Business

Nigeria’s Economy In 2013: Great Outlook, Tame Result

Published

10 years ago

January 1, 2014

With a budget bill of N4.987 trillion pending at the National Assembly, coupled with the early appearance of some positive macro economic twinklers in the horizon at the twilight of 2012, there was no doubt that many Nigerians had hoped for a smoother outer for the country’s economy in 2013.

They had probably reckoned with a rising international crude oil price that would expand Excess Crude savings following the stretching of the Executive’s recommended benchmark price from $75 per barrel to $79 per barrel by the National Assembly.

In their outlook for 2013, Nigerians had hoped that the issue of production losses resulting from oil theft and pipeline vandalism would be tackled to a very reassuring level.

All these did not happen. Again, nobody foresaw the global economic effects of a temporary government shutdown in the United States based on bipartisan bickering over the raising of Washington’s borrowing limits.

The overall effect of these and other unforeseen factors was a frightening drop of Nigeria’s Excess Crude Account from about $11.5 billion at the end of 2012 to less than $5 billion in mid-November 2013.

Even so, the International Monetary Fund (IMF) wants Nigerians to believe that the country’s economy performed strongly in the preceding year. Part of a statement issued by Gene Leon, the Fund’s senior resident representative in Nigeria, at the end of a recent visit of IMF officials to the country read as follows:

“Nigeria’s economy has continued to perform strongly in 2013. Real GDP grew by 6.8 per cent in the third quarter of 2013 (compared to third quarter 2012), supported by robust performances in agriculture, service and trade. Oil theft/production losses have adversely impacted export receipts and government revenues, leading to a significant drawdown from the Excess Crude Account. Inflation declined to 7.8 per cent (end-September 2013) from 12 per cent at end 2012, in part owing to lower food prices and monetary policy implemented by the Central Bank of Nigeria (CBN). The exchange rate has been stable, and the banking sector is well capitalised with low levels of non-performing loans…”

It is convenient to classify Nigeria among the world’s fastest growing economies, especially with a gross domestic product (GDP) that is increasingly being driven by the non-oil sector and still targeting 7.5 per cent in 2014. But while a sector-by-sector review of major economic events in 2013 may not alter the figures, it will certainly reveal that there were also some hard knocks here and there.

Agriculture

Nigerians stepped into 2013 with large portions of their farmland still recovered by the massive flood of 2012. Even up to March, water was yet to fully recede from the alluvial banks of some major rivers in the country. Nor had the affected farmers returned from their various refugee camps to fully engage in any meaningful farming activities.

Not much was also heard about the Federal Government’s plan to distribute flood-resistant seeds and the controversial 10 million mobile phones to farmers across the country.

The Nigeria Incentive-based Risk sharing System for Agricultural Lending (NIRSAL) continued to thrive on paper just like its precursor, the Agricultural Credit Guarantee Scheme (ACGS). Banks have consistently refused to finance local farmers in spite of the Central Bank of Nigeria (CBN’s) readiness to underwrite such funds in the event of payment defaults.

The only cheering news from this sector came in the form of some major investments in fertilizer production by companies like Dangote Group, Indorama Eleme Petrochemicals and Notore Chemicals.

Insecurity in the country, especially the Boko Haram insurgency in the North, impacted negatively on the distribution of farm produce. The high cost of some farm produce like yams, cereals, vegetable fruits and livestock was attributed to this ugly development.

Banking/Financial Services

The banking sector remained stable all through the year as the CBN expanded its cashless policy beyond Lagos and Abuja to five states, including Abia, Anambra, Kano, Ogun and Rivers States.

One discovery in the year that was capable of causing panic among the banking public was the finding that 70 per cent of the sector was being controlled by the five biggest banks in terms of asset base and profit earnings. These are First Bank, Zenith Bank, UBA, Access Bank and GTBank.

The N100 Automated Teller Machine (ATM) charge for every interbank withdrawal was abolished during the year, likewise the N10 per SMS charge which was reduced to N4.00 even as complaints abound that the deposit money banks (DMBs) have introduced other hidden charges to augument.

ATM users were also known to have expressed their year-round frustrations with the cash dispensers. In fact, matters got to a head during the Yuletide as customers wandered in their droves from one bank branch to the other searching for functional machines. Of course, this led to overcrowded banking halls in some cities and created room for banks to surcharge those taking cash below the stipulated minimum over-the-counter withdrawals (mostly N20,000).

The CBN also directed that banks increased their cash reserve ratio (CRR) from 12 per cent to 50 per cent, drawing mainly from the balances of government ministries, departments and agencies (MDAs) as a way of mopping up the huge pile of idle funds domiciled with the banks. Apart from this monetary tightening measure, the apex bank had ensured macroeconomic stability by retaining the other monetary policy rates. It had held interest rate at 12 per cent, inflation rate at 7.8 per cent, cash reserve ratio at 12 per cent (except for public funds) and foreign exchange rate at around N157/dollar.

