Business
LCCI predicts galloping inflation, slow economy in 2021
The Lagos Chamber of Commerce and Industry (LCCI) has warned that 2021 economic outlook may not be bright as cost of living may rise due to higher inflation rate.
It specifically states that headline inflation will remain elevated as the combination of food supply shocks, forex policies, higher energy costs, forex illiquidity, heightened insecurity in major food-producing states will continue to mount pressure on domestic consumer prices.
In its Economic and Business Review for Year 2020 And Outlook for Year 2021 released on Sunday, the LCCI said it remained unclear what new strategies were in the works for the nation’s security situation.
The report released by the LCCI’s Director General, Dr. Muda Yusuf, noted that shortageof foreign exchange to businesses and end-users would remain a major economic issue in 2021.
According to the report, while forex supply will face continued pressure in 2021 in the light of relatively lower dollar inflows from oil, foreign investment, and diaspora remittances, the Central Bank of Nigeria (CBN) is expected to sustain its demand management strategies via rationing and restricting access to forex for food imports.
“In year 2021, the CBN will most likely maintain and initiate more demand management policy measures to taper growing demand for forex amid weak dollar inflows,” it said.
The LCCI said without bold policy pronouncements, constraints to the ease of doing business including foreign exchange shortage, escalating production costs, high regulatory costs, infrastructure inadequacies, and delayed cargo clearance, will persist into year 2021.
The report said the Nigerian policy environment is characterized by a great deal of uncertainty. The inconsistent and unpredictable nature of the policy and regulatory environment continues to hurt long-term investment planning and business projections.
Yusuf said, “These constraints will be more profound on businesses in the real economy. We believe the sluggish pace of recovery will continue to subdue consumer demand, albeit the impact on earnings performance will be disproportionate across sectors.”
He also said many Micro Small and Medium Enterprises (MSMEs) would struggle in the new year amid unfavourable economic conditions, large corporates are expected to demonstrate resilience in the coming year.
According to him, the economy will return to the path of positive growth in the second quarter of 2021 and this will expectedly impact on the macroeconomic environment which may ease some of the critical economic conditions currently impeding economic growth.
He said Nigeria’s trade dynamics with the global community is expected to remain almost unchanged in the short-term. With imports continuing to outpace exports, trade deficit is expected to widen in excess of N5 trillion in year 2020, thereby putting pressure on forex.
“Looking ahead in 2021, we expect crude oil to sustain its dominance in Nigeria’s export while manufactured imports will most likely dominate the country’s import bill. We anticipate sustained trade deficit in agriculture, manufactured goods and raw materials goods in year 2021,” he said.
The LCCI boss said total capital inflows for year 2021 might likely range between $10 billion – $11 billion, below 2018 and 2019’s levels. The forex policies, security challenges, sustained fiscal & external risks, infrastructure inadequacies, policy credibility concerns and regulatory bottlenecks may keep capital importation subdued in the short-term.
“Foreign Portfolio Investors (FPIs) are concerned about continual rise in negative real return rate on investment due to rising inflation and inability of FPIs to exchange naira repayments into forex. Given that these issues remain unresolved, we believe FPIs will remain cautious about naira-denominated investment securities in the short term,” Yusuf said.
He added that the value of Nigeria’s trade with the global community stood at N23.2 trillion between January and September 2020, with imports of N13.91 trillion and exports of N9.3 trillion accounting for 60 per cent and 40 per cent of total trade, respectively.
“There has been a sustained expansion in the country’s trade deficit since the start of the year, with cumulative trade deficit at N4.6 trillion in the first nine months of 2020 as exports have grown less rapidly compared to imports. The structure of Nigeria’s export basket remained unchanged as crude exports accounted for 74 per cent of total exports while manufactured goods dominated imports bills between the first and third quarters,” Yusuf stated.
He also said, “While recovery to growth trajectory is expected to take full course most likely in second quarter 2021 due to base effect of second quarter 2020 when output contracted steeply by 6.1 per cent. We expect the pace of recovery to remain subdued within the region of one per cent in year 2021 in the absence of shocks. In our view, Nigeria’s recovery prospects depend largely on oil price and production level as GDP performance in recent quarters has significantly mirrored trends in both variables.”
Railway
Lagos Rail Mass Transit part of FG free train ride – NRC
Lagos Rail Mass Transit part of FG free train ride – NRC
The Nigerian Railway Corporation (NRC) has disclosed that the Lagos Rail Mass Transit (LRMT) trains are included in the Federal Government’s free train ride initiative for the Christmas and New Year celebrations.
The LRMT, which currently includes the Phase 1 Blue Line Rail and the Phase 1 of the Red Line Rail, operates under the Lagos Metropolitan Area Transport Authority (LAMATA).
This announcement was made by Ben Iloanusi, the Acting Managing Director of the NRC, during an interview on NTA News TV on Friday, following the launch of the initiative earlier that day.
