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Nigerian Economy Shrinks By N63bn, 28 Sectors Struggle

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Twenty-eight sectors of the economy declined in the second quarter of 2022 as real Gross Domestic Product shrunk by N63.49bn quarter-on-quarter.

While real GDP grew by 3.54 per cent year-on-year in Q2 2022, it declined by 0.37 per cent from the N17.35tn that was recorded in the first quarter of 2021 to N17.29tn in Q2, 2022, according to data from the National Bureau of Statistics, NBS.

The NBS blamed this decline on lower economic activity that was witnessed in Q1 2021. The analysis of real GDP data revealed that only 18 of the 46 NBS captured economic activity sectors experienced growth in the quarter under review.

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According to the data from the statistics body, the agriculture sector witnessed mixed positives, with two sub-sectors witnessing growth and the other two recording a decline. Crop production grew from N3.39tn to N3.59tn; livestock declined from N318.49bn to N282.02bn; forestry grew from N44.14bn to N51.28bn; while fishing declined from N125.46bn to N88.3bn.

In the mining and quarrying sector, crude petroleum and natural gas declined from N1.15tn to N1.09tn; coal mining grew from N1.61bn to N4.79bn; metal ores declined from N4.87bn to N1.26bn; and quarrying other minerals grew from N363.29m to N25.51bn.

The 2022 has been a tough year for the manufacturing sector with inflation and foreign exchange scarcity negatively impacting growth. Only three of the 13 subsectors in the manufacturing sector recorded any growth in the quarter under review.

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Oil refining grew from N1.66bn to N2.82bn; cement declined from N188.81bn to N143.74bn; food, beverage and tobacco declined from N875.94bn to N760.08bn; textile, apparel, and footwear declined from N342.48bn to N283.34bn; wood and wood products declined from N53.81bn to N44.41bn; whereas pulp, paper, and paper products declined from N13.38bn to N9.70bn.

Chemical and pharmaceutical products grew from N42.75bn to N47.37bn; non-metallic products declined from N63.52bn to N49.24bn; plastic and rubber products declined from N60.12bn to N53.01bn; electrical and electronics increased from N839.34m to N921.50m; basic metal, iron and steel declined from N39.93bn to N37.31bn; motor vehicles and assembly declined from N9.53bn to N7.63bn; and other manufacturing declined from N76.07bn to N55.55bn

The electricity, gas, steam and air conditioning supply sector grew from N32.72bn to N118.79bn. The water supply, sewerage, waste management and remediation sector grew from N39.06bn to N61.12bn. Construction declined from N725.99bn to N554.11bn. The trade sector grew from N2.79tn to N2.91tn.

Accommodation and food services also recorded a decline from N173.41bn to N68.17bn. Under the transportation and storage sector, road transport grew from N151.97bn to N293.85bn; rail transport and pipelines declined from N40.96m to 19.92m; water transport increased from N802.77m to N1.04bn; air transport declined from N25.26bn to N9.69bn; transport services grew from N7.11bn to N11.14bn; and post and courier services declined from N6.26bn to N2.42bn.

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Seen as one of the bright spots of the economy, telecommunications and information services under the information and communication sector grew from N2.25tn to N2.59tn; publishing declined from N5.45bn to N4.66bn; motion pictures, sound recording and music production declined from N229.67bn to N157.57bn; and broadcasting grew from N330.47bn to N433.43bn.

The arts, entertainment and recreation sector declined from N35.69bn to N51.85bn. In the financial and insurance sector, the financial institutions subsector declined and insurance declined from N85.11bn to N80.18bn.

The real estate sector was one of the sectors that shrunk, declining from N927.32bn to N920.49bn. The professional, scientific and technical services sector fell from N560.47bn to N525.94bn; administrative and support services grew from N3.39bn to N3.54bn; public administration also grew from N283.59bn to N375.59bn, but education fell from N333.06bn to N231.85bn.

While the other services sector declined from N702.74bn to N473.72bn, the human health and social services sector increased from N126.01bn to N131.28bn.

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According to Associate Professor of Economics at the Pan Atlantic University, Olalekan Aworinde, real GDP was the true reflection of the economic status of a country.

He said, “Nominal GDP is the market value of goods and services produced at a particular period. Real GDP is when you have the nominal GDP, and inflation factored in. It is the nominal GDP indexed with inflation.”

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In a statement addressing the general GDP, the Founder /Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, disclosed that productivity and competitiveness issues had continued to negatively impact performance across sectors of the economy.

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He stated that the general operating environment of the nation was also very challenging for most investors, with SMEs particularly more vulnerable to prevailing macroeconomic shocks, resulting in high mortality rate for small businesses.

He said, “Many businesses are struggling to cope with the numerous challenges and shocks to the economy. On the welfare front, the citizens are also experiencing serious economic hardship as a result of the galloping inflation and the impact on purchasing power.”