The Asset Management Corporation of Nigeria (AMCON) was not able to conclude the sale of any of the three nationalized banks in spite of claims of growing foreign investors’ interests in the banks. The banks are Mainstreet Bank (formerly Afribank), Keystone Bank (Bank PHB) and Enterprise Bank (Spring Bank).

The Capital Market

The 2013 Federal Government budget was not meant to benefit the Securities and Exchange Commission (SEC) following the refusal of the House of Representatives to approve allocations to the commission on account of its call for the Director General, MS Arunma Oteh, to resign for what the discerning public saw as a veiled vendetta for her attempt to disparage an honourable member of the hallowed chamber.

As indicated by the commission, this unwarranted punishment would naturally affect its demutualization programme for the Nigerian Stock Exchange (NSE) while also hampering the payment of staff salaries and benefits.

Nevertheless, capital market activities were reported to have witnessed an upswing due mainly to improved earnings and investor confidence in the ability of the CBN and other macro-economic managers, coupled with the substantial inflows of foreign investors who took advantage of the steady growth in the country’s domestic business environment.

The equities market provided the lead as the capital market sustained its rally for the most part of the year. The stock market’s main indicator, the All-Share Index (ASI) rose by 34.9 per cent from 28,079 on the last day of 2012 to 37,884 in mid-November 2013. Market capitalization was said to have increased by about the same margin (35 per cent) from N8.97 trillion to a little above N12 trillion in the same period.

Also in the outgone year, the United States made a $50 million direct investment in Nigerian stocks. A senior American envoy in Nigeria was said to have confirmed this during a courtesy visit to the Nigerian bourse in October.

The Power Sector

At last, the long-awaited privatisation of unbundled Poer Holding Company of Nigeria (PHCN) subsidiaries was finalised in 2013. In all, 10 electricity generating companies (GENCOs) built under the National Independent Power Projects (NIPP) scheme by the three tiers of government and 15 distribution companies (DISCOs) were sold to private investors who received their licences and certificates of ownership early October.

Discussions have also been initiated for the sale of an additional 10 GENCOs built by the Niger Delta Power Holding Company of Nigeria (NDPHCN).

It is however sad to note that two months after the handover, Nigerians are yet to notice any difference in power supply, customer relations and operational style.

Industry

This is perhaps one sector where the government seems not to have achieved much on a grand scale. Apart from intervention funds to small and medium enterprises (SMEs) and other subsectoral allocations, not much went the way of the organized private sector firms which have continued to groan under double taxation.

The government’s new auto policy has been described as laudable, but its implementation plan is what analysts are skeptical about.

Telecommunication

The telecommunications sector was a major driver of the 2013 economy even as network subscribers decried the mainly poor services rendered by the telecoms firms all through the year.

Migration via the mobile number portability is yet to bring any relief to those who have attempted. Even mobile banking which this sector is well positioned to serve is still struggling to kick off in the country.

Ibelema Jumbo

Business

Fuel Scarcity: IPMAN threatens shutdown over bridging claims

Published

3 days ago

May 3, 2024

The Tide

The Independent Petroleum Marketers Association of Nigeria (IPMAN) Depot Chairmen Forum, has exonerated its members from the current fuel scarcity in the country.

According to IPMAN, this is caused by its inability to source petroleum products.

The IPMAN Depot Chairmen Forum also threatened to withdraw its services over non-payment of N200 billion bridging claims by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to its members, since 2022.

Alhaji Yahaya Alhassan, the Chairman, of the Forum said this while briefing newsmen in Abuja, yesterday.

Alhassan said the Nigerian National Petroleum Company Limited (NNPC Ltd.) was the sole importer of the product, but the marketers could not source products from NNPC Ltd. deport, rather from the private depots at high rate.

“We cannot buy fuel from the private depots at N950 and transport the product from Lagos to the North and other parts of the country with N2 million and still sell it at N900 or N1, 000.

“It is expedient for us to state that we are more pained by the non-availability of petroleum products in the country, which has given rise to another round of untold hardship for Nigerians.

“Contrary to claims that IPMAN members are hoarding Premium Motor Spirit (PMS) known as fuel, we would like to categorically state that PMS scarcity is wholly triggered by inability to get fuel from NNPC and not IPMAN,’’ he said.

Meanwhile, the NNPC Ltd. Chief Corporate Communications Officer, Olufemi Soneye said the disruption was due to logistical issues which had since been resolved.

“We currently have an availability of products exceeding 1.5 billion litres, which can last for at least 30 days. Unfortunately, we experienced a three-day disruption in distribution due to logistical issues, which has since been resolved.