While Iloanusi stated that Phase 1 of both the Blue Line and Red Line Rail projects are part of the program, LAMATA has yet to confirm this inclusion.
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Iloanusi outlined the other routes benefiting from the scheme, which include the Lagos-Ibadan Train Service, Kaduna-Abuja Train Service, Warri-Itakpe Train Service, Port Harcourt-Aba Train Service, and the Bola Ahmed Tinubu Mass Transit in Lagos. Notably, little was previously known about the Bola Ahmed Tinubu Mass Transit service until this disclosure.
“Let me mention the routes where this free train service is happening. We have the Lagos-Ibadan Train Service, we have the Kaduna-Abuja Train Service, we have the Warri-Itakpe Train Service, we have the Lagos Rail Mass Transit trains, we have the Port Harcourt-Aba Train Service, and we have what we call the Bola Ahmed Tinubu Mass Transit, which is also in Lagos,” he stated.
Iloanusi provided operational updates, stating that passengers nationwide can access free tickets online or, for those unable to do so, at train stations where they will be profiled and validated.
He noted that passengers using NRC-managed services (excluding the Lagos Rail Mass Transit) should reserve tickets via the official website, www.nrc.gov.ng, with a valid ID required. He also advised travelers to plan, arrive on time, and bring valid identification.
Lagos Rail Mass Transit part of FG free train ride – NRC
Business
NNPC denies claim of Port Harcourt refinery shutdown
NNPC denies claim of Port Harcourt refinery shutdown
The Nigerian National Petroleum Company Limited (NNPCL) has denied claims in media reports that the newly refurbished Port Harcourt refinery has shut down.
The national oil company denied the claim in a press release issued by its Chief Corporate Communications Officer, Olufemi Soneye, on Saturday.
Soneye said the claim was false and urged Nigerians to disregard it. He stressed that the Port-Harcourt Refinery is fully operational.
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The statement read, “The attention of the Nigerian National Petroleum Company Limited (NNPC Ltd.) has been drawn to reports in a section of the media alleging that the Old Port Harcourt Refinery which was re-streamed two months ago has been shut down.
“We wish to clarify that such reports are totally false as the refinery is fully operational as verified a few days ago by former Group Managing Directors of NNPC.”
He noted that preparation for the day’s loading operation is currently ongoing, and added that claims of the shutdown are “figments of the imagination of those who want to create artificial scarcity and rip-off Nigerians.”
NNPC denies claim of Port Harcourt refinery shutdown
Business
CBN permits BDCs to buy up to $25,000 FX weekly from NFEM
CBN permits BDCs to buy up to $25,000 FX weekly from NFEM
The Central Bank of Nigeria (CBN) has granted Bureau de Change (BDC) operators temporary permission to purchase up to $25,000 weekly in foreign exchange (FX) from the Nigerian Foreign Exchange Market (NFEM).
The Central Bank of Nigeria (CBN) has granted Bureau de Change (BDC) operators temporary permission to purchase up to $25,000 weekly in foreign exchange (FX) from the Nigerian Foreign Exchange Market (NFEM).
This move, detailed in a circular dated December 19, 2024, is designed to meet seasonal retail demand for FX during the holiday period.
The circular was signed by T.G. Allu, on behalf of the Acting Director of the Trade and Exchange Department.
The arrangement will be in effect from December 19, 2024, to January 30, 2025.
Under the directive, BDCs may purchase FX from a single Authorized Dealer of their choice, provided they fully fund their accounts before accessing the market.
Transactions to occur at the prevailing NFEM rate
The transactions will occur at the prevailing NFEM rate, and BDCs are required to adhere to a maximum 1% spread when pricing FX for retail end-users.
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All transactions conducted under this scheme must be reported to the CBN’s Trade and Exchange Department.
The circular read in part:
“In order to meet expected seasonal demand for foreign exchange, the CBN is allowing a temporary access for all existing BDCs to the NFEM for the purchase of FX from Authorised Dealers, subject to a weekly cap of USD 25,000.00 (Twenty-five thousand dollars only).
This window will be open between December 19, 2024 to January 30, 2025.
“BDC operators can purchase FX under this arrangement from only one Authorized Dealer of their choice and will be required to fully fund their account before accessing the market at the prevailing NFEM rate. All transactions with BDCs should be reported to the Trade and Exchange department, and a maximum spread of 1% is allowed on the pricing offered by BDCs to retail end-users.”
The CBN assured the general public that PTA (Personal Travel Allowance) and BTA (Business Travel Allowance) remain available through banks for legitimate travel and business needs.”
These transactions are to be conducted at “market-determined exchange rates” within the NFEM framework.
This initiative reflects the CBN’s strategy to stabilize the FX market and manage seasonal surges in demand.
CBN permits BDCs to buy up to $25,000 FX weekly from NFEM
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