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Petrol Prices To Fall Over Refineries’ Take Off, Says Cardoso

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Last Updated on January 24, 2024 by Fellow Press

The pump prices of Premium Motor Spirit (PMS) petrol will moderate this year as government and private-owned refineries begin operation, Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso has said.

He spoke on Wednesday, January 24, at the launch of the Nigerian Economic Summit Group (NESG) 2024 Macroeconomic Outlook Report in Lagos.

Cardoso said the expected stabilisation or reduction in fuel costs is poised to have far-reaching implications across various sectors, contributing significantly to overall economic efficiency and resilience.

While Dangote Refinery has already commenced production, the Port Harcourt Refinery is expected to begin production anytime from now.

Cardoso said the apex bank, the Ministry of Finance and the NNPCL have collaborated to ensure that all FX inflows are returned to the Central Bank to boost reserves accretion.

He described the naira, which exchanges around N1,370 to the dollar at the parallel market as undervalued.

“We believe that the naira is currently undervalued and, coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term,” he said.

In summary of the NESG 2024 Macroeconomic Outlook Report in Lagos, the Chief Economist at NESG, Dr. Olusegun Omisakin, listed some economic outcomes of achieving a stable and appropriate pricing of the exchange rate in Nigeria.

The NESG report advised that stabilising the exchange rate through a functional and transparent foreign exchange market entails enhancing market liquidity through regular auctions, reducing administrative restrictions, and ensuring efficient allocation of FX reserves.

“Adopting a managed float system, regulating speculative activities, and encouraging foreign investments would bolster market confidence. Besides, access to FX needs to be realigned to facilitate international trade and transactions – as such, local access needs to be to the limit of the Naira equivalent. Reinforcing monetary policies for inflation control and export diversification would promote currency stability,” the report advised.

Cardoso acknowledged the challenges facing the economy and the resistance to proposed solutions by various stakeholders, assuring that the economy is now at a turning point, and the bold reforms being undertaken across different segments of the economy, while initially challenging, are ultimately directed towards addressing these challenges in a sustainable manner.

“I am confident that we are already witnessing positive outcomes, and these will undoubtedly become more apparent in the near future. The dedicated and relentless efforts being made are certain to bring about significant and positive changes for our economy.”

“Indeed, recent reports from international rating agencies such as Fitch, Moody’s, and commendations from multilateral banks like 3 Classified as Confidential the World Bank reflect this, with upgrades to Nigeria’s ratings from stable to positive. These reports acknowledge the possible reversal of the deterioration in the country’s fiscal and external position due to the authorities’ reform efforts,” Cardoso said.

“While noting the painful adjustments, they all identify a direction of travel that will unlock the much needed growth and development for our economy in the medium to long term.”

He said the rising costs of food prices and volatility in the forex market will soon be addressed.

On economic growth, he said the global economy is currently grappling with persistent challenges, including inflation and subdued growth prospects.

Despite Gross Domestic Product (GDP) growth outperforming expectations in 2023, it is projected to further moderate in 2024 due to tightened financial conditions, sluggish trade expansion, and reduced business and consumer confidence. The International Monetary Fund (IMF) anticipates a mild slowdown in global economic growth to 2.9 percent in 2024, down from the 3.0 percent growth observed in 2023, with Asia driving the majority of the projected global growth in 2024, similar to the previous year.

He said the projections for the nation’s economy paint an optimistic trajectory as the Federal Government of Nigeria anticipates real GDP growth of 3.76 percent in 2024, slightly surpassing the estimated 3.75 percent for 2023.

The optimism, he said, was underpinned by the implementation of key government reforms set to shape the economic landscape. Foremost among the factors contributing to this positive outlook is the expectation of improved crude oil prices and production, highlighting the crucial role the oil industry is expected to play in driving economic growth.

Cardoso said the positive outlook for Industry, Services, Agriculture, and Mining, Electricity, Gas & Water Supply sub-sectors reflects the potential effect of market-based reforms through private investment and SMEs-led growth that would contribute to business improvement and confidence.

“Government reforms in the mining and energy sub-sectors are expected to serve as a catalyst for growth and development. 3. While the potential for growth exists in 2024, each sector may encounter unique challenges and opportunities,” he said.

He said that inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, which aims to rein in inflation to 21.4 percent.

This will be aided by improved agricultural productivity and the easing of global supply chain pressures, benefiting businesses by boosting consumer confidence and purchasing power.

He explained that the CBN’s adoption of the inflation-targeting framework involves clear communication, use of monetary policy instruments, and collaboration with fiscal authorities to achieve price stability, fostering market confidence and positively influencing consumer behaviour.

“The outlook for decreasing inflation in 2024 will have a profound impact on businesses, providing a more predictable cost environment and potentially leading to lowered policy rates, stimulating investment, fueling growth, and creating job opportunities,” he said.

Cardoso said the expected stability in the foreign exchange market for 2024 can be attributed to the reduction in petroleum product imports and the recent implementation of a market-determined exchange rate policy by the CBN.

“This reform is designed to streamline and unify multiple exchange rates, fostering transparency and reducing opportunities for arbitrage. The resulting consistent and stable exchange rate will not only boost investor confidence but also attract foreign investment, elevating Nigeria’s appeal to global investors,” he said.

