Nigeria's economy grows by 6.28 percent

The Nigerian economy grew by 6.28 per cent in the second quarter of this year, driven by non-oil sector growth, while inflation fell for the second straight month in August helped by tight monetary policy, the latest economic data from the National Bureau of Statistics (NBS) have shown.

GDP growth accelerated in the second quarter, up from 6.17 per cent in the first quarter, which was the lowest quarterly rise in three years.

"The non-oil sector was driven by growth in activities recorded in the building and construction sector, while oil sector output decreased, compared to the second quarter of 2011," the NBS said in its report released Sunday.

The economy is expected to expand at a slower rate this year, after rising 7.4 per cent in 2011, due to disruptions to oil production and economic weakness in developed countries that buy its gasoline-rich crude.

The Consumer Price Index (CPI) dropped to 11.7 per cent year-on-year in August, down from 12.8 per cent in July, largely due to a fall in food inflation which dropped to 9.9 per cent in August from 12.1 per cent the previous month, the NBS said.

Average crude oil output from Africa's largest producer rose marginally to 2.38 million barrels per day (bpd) in the second quarter, from 2.35 million bpd in the first quarter. This was down from 2.45 million bpd in the second quarter of last year.

Oil accounts for more than 80 per cent of Nigerian government revenue and around 95 per cent of its foreign exchange earnings.

The report said high interest rates and lower food prices had helped temper inflation.

"The relative moderation in the index is attributable to the relative slower rises in both the food and 'core' indices partly as a result of aggressive monetary policy initiatives by the Central Bank of Nigeria (CBN), base effects and a much lower rise in several food prices," the bureau said.

The CBN had, among other things at its last monetary policy committee (MPC) meeting, raised banks' cash reserve ratio (CRR) to 12 per cent from 8 per cent in a bid to curb inflation and discourage speculative activities at the foreign exchange market.

The CBN monetary policy committee will meet next week and while the inflation numbers will feed some private sector demand for a loosening of monetary policy, some analysts are expecting rates to remain at 12 per cent, as they have been since November last year. The rate decision will be announced tomorrow.

Other reasons given for the 8.5 per cent drop in inflation include base effects and a much lower rise in several food prices such as yam, tubers and vegetables due to the harvest season.

The NBS said: "In particular, the Food Index exhibited a sharp increase in August 2011. The implication is that year-on-year changes in August this year were muted due to higher prices in August of the previous year.

"In August this year, most classes under the food index increased, but again, only in relative moderation."

According to the report, the composite Food Index dropped year-on-year by 9.9 per cent to 135.9 points in August from 12.1 per cent in July.

Meanwhile, the urban inflation rate stood at 14.4 per cent year-on-year, while that of the rural component recorded a year-on-year increase of 9.7 per cent.

According to the NBS, the urban all items index increased by 0.69 per cent month-on-month, while the corresponding rural index also increased by 0.66 per cent, compared with the previous month.

The NBS report noted that on a month-on-month basis, core index increased by 0.6 per cent during the same period.

"The rise in core index is attributable to higher prices of clothing, medical services, hotel and restaurant prices, and accommodation services, among others. The average 12-month annual rate of rise of index was 13.3 per cent for the twelve-month period ending August 2012," it stated.

Continuing, the report also noted that percentage change in the average composite CPI for the 12-month period ending in August 2012 over the average of the CPI for the previous twelve-month period was 11.8 per cent.

It added that the corresponding 12-month year-on-year average percentage change for urban and rural indices was 12.4 and 11.4 respectively.

This Day

Electricity supply increases to 20 hours per day in Lagos

Lagos Chamber of Commerce and Industry said electricity supply to Lagos areas have increased to 35 percent in the last three months.

The Chamber revealed this in its latest survey which was presented to the media yesterday by its president, Chief Goodie Ibru.

He said in some parts of the country, the average daily supply of power now ranges between 15 to 20 hours per day.

He said that while households and small businesses tend to have significantly keyed into the increased power supply, diesel price is decreasing in line with falling consumption rate coming from increased power supply.

