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2018: Nigeria’s Economic Outlook

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As a year winds to a close, it has become the tradition of analysts and pundits to attempt an appraisal and possibly hazard forecasts of how events are likely to pan out in the coming year.
In the following exercise, effort will be channelled at attempting an economic preview of 2018 but not before a retrospective examination of some of the events that shaped Africa’s largest economy in the last 365 days.
2017 Review
As is fast becoming the norm, not a few Nigerians crossed into 2017 while still in queues to withdraw cash at the Automatic Teller Machine (ATM) points across the country. Some three million of their compatriots even bore the additional burden of contemplating the sudden decision of promoters of the Russian-based Ponzi scheme, MMM, to suspend payment of maturing stakes in its Nigerian operation. There was no shortage of Happy New Year wishes, all the same.
The World Bank had projected the country’s economy to grow by 1.0 per cent in 2017 following the carryover of a sub-zero (about -1.7 per cent) real Gross Domestic Product (GDP) growth rate from the 2016 recession. The most important policy challenge for the Federal Government was, therefore, to take the country out of recession within the year; and all this was at a time the naira traded at N490 against the US dollar at the bureau de change (BDC) while exchanging for N497 at the parallel (black) market, up from about N516 per dollar in Q4 2016.
The government’s 2017 Appropriation Act tagged ‘Budget of Recovery and Growth’ was for a total expenditure of N7.298 trillion with $42.5 per barrel crude oil price benchmark; 2.5 per cent GDP growth rate forecast; forex rate of N305 per dollar; and 2.2 million barrels per day crude oil output. External reserve had plummeted to $26.4 billion while inflation rate in Q1 2017 reached 18.72 per cent, the highest since 2005.
In the volatile oil and gas sector, the Organisation of Petroleum Exporting Countries (OPEC) and some non-OPEC oil producing nations led by Russia had agreed to a country-by-country quota cut amounting to 1.2 mbpd shortfall as to shore up the global price of petroleum. This arrangement excluded Nigeria which was already producing at 1.5 mbpd, far below her 2.2 mbpd output quota following blowout of oil and gas infrastructure by militant Niger Delta youth forcing some major oil firms to declare force majeure on their future deliveries via the Bonny and Qua Iboe export terminals. But by mid-2017, Shell’s Trans Forcados Pipeline had been repaired and its force majeure lifted which enabled indigenous oil operators like Seplat, Neconde and Shoreline to resume pipeline transportation of their marginal field outputs to the export terminal at Bonny.
Another notable event in the oil sector was the shuttle diplomacy embarked upon by the then Acting President Yemi Osinbajo to some oil host communities in the Niger Delta states aimed at ensuring security and protection of oil infrastructure as well as reassure the people on government’s determination to develop the region. There is no doubt that this has served to calm frayed nerves, especially among the militant camps. In fact, if not for the latest statement issued by the Niger Delta Avengers (NDA) in which they threatened to resume hostilities against oil firms and their installations, including Total’s Egina FSPO being moved from South Korea, 2017 was largely devoid of any destructive activities by the Avengers and their ilk who are angered by the non-implementation of any of the items in the 16-point agenda submitted to the Presidency by Niger Delta leaders since November 1, 2016.
The non-oil sector did not perform as expected in 2017. Nigeria exited recession in Q2 2017 with 0.56 per cent GDP growth rate which was later revised to 0.72 per cent (on account of oil output revision which in turn led to a review of oil GDP). According to National Bureau of Statistics (NBS) data, real GDP grew 1.40 per cent in Q3 2017. In Q2, non-oil growth was 0.45 per cent, but this would later shrink to -0.76 per cent in Q3. Meanwhile, oil sector real GDP growth grew from 1.64 per cent year-on-year (y-o-y) in Q2 to 25.89 per cent (y-o-y) in Q3.
Similarly, agriculture which the NBS touts as a growth driver in the non-oil sector also underperformed in 2017. It moved from a growth rate of 4.54 per cent in Q3 2016 down to 3.39 per cent in Q1 2017, 3.01 per cent in Q2 2017 and 3.06 per cent in Q3 2017.