Cardoso said the NESG’s Macroeconomic Outlook Report for 2024 emphasises the necessity of economic transformation under the central theme, “Economic Transformation Roadmap: Medium-Term Policy Priorities.”

“This theme underscores the requirement for a clearly outlined roadmap comprising distinct yet interconnected phases and essential policy recommendations. This resonates with me as we have just last week, launched a new 5-year Strategy for the Central Bank of Nigeria for the period 2024-2028 that provides a clear roadmap for achieving our mandates,” he said.

The NESG report explained that when exchange rates are stable, everyone is better off. Price stability supports economic growth and employment. It allows people to make more reliable plans for borrowing, saving, and expanding businesses.

“Decreased volatility of the exchange rate helps to support stability in inflation, which mainly affects low-income households because they have fewer resources to protect themselves. In the situation of price stability, it helps to maintain social cohesion and stability. History has shown that episodes of high inflation tend to be associated with social unrest,” the report.

According to the report, increased capital inflows will fortify the nation’s external reserves, establishing a robust defence against external shocks.

“This can only happen with the stability of the exchange rate. Capital inflows, comprising foreign investment, loans and remittances, elevate the reserve levels, bolstering Nigeria’s financial stability and economic resilience,” it said.

The NESG report advised that in addition to nominal enhancements in revenue, the country’s revenue-to-GDP ratio must reach a minimum threshold of 15 percent to substantiate the processes of economic growth and stabilisation.

“The country must significantly decrease its current public debt service-to revenue ratio, aiming for a reduction to less than 22 percent from the current high of 80.2 percent as of 2022. This reduction is crucial to create fiscal space, enabling the government to reallocate funds toward economic development and stability initiatives.

“A moderate fiscal deficit can be a useful tool for financing essential investments and stimulating economic activity. Hence, the optimal level of fiscal deficit that supports economic growth and stability in Nigeria requires a careful balance. A fiscal deficit of less than three per cent as stipulated in the FRA 2007 is considered appropriate for the economy,” it said.

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AMCOSS, PADI partner for 3-day management training

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A leading personnel consultancy, AMCOSS, is organizing “a 3-day leadership and management development retreat” for PEDI management staff.

The retreat which is scheduled to hold between Thursday 20th June and Saturday 22nd June 2024, will feature trending, emerging and solution-focused presentations, as well as interactive sessions by the participants.

The programmes of the event lined up are as follows:

Opening day, June 20 will start by 9:00am, and by 10:00am, the Managing Director/CEO will give a welcome address, which will be followed by a brief remark from the Managing Director of PEDI, Ilesa. An highlight of the event is a guided tour of places of historical importance in Ilorin.

By 2:30pm, there will be a presentations titled “Effective Leadership and Leadership Skills”, followed by the interactive session of questions and answers.

There will be three presentations on the second day June 21, tagged: “Managerial Skills and Personal Effectiveness”; Performance Management System” and “Health and Well-being”.

Likewise on the last day of the programmes, there will be two presentations: “Team Building and Effective Communication” and “Organisational Continuity, Sustainability and Succession Planning”.

The training starts each day by 9am, with provision for interactive sessions after each presentation and lecture, tea break/lunch, and ends approximately 4:30pm.

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Dangote to venture into steel production

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Last Updated on June 14, 2024 by Fellow Press

Africa’s richest man, Alhaji Aliko Dangote has mooted plans to delve into steel production in the near future stating that he wants to ensure that every steel used in West Africa comes from Nigeria.

The industrial mogul stated this during an interview at the ongoing Afreximbank Afro-Caribbean Trade & Investment Forum in Nassau, The Bahamas.

When asked if he is taking a break after the refinery, he noted that the next venture after the refinery project would be in Steel manufacturing and ensure that all Steel products used in West Africa comes from Nigeria.

He also encouraged African leaders to take agriculture and solid mineral development seriously lamenting the fact that food imports cost the continent dearly by increasing unemployment and poverty.

He said, “What we need to do that is missing is actually to concentrate and pay more attention to agriculture and solid minerals.
I don’t like people coming to take our solid minerals to process and bring the finished product.
We should try and industrialise our continent and take it to the next level.”

“I told somebody we are not going to take any break. What we are trying to do is to make sure at least in West Africa, we want to make sure that every single steel that we use will come from Nigeria”

Nigeria has tried unsuccessfully to become a leader in the steel manufacturing industry with a handful of failed projects like the Ajaokuta steel plant, Delta Steel Company, Osogbo and Jos rolling mills even under government and private ownership.

Like the oil refineries, the federal government under different administrations has spent billions trying to put the local steel plants to work but has been unsuccessful.
The administration of President Bola Tinubu had promised during the campaigns to ensure steel production starts in the multi-billion-dollar Ajaokuta steel complex.

The federal government in the 2024 appropriation act budgeted around N4.45 billion for the plant but hopes to raise around N35 billion from private investors to bring the plant to life for the first time in its history.

However, the Minister of Steel Development, Shuaibu Audu has also stated that reviving the plant could cost around $2 billion to $5 billion.

According to the National Steel Raw Materials Exploration Agency (NSRMEA), total steel consumption in the country averages around 10 million metric tonnes of which 70% is imported.
The current Minister of Steel Development had earlier stated that Nigeria spends around $4 billion on steel imports annually despite having around 74 steel plants and fabricators across the country.

Nigeria is home to significant iron-ore deposit- a critical raw material in steel production found in Kogi state.

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