He said: "We observed that while the administrative blocks of most businesses are now connected to the PHCN, major manufacturers are yet to switch their production lines to the public power supply, because of sustainability concerns.

"We are looking to see how much the dry season will impact power supply as increased water levels in the dams due to the raining season played a key role in the current boost of power generation."

He advised that in order to build on the current tempo, government should sustain the gas-to-power framework.

He said the joint venture gas supply agreements with oil companies must be firmed up in order to ensure regular gas availability for the nation's existing and upcoming thermal power stations.

Daily Trust

Related story: Electricity supply drops by 1,000 megawatts in Nigeria 

President Goodluck Jonathan to host paralympians

President Goodluck Jonathan is to host the Nigerian delegation to the paralympic games as well as members of the Falconet in appreciation of their sterling performance.

The Nigerian paralympians Tuesday night rejected the National Institute for Sports hostel accommodation reserved for them after they touched down in Lagos from their triumphant run at the London 2012 Paralympics Games.

Minister of Information, Labaran Maku, told state House correspondents that the superlative performance of members of the Team Nigeria Special athletes at the just concluded Paralympic Games in London "have wiped away our tears".

According to him, the Paraolympians and the Falconets performance at the just concluded FIFA Women U-20 Championship in Japan was brilliant, and the planned reception this saturday is to send a clear message that all athletes are important.

"They (Paraolympians) have wiped away our tears. The message they have sent is that we need a greater passion in what we do. Their performance confirms that every citizen is important. The reception will send a clear message that all is important", he noted.

On the Falconets, the Minister described the performance of the female junior team that came third as "ventilating", adding that "they showed a lot of talents and defeated very great football nations.

"They have demonstrated that when women are asking for 35 per cent they mean it. It is a clear indication what women can do better where men have failed".

At the London Games, the Nigerian special athletes won a total of 13 medals; six gold, five silver and two bronze medals. The performance lifted the dampen spirit of Nigerians when the able bodied athletes could not win a single medal at the main London Games London.

Hisses, Sighs as Paralympians reject NSC's accommodation

However Nigerian paralympians Tuesday night rejected the National Institute for Sports hostel accommodation reserved for them after they touched down in Lagos from their triumphant run at the London 2012 Paralympics Games.

Some of the athletes spoken to submitted that the NIS hostel did not match their status as paralympics heroes.

The athletes were treated to a mini reception at the National Stadium Lagos. And they were shepherded into the NIS hostels by the National Sports Commission Liaison officer in Lagos, Mrs. Tayo Oreweme, but one by one they sneaked out of the premises preferring to lodge in comfortable hotels on their own, while those who have homes in Lagos went to their abodes.

"We felt that they will be secured at the NIS after a reception was held for them at the National Stadium. I'm aware that some of them went home, but I cannot say if they protested against what was offered to them," said Secretary-general of the Nigeria Paralympics Committee, Dr. Frank Thorpe.

Vanguard

Related stories: Nigeria third best amongst African nations in 2012 Paralympics

75 percent of Nigerians oppose new N5,000 bank note

A survey by the National Bureau of Statistics (NBS) has revealed that 75.1 per cent of Nigerians are opposed to the currency restructuring by the Central Bank of Nigeria (CBN) which will lead to the introduction of the N5'000 note and the conversion of lesser bills to coins.

According to the poll conducted by the NBS, only 16.1 per cent of the Nigerian populace are in strong support of the CBN policy while 4.04 and 4.62 per cent were partially in support and against the currency restructuring policy respectively.

The proposal to introduce the larger bill and convert the N20, N10 and N5 bills into coins has generated a lot of controversy with many groups issuing statements against the CBN initiative.

However, the CBN says it will introduce the new note and coins come 2013 despite the opposition the policy is receiving.

The unyielding stand of the CBN may not be unconnected to the full support given to the policy by both the federal and state governments. The policy has also received the approval and backing of the presidency.

Nigeria's Economic Management Team also believes that the move will help drive the country's economy and discourage the high demand for the US dollar, saying the N5,000 bill will only be for banks and a few "heavy cash users".

