The beauty of this (subsidy removal) is that there will be new entrants (into the market) because oil marketing companies’ reluctance to come into the market all along is the very fact of the subsidy regime that is in place.

    “And that subsidy regime doesn’t have a guarantee of repayment back to the those who provide the product at subsidise price and now that the market is being regulated, oil marketing companies can actually import product or even if it is produced locally, they can buy and take it into the market and sell it at its retail price.

    “Therefore, you will see competition, even with NNPC. And by the way, by law, NNPC cannot do more than 30 percent of the market going forward. As soon as the market stabilises, oil marketing companies will be able to come in,” he explained.

  • Naira drops 0.04% at Investors, Exporters’ window

    The Naira depreciated at the Investors and Exporters window on Wednesday, exchanging at N464.67 to the dollar.

    The local currency showed a 0.04 percent decrease when compared with the N464.50 to the dollar, it traded on Tuesday.

    The open indicative rate closed at N464.10 to the dollar on Wednesday.

    An exchange rate of N467 to the dollar was the highest rate recorded within Wednesday’s trading before it settled at N464.67.

    The Naira sold for as low as 460 to the dollar within the days trading.

    A total of 163.74 million dollars was traded at the official Investors and Exporters window on Wednesday. 

  • FIRS: Nigeria’s Tax-To-GDP rises to 10.86%

    Nigeria’s Tax-to-GDP ratio has risen to 10.88 percent from between 5-6 per cent in the last 12 years. 

    The new ratio was communicated to the Federal Inland Revenue Service (FIRS), via a letter signed by the National Bureau of Statistics (NBS), in collaboration with the Federal Ministry of Finance and the FIRS, using data from 2010 see to 2021.

    Special Assistant Media and Communications to the Executive Chairman, FIRS, Johannes Oluwatobi Wojuola, in a statement to journalists Wednesday stated that the revision took into account revenue items hitherto not previously included in the computations; particularly, relevant revenue collected by other agencies of government.

    Tax-to-GDP ratio is a measure of a nation’s tax revenue relative to the size of her economy as measured by Gross Domestic Product (GDP). The ratio is a useful tool for assessing the “health” of a country’s tax system, and highlighting its tax potentials relative to the size of the economy. It is the ultimate measure of the effectiveness of a nation’s tax system compared to other countries.

    Reacting to the news, FIRS Executive Chairman, Mr. Muhammad Nami, explained that sources which previously put the country’s Tax-to-GDP ratio at between 5% and 6% did not consider tax revenue accruing to other government agencies in their computation. Particularly, revenues collected by agencies other than the FIRS, Customs and States Internal Revenue Service were excluded. 

    According to Nami, the situation was peculiar to Nigeria as most other countries operate a harmonised tax system (all or most tax revenues are collected by one agency of government) with single-point tax revenue reporting.  As such, all relevant tax revenues are included in the computation of the Tax-to-GDP ratio.

    “In order to correctly state the Tax-to-GDP ratio, the FIRS initiated a review and re-computation of the ratio for 2010 to 2021. In recomputing the ratio, key indicators that were previously left out were taken into account. This resulted into a revised Tax-to-GDP ratio of 10.86% for 2021 as against 6% hitherto reported,” the statement noted.

    The FIRS boss noted that  Nigeria’s Tax-to-GDP ratio should have been higher than 10.86% but for certain economic and fiscal policy factors, including tax waivers and leakages occasioned by the country’s fragmented tax system.

    “It is important to note that the Tax-to-GDP ratio for Nigeria should be higher, but for the impact of tax waivers contained in our various tax laws (including exemptions to Micro, Small and Medium Enterprises brought-in by Finance Act, 2019), low tax morale, leakages occasioned by the country’s fragmented tax system and the impact of the rebasing of the GDP in 2014”, he explained.

    The Service helmsman implored the government to consider reviewing its policies on tax waivers thereby guaranteeing increased revenue to prosecute its programmes and positively move the needle of the country’s tax-to-GDP ratio.

    The Statistician-General of the Federation, Prince Adeyemi Adeniran, in his letter to the Executive Chairman of FIRS, described the revision as a facelift to the Tax-to-GDP ratio for Nigeria in comparison with other countries.

    He further noted that the NBS had “carefully and diligently reviewed the methodology used for computing the revised estimates, as well as the various items that have been included in the new computation,” and that the NBS as an outcome of its review and meetings with FIRS has adopted the new Tax-to-GDP computation.

  • Subsidy Removal: We’ll tackle supply disruptions – NMDPRA

    *Urges Nigerians not to panic

    The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said it is working with NNPC Limited and other stakeholders to guarantee a smooth transition following the removal of fuel subsidy.

    President Bola Tinubu, in his inaugural speech on Monday, said the fuel subsidy regime had ended with the commencement of his administration.

    NMDPRA made this known on Tuesday in a statement signed by Mr Kimchi Apollo, General Manager, Corporate Communications, NMDPRA, to address concerns regarding the removal of fuel subsidy.

    Apollo said the authority was working to avoid disruptions in the supply of Premium Motor Spirit (PMS), also known as petrol, as well as ensure that consumers were not short-changed in any form.

    He assured that there was an ample supply of PMS to meet demand and that the authority had taken necessary steps to ensure that distribution channels remained uninterrupted and fuel readily available at all filling stations nationwide.

    He urged Nigerians not to panic over the removal of subsidy as the authority had ensured availability of petrol nationwide.

    “Contrary to speculations and concerns, the announcement is in line with the Petroleum Industry Act (PIA 2021), which provides for total deregulation of the petroleum downstream sector to drive investment and growth.

    “We, therefore, call on Nigerians to remain calm and resist the urge to stockpile as it poses a significant safety hazard.

    “The NMDPRA reassures all Nigerians that the removal of subsidy on PMS is a step towards building a more sustainable and prosperous future for our nation.

    “We will continue to monitor activities and implement necessary measures to enhance transparency and accountability in the petroleum downstream sector,” he said.