Category: Economy

The International Monetary Fund (IMF) has emphasized the importance of agile multilateral support in addressing common challenges related to debt vulnerabilities, climate change, and limited concessional financing, particularly for countries affected by shocks.

In a recent article on the IMF Blog, the Fund’s President, Kristalina Georgieva, highlights additional challenges posed by weakness in the manufacturing sector, financial fragilities, and global headline inflation.

According to the IMF’s projections in April, global growth for 2023 was forecasted at 2.8 percent, down from 3.4 percent in 2022.

The Asia-Pacific region is expected to contribute the majority, accounting for over 70 percent of the growth.

To effectively tackle these challenges, Georgieva emphasizes the need for global leaders to unite and address the worsening global headwinds collectively.

Drawing attention to countries like Zambia and Chad, the IMF’s President highlighted the potential for significant progress when the international community sets aside differences and works together.

It said by fostering cooperation and collaboration, countries can navigate these challenges more effectively and develop sustainable solutions.

The IMF further stressed the importance of concerted efforts and cooperation among global leaders to combat weak global growth, rising inflation, and other economic challenges.  

It said that by pooling resources and working together, countries can tackle these issues head-on, fostering stability, and paving the way for sustainable and inclusive economic growth.

 “But the work is not yet done. More effort is needed to accelerate the debt restructuring process through clear timelines, debt service suspension during negotiations, and improved creditor coordination on debt treatment for countries outside the Common Framework,” Georgieva said.

The Fund’s President further called on developed economies to support vulnerable emerging markets and low-income economies that are at the sharp end of multiple shocks and fundamental transitions.

She said, “Take climate change, where they have contributed very little to the problem, but are most vulnerable to the consequences. Or the cost-of-living crisis and high-interest rates, which take a disproportionate toll, pushing more countries toward debt distress and threatening development prospects. Add to this increasing economic fragmentation that could deprive them of the benefits of an integrated global economy that delivered high growth and raised living standards for billions of people.

“Taken together, these challenges mean countries will need more support in the months and years ahead—to ensure economic stability and get back on the path to income convergence with advanced economies. Strong multilateral institutions have a vital role to play in providing this support, especially IDA, the World Bank’s fund for low-income countries, and the IMF.”

She said the Fund will continue to support global efforts to navigate the present situation.

According to her, the Bretton Woods Institute will continue to adapt and respond with agility through both timely policy changes and stronger resources.

“The overriding priority is a prompt and successful completion of the 16th quota review: increasing the overall size of the IMF’s quota resources—which are critical for a robust global finance safety net— with mindfulness of how the global economy has evolved.

“This must be complemented by decisions to replenish the Fund’s concessional resources for vulnerable countries: a fully funded PRGT and a replenished Catastrophe Containment and Relief Trust that provides debt service relief when countries are hit by large shocks.

“In parallel, we are exploring reforms to our lending toolkit, including adjustments to precautionary instruments to better suit the needs of our membership. We are also looking at ways to better account for how climate change affects debt sustainability and to enhance our support for countries hit by climate-related shocks.

“Together, these steps will ensure the IMF remains an inclusive institution capable of serving the needs of its entire membership, especially vulnerable emerging and developing economies,” she added.

The plan by President Bola Ahmed Tinubu’s administration to make available N8,000 monthly to over 12 million households has continued to elicit reactions from Nigerians.

A cross-section of Nigerians have questioned the wisdom in the Federal Government doling out cash as they say that the process is not sustainable in the long run.

According to them, past experiences of cash transfers by the government hfailed to yield the intended result.

Founder of N.E.W Foundation, Dr. Kelechukwu Okezie, insisted that N8000 to 12 million Nigerians monthly to cushion the fuel petroleum subsidy removal is not the best way to go.

Okezie told NIGERIAN ANCHOR that the government should invest in massive food production considering the country’s high inflation rate.

Data by the National Bureau of Statistics (NBS) states that food inflation for the month of May rose to 24.82% on a year-on-year basis, 5.33% higher than May 2022 (19.50%).

He said, “Over 140 million Nigerians are within the poverty net and N8,000 is like a drop in the ocean. Let the government invest in food subsidies because the cost of food has gone high.