The Central Bank of Nigeria (CBN’s) Anchor Borrowers Programme which reportedly transformed peasant dry season rice farmers in Kebbi and a few other Northern states to instant millionaires in 2016 was not replicated in other regions as to boost agriculture and income generation. The Kebbi experience is, however, being tapped into by Lagos State through a collaboration that has given birth to large-scale production of Lake Rice, a brand owned by both states.
While addressing the nation on May 29, 2017, President Muhammadu Buhari had assured that the River Basin Development Authorities would be revamped as a way of boosting food production and guaranteeing food security. It is believed that these agencies and their supervising ministry had made the necessary budgetary requisitions toward actualising this lofty goal.
Still on the non-oil sector, the Nigerian Communications Commission (NCC) dragged its penalty against MTN into 2017 over the sale of pre-registered SIM cards; but while this raged, the NCC and CBN stepped in to save a rival firm, Etisalat, and its 4,000 employees when the latter’s parent body, the Emerging Markets Telecommunications Services (EMTS) of United Arab Emirates, pulled out of Nigeria, abandoning its Nigerian subsidiary at the mercy of a banking consortium to which it owed an outstanding balance of $227 million, N113 billion out of a total credit of $1.2 billion. Etisalat would later change its name to 9Mobile and is currently being considered for sale to interested investors. Meanwhile, customer complaints remained the same across networks in 2017; these included poor services, overbilling, unsolicited messages and frequent re-registration of SIM cards.
During the year under review, the Federal Government’s Voluntary Assets and Income Declaration Scheme (VAIDS) generated N17 billion barely seven months into its nine months life span with a prospect of an additional N6 billion before December 31, according to Tunde Fowler, executive chairman, Federal Inland Revenue Service (FIRS). Apart from the recovery of otherwise unremitted taxes from undeclared assets and incomes, VAIDS is also intended to serve as an amnesty programme to tax defaulters as they are expected to utilize the window to regularize their tax status and benefit from forgiveness of any overdue interests and penalties or even prosecution.
The Nigerian Stock Exchange (NSE) recorded substantial progress in the preceding year, going by its major indicators. For instance, its All-Share Index (ASI) grew from a recession weary 26,870 points to 39,257.53 points in early December; Market Capitalisation (value of listed equities) was N13.67 billion also in December.
Power generation staggered during the year even as there were no disruptions in gas supply resulting from militant activities. Output climbed from an average of about 2,755 MW in 2016 to a peak of 7000MW in Q3 2017. But as hinted by Babatunde Fashola, minister of Power, Works and Housing, the distribution companies (DISCOs) are only willing to purchase 5000MW, their argument being that they buy at N68KWh and are compelled to sell at N31.58KWh.
2018 Outlook
Although annual budgets have been implemented shoddily since the inception of the present Federal Government, it would not be out of place to suggest that the 2018 spending blueprint holds some economic potential. What with a whopping expenditure of N8.612 trillion couched on a Medium-Term Expenditure Framework (MTEF) of 2.3 mbpd crude oil output; $45 per barrel oil price benchmark; 3.5 per cent GDP growth rate; and at a naira exchange rate of N305 per dollar. Also instructive is President Buhari’s charge for the National Assembly members to expeditiously pass the bill in order for the country to return to a more predictable January-December budget cycle. Indeed, with 2018 serving as an electioneering year, it will not be surprising to notice gear shifting by politicians to fast-track policy implementation. Buhari may have set the ball rolling, if you asked me.
Nigeria’s 2018 budget is proposing a 2.3 mbpd oil production, more than the 1.8 mbpd cap allowed her by the OPEC/non-OPEC oil producers’ pact. This can only suggest that the government intends to produce 500,000 bpd of condensate.
The outlook for the oil and gas industry appears good in 2018 only to the extent that oil price is steadily tending north, creating a widening gap between it and the $45 benchmark. The only worries here will be how to continue to leash the creek warriors of the Niger Delta while also curbing incessant strikes by oil sector employees.
