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Nigeria’s GDP growth drops to 1.5%, IMF predicts

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The International Monetary Fund (IMF) in its latest World Economic Outlook update has projected that the Nigerian economy will grow by 1.5 per cent this year.

This is slightly lower than the 1.7 per cent it predicted for the country in its previous forecast.

The IMF’s latest outlook released on Tuesday, titled, ‘Policy Support and Vaccines Expected to Lift Activity,’ however, predicted that in sub-Saharan Africa, growth would strengthen to 3.2 per cent in 2021 and 3.9 per cent in 2022.

It also expected oil prices to average above $50 per barrel in 2021, a more than 21 per cent rise from 2020’s depressed level on the back of the rollout of vaccines and fiscal stimulus programmes.

IMF stated that the updated version of the report was reviewed in line with emergence of a new variant of coronavirus, which poses as a concern for global recovery.

The report stated, “Although recent vaccine approvals have raised hopes of a turnaround in the pandemic later this year, renewed waves and new variants of the virus pose concerns for the outlook. Amid exceptional uncertainty, the global economy is projected to grow 5.5 per cent in 2021 and 4.2 percent in 2022.

“The 2021 forecast is revised up 0.3 percentage point relative to the previous forecast, reflecting expectations of a vaccine-powered strengthening of activity later in the year and additional policy support in a few large economies.”

Economic Counselor and Director of the Research Department, Ms. Gita Gopinath, who at the virtual unveil of the WEO report, said as much as 90 million people worldwide would fall below poverty bracket and also urged low income and emerging economies to hasten COVID-19 vaccination.

She said, “Oil exporters and tourism-dependent economies are particularly hard hit and their prospects are severe given that oil prices have a subdued outlook and cross border travel is not expected to resume anytime soon.

“Even within countries, the burden of the crisis has been felt unequally across different groups. Workers with less education, youth and women have suffered disproportionate income losses. 90 million individuals are expected to enter extreme poverty over 2020/2021 reversing the trends of the past two decades.”

She called for more support to fund African countries’ purchase of vaccines.

“But there are many countries that are waiting till 2022 for that to happen and that is just costly for everybody not just for developing countries, it is also very costly for countries that have the vaccines. Which is why we are calling for greater funding for making sure these vaccines are available to poor nations.”

The IMF also said oil prices would average above $50 per barrel in 2021, a more than 21 per cent rise from 2020’s depressed level on the back of the rollout of vaccines and fiscal stimulus programmes.

It expects global Gross Domestic Product (GDP) to grow 5.5 per cent in 2021, after a 3.5 per cent contraction in 2020, with the 2020 figure revised up 0.9 percentage point from the previous forecast issued in October while the 2021 estimate is a 0.3 percentage point upward revision.

The S&P Global Platts quoted the IMF as forecasting that advanced economies are projected to recover more quickly than developing countries due to quicker access to vaccines and broader fiscal measures.

“Oil exporters and tourism-based economies face particularly difficult prospects given the subdued outlook for oil prices and expected slow normalisation of cross-border travel,” it said.

The IMF uses a simple average of prices of Brent, Dubai and WTI to calculate its oil prices. With that methodology, the IMF said oil prices averaged $41.29/b in 2020 and would rise to $50.03/b in 2021, before falling back to $48.82/b in 2022.

The October forecast had estimated that oil prices would average $46.70/b in 2021.

“Non-oil commodity prices are also expected to increase with those of metals, in particular, projected to accelerate strongly in 2021,” the IMF said.

The fund said its forecasts were subject to uncertainty, with the pandemic yet to be contained.

 

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Just in: Reps halt CBN’s cash withdrawal policy, summon Emefiele

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The House of Representatives has asked the Central Bank of Nigeria (CBN) not to implement the new cash withdrawal policy slated for January 9, 2023 pending compliance with the provisions of the Act establishing the bank.

The House also summoned CBN Governor Godwin Emiefele to brief the Chamber on several policies of the bank in recent times.

The lawmakers on Thursday condemned the new cash withdrawal policy, saying it would grossly affect small businesses and the economy especially those in  the rural communities who do not have access to banks.

And following a point of order raised by Mark Gbillah on the provisions of the Central Bank Act, the House directed the CBN Governor to appear before the House on Thursday, December 15, 2022 to brief the House on why the policy should be allowed to stand.

Magaji Da’u Aliyu, who sponsored the motion, said the new policy by the CBN, which limits daily cash withdrawal to N20,000 daily should not be allowed to stand as it would adversely affect the Nigerian people, especially those running small-scale businesses.

He said while the country was trying to come to terms with the decision to redesign the currency, the CBN was coming up with yet another policy that will adversely affect the masses without proper advocacy.

 

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Cash withdrawal limits will send us out of business – POS Terminal operators

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The new directive on cash withdrawal by the Central Bank of Nigeria (CBN) on Tuesday is generating heated comments and reactions from Nigerians, especially point of sale (PoS) terminal operators who largely depend on cash to run their business.

FIJ interviewed some operators at Agric and Isawo bus-stops in Ikorodu on Wednesday and they spoke on how the policy would impact their means of livelihood.

A tricycle operator who identified as Kamoli Abayomi explained that the policy would not sit down well with the unbanked and uneducated population, citing an instance of a tricycle dealer in Agric, who doesn’t operate a bank account because he lacks confidence in the banks.

“I heard about the regulations yesterday in a news report. I am concerned about uneducated people and those who do not patronise banks,” Abayomi told FIJ.