“Tinubu should create a consumer welfare board that monitors the cost of food and supports farmers with that sum. It will help have a ripple effect to support families. 

“Again, remove all forms of fees in schools, criminalize collection of any form of levy in schools and this will help solve the stress parents are going through.

“We have beggars on the streets, we have out of school children scavenging in the streets, these groups of Nigerians should be captured and given the support through accredited religious centres if we must ensure transparency and accountability.”

Similarly, writing on his verified twitter handle, social activist, Reno Omokri, while commending the federal government for the move, said the monthly payment should be on the condition that “children in recipient families must attend school and have their payment vouchers signed by the principal/headmaster of their school to prove that they attended school throughout that month; failure of which they will not be paid. 

“That way, Nigeria will reduce her current population of 20 million out-of-school children. And it will have an immediate impact on our economy, as educated children tend to be healthier, less likely to engage in terrorism and criminality, and also less likely to be teenage parents. 

“Furthermore, as a nation, we should not only give fish to people experiencing poverty. We should also teach willing Nigerians how to fish. 

“I, therefore, recommend to the President that he may want to provide free training and business grants (not loans, but grants) to at least half a million Nigerian youths to enable them to start up verifiable small and medium-scale enterprises.

“Nigeria’s situation is similar to that of the United States of the 1930s, and this was how President FDR Roosevelt empowered Americans through the New Deal. 

“In that way, the President will help Nigerian youths to help themselves as well as to help Nigeria. 

Legal Practitioner, Alex Uriri Esq, questioned the process that will be used to select the 12 million recipients of the cash transfers.

He said, “And how are the due beneficial recipients going to be responsibly and equitably selected? Please who knows of any or how many Isokos benefited from the Trader Money largesse? Same for the School feeding programme when students were locked down for months due to Covid-19 pandemic?”

On his part, a writer, Ubara Obaro said the money was too small considering the present inflationary trends.  

“12 million poor Nigerians receive 8k every month. That means receiving less than 300 hundred naira daily in an economy where 300 hundred naira cannot buy a packet of salt.

“Congratulations to the 12 million Nigerians. God don butter ona bread!” he said.

President Bola Tinubu has ordered immediate action to stem rising food prices and ensure sustainable food security in the country.

At a briefing in Abuja by Presidential Adviser on Special Duties, Communications, and Strategy, Mr Dele Alake, Tinubu said the interventions were meant to have an immediate impact on the most vulnerable Nigerians.

“As a hands-on- leader who follows developments across the country every day, Mr. President is not unmindful of the rising cost of food and how it affects the citizens. While availability is not a problem, affordability has been a major issue to many Nigerians in all parts of the country.

“This has led to a significant drop in demand thereby undermining the viability of the entire agriculture and food value chain.”

To contain this trend, the President announced the declaration of a state of emergency on food security, and other measures.

He said all matters pertaining to food and water availability and affordability, now fall within the purview of the National Security Council.

The president said other initiatives would be deployed in the coming weeks to reverse the inflationary trend and guarantee future uninterrupted supplies of affordable foods to ordinary Nigerians.

“As with most emergencies, there are immediate, medium- and long-term interventions and solutions.

“In the immediate term, we intend to deploy some savings from the fuel subsidy removal into the Agricultural sector focusing on revamping the agricultural sector.”

He said that a Memorandum of Partnership between the government and agricultural stakeholders had been drafted, containing decisions taken and proposed actions.

“We will immediately release fertilizers and grains to farmers and households to mitigate the effects of the subsidy removal.

“There must be an urgent synergy between the Ministry of Agriculture and the Ministry of Water Resources to ensure adequate irrigation of farmlands and to guarantee that food is produced all-year round.”

He said that the country could no longer rely on seasonal farming for affordable food items.

“We shall create and support a National Commodity Board that will review and continuously assess food prices as well as maintain a strategic food reserve that will be used as a price stabilisation mechanism for critical grains and other food items.

“Through this board, the government will moderate spikes and dips in food prices.”

The president added that to achieve these objectives stakeholders have been drafted to support the interventions.