Investor confidence is very likely to soar in the new year following the sustained weekly interventions by CBN to make dollar available at the various foreign exchange windows, especially the Investors & Exporters window which was reported to have garnered $20 billion worth of activities in the preceding year. Related to this is Nigeria’s climb by 24 places to the 145th position on the World Bank’s Doing Business Index.
Again, the CBN’s suspension of its Open Market Operations (OMO) following the refinancing of its short-term securities is expected to embolden cash-strapped private entities wishing to raise funds through corporate bond and commercial paper issuance as they now stand to attract better coupon rates than what is currently accruable from the apex bank’s treasury bills. Recall that Nigeria’s treasury bill yields dropped to 7 per cent on December 12 from 18 per cent after the Debt Management Office (DMO) announced that the debt instruments would be redeemed primarily using proceeds from the $500 million raised last November. The country had issued a dual-tranche $3 billion Eurobond in November out of which $2.5 billion is to part-finance the 2017 budget deficit and the balance used to buy back domestic debt.
Regarding the power sector, there are already reports that the Federal Government plans to expand electricity output this year to 9000MW through the establishment of 11 additional power projects across the country. But Nigerians seem not to be excited by such projects any more as any eventual gains therefrom are often stifled by the apparent obstinacy of the DISCOs which refuse to purchase and reticulate to the end users. Given the people’s seeming frustrations in this regard, it therefore goes without saying that mini grids and renewable energy sources would attract greater attention in 2018. The universities and a growing number of rural communities are already being powered through these sources.
Finally, government would be looked upon to actualize the new minimum wage regime for workers. Labour leaders will also be on trial as they negotiate with politicians in the build-up to the 2019 general elections. In all, 2018 is not likely to disappoint as the gains of the Federal Government’s 2017 – 2020 Economic Recovery and Growth Plan (ERGP) will have started becoming evident by the third quarter of this year. Happy New Year!

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NCDMB, Dangote Refinery Unveil JTC On Deepening Local Content

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The Nigerian Content Development and Monitoring Board (NCDMB) and the Dangote Petroleum Refinery and Petrochemical Company have inaugurated a Joint Technical Committee (JrefineryTC) aimed at advancing local content implementation during the operational phase of the 650,000 barrels per day  plant.
A statement from the Directorate of Corporate Communications of the Board noted that the inauguration ceremony took place at the Dangote Free Trade Zone, Ibeju-Lekki, Lagos State.
The statement also said the inauguration marks a pivotal moment in fostering strategic collaboration between the both institutions, and was a significant move to reinforce local content development in the oil and gas sector.
Presided over by the Executive Secretary of the NCDMB, Engr. Felix Omatsola Ogbe, and the Group Vice President, Oil and Gas, Dangote Group, Chief Edwin Devakumar, the event featured the formal sign-off of the Committee’s Terms of Reference (ToR), a guided tour of the refinery, other critical facilities, and the official commencement of the JTC’s responsibilities.
According to the Board, the visit also featured the presentation of the certificate of the Nigerian Content Downstream Operator of the Year Award won by the Dangote Petroleum Refinery and Petrochemical Company at the inaugural ‘Champions of Nigerian Content Awards’ held recently in May.
The NCDMB’s boss made the presentation to the President of the Dangote Group, Alhalji Aliko Dangote, who expressed delight at the recognition, noting that he would display the certificate proudly at his office.
Ogbe congratulated the Dangote Group on the successful development and commissioning of the largest single train refinery in the world, as well as petrochemical and fertiliser plants, describing the projects as a historic milestone not for Nigeria alone, but for the entire continent.
He emphasized that the Dangote Refinery stands as a testament to the success of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010 and the transformative potential of Nigerian-led industrial projects.
“At an optimal daily production capacity of 650,000 barrels, this refinery will significantly enhance Nigeria’s energy security and contribute to the supply of refined petroleum products across West Africa.
“Nigerians, have to own the plant, we have to make sure that the plant works well. We have to secure it, we have to maintain it. The NCDMB would continue to collaborate with Dangote Petroleum Refinery”, Engr  Ogbe said.