“A couple of weeks ago, one old man selling tricycle here (Agric) sold a tricycle for ₦650,000 and he had to acquire the bank information of one of his fellow tenants at their complex to receive the payment.

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“Ordinarily, he prefers customers to pay in cash. If the money is huge, he would quickly take it home for safe-keeping. For people like this, how would they fare under this new banking rules?”

Tobi Martins has a PoS stand at the entrance of RSA Street, close to Isawo. He told FIJ the policy would not favour his business.

“I read the news yesterday on social media and became affected. I thought of how this would reduce my business patronage and even inconvenient some customers who come here to withdraw large sums,” he said.

“However, I think they have their reasons and we too will find a way to accommodate the new reality.”

IT COULD KILL OUR BUSINESS

Agbaje Mary, an indigene of Osun State, said she was not aware of the development.

“I didn’t know anything about this policy until you told me. It is not going to affect my business positively. I’m an admission seeker and I started this business to make myself productive while hoping to go get an admission,” she explained.

“What this means to me is that I may end up closing this business by the time my customer base diminishes as a result of this policy. I remember I started with ₦10,000 a year ago and the capital has multiplied now. In a day, I could trade with ₦200,000 and even more.

“But now, if I cannot withdraw more than ₦50,000 for my business over the counter in a day, the implication is that my business could die gradually.”

When this reporter approached Ajibola Janet for comments, she said she was not aware of such regulations. After reading out the letter to her, she also expressed her worry over the development, saying “it will definitely tell on our business”.

“Such policy is unfair. Our business is cash-dependent and limiting how much people withdraw daily and how much we also can withdraw to use for business, will bring severe impacts on our operations,” he said.

“At any rate, this is not my only line of business. I will rather concentrate my attention on other lines for my survival and follow the trend.”

As this reporter approached Adebisi Adejumoh and Mosun Akanji, what came to their minds was that he wanted to withdraw money. Upon initiating a conversation with them, they realised his purpose was entirely different.

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Adejumoh said, “This policy is too harsh. People withdraw various amounts from me daily. Sometimes, some people come here to withdraw ₦100,000 at once.”

“The higher the amount an individual withdraws at a go, the higher my own charges. So, if it now becomes impossible for one person to withdraw above ₦20,000 in a day, I am confused, as we would be making adequate profits and receive my pay at the end of the month from my employer.”

On her own part, Akanji dismissed the policy as untrue. She said it was doubtful the apex bank would release such regulations when POS business had kept many productive.

“I don’t want to believe what you are saying is true. Why will they (CBN) pronounce a policy like that? It does not have human face. Looking at the number of people in this business, there may be a problem if the policy becomes effective and people can no longer make ends meet,” Akanji explained to FIJ.

At another shop on a one-storey building situated at Isawo junction, a man who identified as Emmanuel Houston, told FIJ that the policy would affect everybody to different extents.

According to Houston, POS machines have created jobs for thousands of Nigerians and ensured relative peace in some communities.

“In Isawo alone,” Houston said, “unless there is an official register of POS terminals here, you might not be able to count the number of people doing the business.

“Some people don’t take it as their full line of business while some do not have any other business. I believe the regulations have the potential to bite everybody regardless.”

With the new CBN regulations, ATMs will only dispense ₦200 notes and below.

The revised cash withdrawal limits contained in a letter with reference number BSD/DIR/PUB/LAB/015/069 becomes effective on January 9, 2023.

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Senate cautions CBN over cash withdrawal limits

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The Senate on Wednesday asked the Central Bank of Nigeria (CBN) to exercise restraint on its latest policy on cash withdrawals.

The apex bank, under the new withdrawal policy, limited the maximum cash withdrawal over the counter (OTC) by individuals and corporate organisations per week to N100,000 and N500,000 respectively.
Senate President Ahmad Lawan said the CBN should not approach the policy by jumping into it at once, saying many Nigerians would be affected.
He was responding to concerns raised by senators on the issue during plenary on Wednesday.
The Senate Minority Leader Phillip Aduda (PDP, FCT) during the session had called the attention of his colleagues to the new policy while seconding a motion that the nominations of Mrs Aishah Ahmad and Mr Edward Lametek Adamu as deputy governors of CBN be referred to the committee for screening.
Aduda called for caution on the cash withdrawal limit, saying the policy would affect the country’s economy.
He said, “Our commerce, I think, is not ready for this and our economy cannot take this shock.
“There is a need for us to speak about it because people are suffering and it is a very serious issue.”
Senator Gabriel Suswam (PDP, Benue) also urged the Senate to debate the policy immediately for the sake of Nigerians, whom, he said, were extremely worried.
Suswam said, “My phone was inundated by calls from constituents, who are outside the former sector. People are extremely worried. You should have allowed us to discuss this issue for the sake of Nigerians.”
Senate President Lawan noted that there was a need to engage the CBN to get more details on the policy.
He therefore directed the Senate committee on banking, insurance and other financial institutions to discuss the matter during the screening of the CBN deputy governors.
Lawan said the new CBN policy would be thoroughly debated next Tuesday.
He said, “At the moment, I will advise that these two deputy governors had been in the CBN for the past four years. So they are part of this system. They are not new people.
“This should be part of the major issues to be raised when they appear for screening.
“I want us to be properly informed and guided. Most of us, if not all of us have not had an engagement with that institution.
“My personal opinion is, if we want to be a cashless society, we should take time to be cashless society and not to jump on it at once. Most Nigerians will be out of business.
“But we need to take the opportunity of the screening to be better informed on the policy.”
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