“However, as you know, overcoming such disruptions typically requires double the amount of time to return to normal operations.

“Some folks are taking advantage of this situation to maximise profits. Thankfully, product scarcity has been minimal lately, but these folks might be exploiting the situation for unwarranted gain,’’ Soneye said.

He however, said the lines would clear out soon.

On the non-payment of bridging claims, the IPMAN forum said it was distressed and depressed by the laidback attitude of the NMDPRA towards the survival its member’s businesses, arising from its refusal in paying the claims.

“It is with deep frustration that we have assembled here today as the IPMAN Depot Chairmen Forum. It is also disheartening to note that some of our members have completely shut down businesses and retrenched employees.

“As businessmen and women, our members acquired bank loans to keep their fuel retail outlets running on a daily basis across the nooks and crannies of Nigeria in order to serve the teeming population of Nigerians,’’ Alhassan said.

He recalled that Sen. Heineken Lokpobiri, Minister of State Petroleum Resources (Oil), at a stakeholders meeting in February mandated the NMDPRA management to clear the entire debt in 40 days.

“However, today, we have crossed the 40 days’ time lapse given to the NMDPRA to clear the debt, and it is shameful to state that only the paltry sum of N13 billion has been paid, ignoring minister’s directive.

“We are not happy with the indiscriminate increment in the issuance and renewal of Sales and Storage Licence, by the NMDPRA, and the subsequent delays in acquiring the licence, which our members are recently subjected to.

“We are also calling on President Bola Tinubu to look into this unwholesome figure which is highly detrimental to our business and reverse it forthwith, as it is bound to impact negatively on the masses.

“We are poised to take far reaching decisions that may cripple the supply and sales of petroleum products across Nigeria if our demands are not met within the shortest period of time.

“We are collectively prepared to withdraw our services, shut down every single outlet, and suspend lifting of products forthwith till our demands are fully met, and the consequences will be terrible.

“We call on our members to however remain resolute and law abiding, even as we draw close to the immediate ultimatum for our demands to be met by the NMDPRA,’’ the chairman said.

Reacting to the IPMAN’s claims, the Acting Head, Corporate Communications, NMDPRA, Seiyefa Osanebi said the bridging claims payment was ongoing.

“The bridging claims payment is always an ongoing process,” she said.

Maritime

Shippers’ Council Registers 160 Port Operators

Published

7 days ago

April 29, 2024

The Tide

The Nigerian Shippers Council (NSC) says it has registered 160 Port stakeholders into its Regulated Port Service Provider and Users platform since the initiative began in 2023.
Executive Secretary, NSC, Mr Pius Akutah, made the disclosure on the sideline of a sensitisation programme by the commission for port operators in Lagos, with the theme, “Regulated Port Service Provider and Users”.
Represented by the Director, Consumer Affairs, Chief Cajetan Agu, Akutah emphasised the significance of the programme for stakeholders.
He said the sensitisation programme was the second edition after its commencement during the last quarter of 2023.
The Secretary said the 160 registered port operators consist of agencies, terminal operators, shipping companies, individual port users as well as service providers.
“We invited the ports stakeholders for enlightening them on the processes for online registration of Regulated Port Service Provider and Users.
“We have demonstrated to them how to register and how to make payment and we were able to present before them the various categories of the registration.
“The rate of payment is also in the registration. The payment of each group depends on the operation. A shipper pays N30,000, terminal operators and shipping companies pay N300,000, truckers also pay N30,000, while some pay N50,000 and N100,000.
“The Council was able to intimate them on the benefits, because port users benefit more as we help to interface on reducing port charges from time to time”, Akutah said.
He said that there was a need to continue to work with port operators to stop delays and eliminate high costs to make the port efficient.
Also speaking, the Deputy Director, Stakeholders, Service, NSC, Mr Celestine Akujobi, said “the sensitisation exercise was important for the council to enable us bring all the port stakeholders together”.
According to him, this is to avoid challenges during the implementation of the council’s responsibilities.
“By the time we introduce sanctions on defaulters, no operators will complain that he or she is not aware of the registration.
“I’m happy with the turnout of this sensitisation. This shows that the operators are well informed of the statutory friction of the council as the port regulator.
“The final implementation will commence as soon as we discover that all the operators have keyed into the portal.
“We are engaging other ports across the country and we’re hopeful that before the last quater of 2024, the council will implement sanctions on defaulting operators”, Akujobi said.
Earlier, Vice Chairman, National Association of Government Approved Freight Forwards (NAGAFF), Dr Ifeanyi Emoh, said port challenges were enormous, adding that they originated from some of the government agencies.

Emoh urged the council to look into regulating other government agencies, so that there could be a window through which they can collect port charges collectively instead of indiscriminately.

By: Chinedu Wosu