PUNCH

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JUST IN: CBN Raises Interest Rate to 26.75% Amid Surging Inflation

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The Central Bank of Nigeria, CBN, Monetary Policy Committee, MPC, on Tuesday raised the interest by 50 basis points to 26.75 per cent from 26.25 per cent in May 2024.

CBN governor, Olayemi Cardoso, announced this at a press briefing on Tuesday at the end of the two-day 296th MPC in Abuja.

According to him, the decision to further increase the interest rate is to tackle the country’s rising core inflation and food inflation which stood at 34.19 per cent and 40.87 per cent, respectively in June.

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He said members of the MPC are not oblivious of the need to address the rising prices of food in Nigeria, necessitating the interest rate hike.

DAILY POST reports that the implication of the interest rate hike is that businesses, farmers, manufacturers and investors will have to pay more to get loans from banks.

The 296th MPC meeting is the fourth time the interest rate has been increased since the appointment of Cardoso in September last year.

Recall that in May 2023, when President Bola Tinubu was inaugurated, Nigeria’s interest rate stood at 18.75 per cent while inflation rate stood at 22.41 per cent.

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Meanwhile, despite CBN’s continued interest rate hikes, the country’s inflation has not cooled off.

Earlier analysts had called for a pause in the hike of the interest rate.

The Director of the Centre for Promotion of Private Enterprise, Muda Yusuf, backed call for a pause in the hike of the interest rate.

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According to him, the monetary instruments have been overstretched, hence not productive.

“I think we have overstretched monetary instruments because of inflation. They should put a pause on interest rate hikes,” he said.

 

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CAC To Cancel Certificates Of BDCs With Revoked Licences

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The Corporate Affairs Commission (CAC) has said it would cancel the certificates of incorporation of Bureaux De Change(BCDs) whose licences have been revoked by the Central Bank of Nigeria( CBN).

The Nation reported in February the CBN revoked the licences of 4,173 Bureau De Change operators over their failure to meet regulatory guidelines.

In a statement by its acting Director, Corporate Communications, Sidi Hakama, CBN explained that the regulatory provisions flouted include nonpayment of all necessary fees within the stipulated period.

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CBN said: “The affected institutions failed to observe at least one of the following regulatory provisions: Payment of all necessary fees, including licence renewal, within the stipulated period in line with the guidelines.

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“Rendition of returns in line with the guidelines; compliance with guidelines, directives, and circulars of the CBN, particularly Anti-Money Laundering, Countering the Financing of Terrorism and Counter-Proliferation Financing regulations.”

However, in line with the above directive by the CBN, the CAC in a notice on its website on Wednesday, said the certificates would be cancelled within three months if the affected companies do not change the names and objects of such companies.

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The general public is hereby informed that following the revocation of the operational licenses of 4,173 Bureau De Change companies by the Central Bank of Nigeria vide a Federal Republic of Nigeria Official Gazette (Vol. 111) No. 37 of February 27, 2024 for noncompliance with Regulatory Standards, the Corporate Affairs Commission in the exercise of its powers under section 8(1)(e) of the Companies and Allied Matters Act, 2020 advises these companies to within three months from the date of this publication, change the names and objects of such companies.

“Failure to change the names and objects within the stipulated time frame shall result in cancellation of certificate of incorporation and dissolution. It is to be noted that it is unlawful for a company whose certificate has been deemed dissolved to carry on business,” the CAC notice reads.

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FG Suspends Taxes On Maize, Wheat, Rice, Others

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The Federal Government has suspended duties, tariffs and taxes on some essential food items imported through land and sea borders.

Minister of Agriculture and Food Security, Abubakar Kyari, announced this at the National Press Centre, Abuja.

Kyari also said the Federal Government has also inaugurated the Renewed Hope National Livestock Transformation Implementation Committee to develop and implement policies that prioritize livestock development and align with the National Livestock Transformation Plan.

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He stated that the listed food items, which include maize, wheat, husked brown rice and cowpeas, will enjoy a 150-day Duty-Free Import Window.

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He added that the move is part of the Presidential Accelerated Stabilization and Advancement Plan, which is aimed at achieving food security and economic stability in the country.

According to him: “The Federal Government has announced a 150-day Duty-Free Import Window for Food Commodities, suspension of duties, tariffs and taxes for the importation of certain food commodities (through land and sea borders). These commodities include maize, husked brown rice, wheat and cowpeas.

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“Under this arrangement, imported food commodities will be subjected to a Recommended Retail Price (RRP).

“I am glad to reiterate that the Government’s position exemplifies standards that would not compromise the safety of the various food items for consumption.

“In addition to the importation by the private sector, the Federal Government will import 250,000MT of wheat and 250,000MT of maize. The imported food commodities in their semi-processed state will target supplies to the small-scale processors and millers across the country.”

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