The stakeholders include National Commodity Exchange, Seed Companies, National Seed Council and Research institutes, and NIRSAL Microfinance Bank.

Others are, Food Processing/ Agric Processing associations, private sector holders and Prime Anchors, smallholder farmers, crop associations and fertilizer producers, blenders and suppliers associations.

“In furtherance of this, the federal government would engage security architecture to protect the farms and the farmers so that farmers can return to the farmlands without fear of attacks.

“The Central Bank will continue to play a major role of funding the agricultural value chain.”

Tinubu said that the government would activate its land banks to enable more Nigerians to return to farming.

“There are currently 500,000 hectares of already mapped land that will be used to increase the availability of arable land for farming which will immediately impact food output.”

He added that the “government will also collaborate with mechanization companies to clear more forests and make them available for farming

“There are currently 11 rivers basins that will ensure planting of crops during the dry season with irrigation schemes that will guarantee continuous farming production all year round, to stem the seasonal glut and scarcity that we usually experience.

“We will deploy concessionary capital/funding to the sector, especially towards fertilizer, processing, mechanization, seeds, chemicals, equipment, feed, labour, etc.

“The concessionary funds will ensure food is always available and affordable thereby having a direct impact on Nigeria’s Human Capital Index (HCI).

“This administration is focused on ensuring the HCI numbers, which currently rank as the 3rd lowest in the world, are improved for increased productivity.”

The President further said that the government would explore other means of transportation including rail and water transport, to reduce freight costs, thereby impacting food prices.

“The cost of transporting Agricultural products has been a major challenge due to permits, toll gates, and other associated costs.

“When the costs of moving farm produce is significantly impacted, it will immediately be passed to the consumers, which will affect the price of food.”

He added that existing warehouses and tanks would be revamped to cut waste and ensure efficient preservation of food items.

Tinubu also pledged to increase revenue from food and agricultural exports.

“As we ensure there is sufficient, affordable food for the populace, we will concurrently work on stimulating the export capacity of the Agric sector.”

He said to enhance trade facilitation, transportation, storage, and export will be improved by working with the Nigeria Customs Service.

According to him, the customs service has assured the government that the bottlenecks being experienced in exporting and importing food items as well as intra-city transportation through tolling will be removed.

The President stressed that the measures would bring about positive outcomes through massive boost in employment and job creation.

“Indeed, agriculture already accounts for about 35.21 per cent of employment in Nigeria (as at 2021), the target is to double this percentage to about 70 per cent in the long term.”

He said that this would be in line with his pledge to create jobs, as the initiative is expected to achieve between five to 10 million more jobs created within the value chain.

The jobs he said would come through working with the current 500,000 hectares of arable land and the several hundreds of thousands more farmlands to be developed in the medium term.

The president, therefore, called on all Nigerians to partner with the government to ensure the success of the strategic intervention.

“This administration is working assiduously to ensure that Nigerians do not struggle with their essential needs,” he added.

Tinubu assured Nigerians that the administration would not relent in its efforts “until all strategic interventions are deployed efficiently and effectively and until every household is positively impacted”.

The Senate has approved $800 million World Bank loan request made by President Bola Tinubu.

This followed the consideration of the loan by the Committee of the Whole during Thursday’s plenary.

Former President Muhammadu Buhari had, towards the tail end of his administration, forwarded the same request to the 9th Senate in May.

But the 9th Assembly could not consider the request before its tenure ended on June 11.

Tinubu, in a letter read by Senate President, Godswill Akpabio earlier during plenary, asked the 10th Senate to approve the same borrowing request.

The president, in the letter, explained that the loan would be used to scale up the National Social Safety Net Programme.

Tinubu’s letter reads: “Please note that the Federal Executive Council (FEC) led by President Muhammadu Buhari approved an additional loan facility to the tune of $800 million.

“This is to be secured from the World Bank for the National Social Safety Net programme. Copy of FEC’s extract attached.

“You may also wish to note that the purpose of the facility is to expand coverage of shock responsive safety net support among the poor and vulnerable Nigerians. This will assist them in coping with basic needs.

“You may further wish to note that under the conditional cash transfer window of the programme, the Federal Government of Nigeria will transfer the sum of N8,000 per month to 12 million poor and low income households.