But many are of the view that the new policy will engender corruption, fuel inflation and negate the "cashless" policy of the CBN, which was designed to promote the use of non-cash transaction instruments.

FBN Capital Limited, in its bulletin just released, had noted that "some opposition can be attributed to a generalised lack of trust in any official measure with economic or financial implications".

On the cost of managing cash, FBN Capital said, "We note the high, but falling, cost of currency management. Over N125 billion was spent in the past three years printing and minting currency. If this move goes through, we expect to see significant savings made, as the new currency note becomes easier to carry and manage.

"We are also of the view that there is no proven evidence of a correlation between inflation and higher currency denominations. Inflation as we know it is fuelled by too much money chasing fewer goods.

Leadership

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Video - CBN Governor says former President Obasanjo is a good farmer but bad economist

Governor of the Central Bank of Nigeria (CBN) Sanusi Lamido Sanusi has berated former president Olusegun Obasanjo for his stand on the planned introduction of N5, 000 note, saying he was a very successful farmer but a very bad economist.

Sanusi, who defended the proposal to introduce the N5,000 note next year, said Obasanjo as head of state introduced more high-currency denominations than any other leader in the history of Nigeria.

Obasanjo had, last Thursday, stated that the introduction of the N5, 000 note would kill production and affect small businesses negatively.

The CBN governor, while delivering the keynote address at the 6th Annual Banking and Finance Conference of the Chartered Institute of Bankers of Nigeria (CIBN) in Abuja yesterday, pointed out that Obasanjo introduced the N20, N100, N200, N500 and N1,000 notes, yet inflation was low during his tenure.

Sanusi said: "I like General Obasanjo; he is a very successful farmer but a very bad economist. He has introduced more higher denominations in Nigeria than any other head of state. He did the N100 in 1999, N200 in 2000, did N500, I think, two years later and, in that period, inflation was low because it was accompanied by very tight monetary and fiscal policy reforms.

"So for somebody who has gone through that to stand up and say that introducing higher denomination will cause inflation... I don't know if somebody wrote the speech. I am trying to see him, or maybe he was misquoted. Because if he actually said that, then, he must be the single most important determinant of inflation in our history, given the number of notes he has introduced."

According to him, simply producing higher denominations cannot cause inflation if it is not accompanied by an increase in money supply. "We all know that you cannot have inflation simply by introducing higher denomination if you don't increase money supply, and yet we keep repeating the opposite."

The CBN governor said that the apex bank had reduced the cost of cash management from N49 billion in 2009 to N32 billion in 2011, adding that it planned to bring it further down to N25 billion by 2014.

"We started a project, over two years ago, aimed at reducing the overhead in the Nigerian banking industry by at least 30 per cent in a two-year period. That project involved shared services and cash management and cash production and data control and operations. It involved an increased use of technology; so you now have PoS terminals, ATMs, mobile banking, NIBSS transfer, the clearing days have been shortened," he said, adding that the CBN had looked at how it could be more efficient in the management of cash. "In 2009, we did a survey and saw that, of all the cash transactions done in banks, only 20 per cent were for more than N150,000, and that 10 per cent accounted for over 70 per cent of the value of cash. So a very small number of customers are the heavy users of cash and we pay a lot of money printing paper for them," he stated.

The CBN governor said the accounts were there for the record: the total cost of printing and minting all denominations of currency in Nigeria in 2009 at N47 billion, in 2011 at N32 billion and 2014 at N25 billion. He said that 50 per cent of the total cost of procurement could be saved.

Malam Sanusi said printing of the N5, 000 notes could not cost more than N2 or 3 billion.

He noted: "In the 1970s when the N20 note was introduced, N20 was the equivalent of $30. In 2013, when we introduce the N5, 000 note, N5,000 will be the equivalent of $30. It's the statistics. If we could buy $30 with one N20 bill in 1978, you now need 250 N20 bills to buy $30 and we have to print the whole250 notes, pay for the paper, pay for the ink, pay for the security features, for the transportation, for insurance, for clearing, for the bullion van for the ... processing, disposal..."

Leadership

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