“This is for a period of six months with a multiplier effect on about 60 million individuals.

“In order to guarantee the credibility of the process, digital transfers will be made directly to beneficiaries’ accounts and mobile wallets.”

Nigeria retained its position as Africa’s largest producer of Petroleum in June, pumping 1,298 million barrels per day, while production in Angola, Algeria and Congo dropped during the period under review.

Secondary sources put Nigeria’s crude output at 1,249 million barrels per day last month while recording 1,184 million barrels for May.

According to the Organization of the Petroleum Exporting Countries (OPEC) Monthly Oil Market Report, Nigeria increased its production output compared to the 1,277 million barrels per day it pumped in May of 2023.

Angola followed next, with Direct Communication stating the country produced 1,102 million bpd in June, lower than the 1,148 million barrels reported the month before.

However, Secondary Sources said Angola’s crude oil output increased slightly in the review month, rising from 1,111 million barrels in May to 1,119 million bpd in June.

Algeria’s Direct Communication showed that production declined to 957,000 barrels, from 973,000 bpd in May, while Congo recorded a slight dip to 262,000 barrels bpd last month, from 266,000 barrels.

Meanwhile, according to OPEC’s secondary sources, “total OPEC-13 crude oil production averaged 28.19 mb/d in June 2023, higher by 91 tb/d m-o-m. Crude oil output increased mainly in IR Iran and Iraq, while production in Angola declined.”

According to OPEC, “Nigeria’s economy grew by 3.3 per cent in 2022, but is forecast to decelerate in 2023. Growth in the first quarter of 2023 stood at 2.4 per cent year-on-year in the first quarter of 2023, after growth of 3.6 per cent in the fourth quarter of 2022, an indicator for this year’s anticipated slowdown.

“The seasonally adjusted first quarter of 20231 GDP growth rate on a quarterly basis even contracted by 0.8 per cent. Weakening growth in the services, manufacturing, and agricultural sectors are developments to be considered in the 2023 growth trend.

“Moreover, high inflation continues to burden the economy. Inflation data for May shows an ongoing acceleration, with an annual rate of 22.4 per cent year-on-year, compared with 22.2 per cent in April and 22 per cent in March. Food inflation has been a key factor in this rise, reaching 24.8 per cent year-on-year in May, after 24.6 per cent in April and 24.5 per cent in March.

“Consequently, the Central Bank of Nigeria lifted the key policy rate by 50 bp to 18.5 per cent in May, but this policy rate has remained unchanged since. Despite the challenges, May’s Stanbic IBTC Bank Nigeria PMI held up well, retracting only slightly to stand at 52.3 in June, after 54 in May and 53.8 in April.”

President Bola Tinubu has written the Senate requesting the approval of N500 billion for palliatives to mitigate the effect of the recent removal of fuel subsidy on Nigerians.

The request was contained in a letter to the Senate and was read by Senate President Godswill Akpabio during plenary on Thursday.

The letter is titled “Request for the amendment of the 2022 Supplementary Appropriation Act.”

And it reads: “I write to request the approval of the Senate for the amendment of the 2022 Supplementary Appropriation Act.

“The request has become necessary in order to among other things, source the funds necessary to provide palliatives to mitigate the effect of the recent removal of fuel subsidy on Nigerians.

“The sum of N500 billion had been extracted from the 2022 Supplementary Appropriation Act of N819,536,937,815 for the provision of palliatives to Nigerians to cushion the effect of fuel subsidy removal.”

Akpabio thereafter referred the letter to the Committee of the Whole for consideration.

The Naira on Tuesday dropped further, exchanging for N763 against the dollar at the Investors and Exporters window.

The Naira depreciated by 0.67 percent when compared with N768.17 which it exchanged for the dollar at the close of business on Monday.

The open indicative rate closed at N760.50 to the dollar on Tuesday.

An exchange rate of N841 to the dollar was the highest rate recorded within the day’s trading, before settling at N763.

The Naira sold for as low as 467 to the dollar within the day’s trading.

A total of 245.65 million dollars was traded at the official investors and exporters window on Tuesday.