Highlighting the need to ensure more value retention in the sector, as mandated by the Nigerian Oil and Gas Industry Content Development Act (NOGICD) 2010, the Board’s helmsman demanded compliance with Sections 32 and 33 of the NOGICD Act, with particular reference to local manpower utilization and requirements for NCDMB’s approval prior to the engagement of expatriates.
“The NOGICD Act stipulates that no expatriate can be employed in any organization in the oil and gas industry without the prior approval of the NCDMB. We will work with you, We’ve to protect jobs for Nigerians. It’s critical to job creation, skills development, and national capacity building in line with the ‘Renewed Hope Agenda’ of President Bola Ahmed Tinubu”, he said.
He commended the firm for training and employing Nigerian engineers, saying the collaboration will ensure that qualified Nigerians were given opportunities across all operational roles, while also urging the Dangote Petroleum Refinery and Petrochemicals to support the Board’s initiative which aims at developing oil and gas industrial parks across the country to foster local content and manufacturing in the sector.
He noted that the Nigerian Oil and Gas Parks Scheme (NOGaPS) seeks to create an enabling environment for Small and Medium Enterprises in the sector.
“NOGaPS was conceived by the Board to develop facilities close to oil fields where manufacturing of oil and gas components, as well as research and development, can be carried out.
“We would like Dangote to support one of our major activities, which is the oil and gas industrial parks scheme. The parks are aimed at creating an enabling environment for SMEs in the industry to do fabrications and create more jobs for Nigerians”, the NCDMB’S boss stated.
In his welcome address, the Dangote Group Vice President, Devakumar, highlighted that the refinery project and NCDMB have been working together, promoting local content development during the construction stages of the project.
“We can’t say we have achieved everything, because there is opportunity to do more. We’re grateful to the NCDMB for all their support and advice.  As entrepreneurs, we’re trying to optimise costs. It’s a Nigerian company, it’s also an entrepreneur-driven company. As a Nigerian company, the focus will be on Nigerian content. As an entrepreneur-driven company, it will be cost-focused”, he noted.
Devakumar underscored the long-standing commitment of the Dangote Group to national development and capacity building, saying that the Group’s vision is to grow Nigeria’s industrial landscape.
High points of the visit, according to the Corporate Communications Directorate of the NCDMB, was the inauguration of the Committee members.
The statement from the NCDMB further added that the committee is to ensure the implementation of local content in the refinery’s operations, while its core objectives include promoting the use of Nigerian skilled manpower, services, and locally sourced materials in compliance with Section 3 of the NOGICD Act.
The Tide learnt that the committee will also support Dangote Refinery in aligning its operational procedures with the Act’s requirements.
In his acceptance remarks, Director of Corporate Services at NCDMB and Chairman of the Committee, Mr. Abdulmalik Halilu, expressed gratitude to the leadership of both organizations, reiterating the Committee’s dedication to upholding the highest standards of local content enforcement and fostering measurable outcomes that will benefit the nation’s economy.
Ariwera Ibibo-Howells, Yenagoa
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Food Security: NDDC Pays Counterpart Fund  For LIFE-ND Project

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The Managing Director of the Niger Delta Development Commission (NDDC), Samuel Ogbuku, says the commission has paid its counterpart fund for the Livelihood Improvement Family Enterprise Project to ensure food security in the region.
The LIFE-ND project is an agriculture intervention project sponsored by the Federal Government, the International Fund for Agricultural Development, and the NDDC to boost food security in the region.
Mr. Ogbuku disclosed this while fielding questions at the commission’s 25th anniversary world press briefing  in Asaba, Delta State.
He stated that the commission has equipped and trained farmers in the region on best practices, adding that it has also established Niger Delta Chambers of Commerce with a commitment of N30 billion, but has released N5 billion to encourage commerce and entrepreneurship in the area.
According to him, agriculture is among the next phase of the commission’s programmes aimed at addressing food security in the region.
“Our target is to use agriculture to fight criminalities in the Niger Delta region”, he said.
The NDDC boss said the commission would hold a retreat to marshal plans to enhance the cultivation of rice, oil palm, cassava, and maize for industrialisation.
He also disclosed that its fund allocation from the Federal Government has improved, adding that funding from International Oil Companies has also increased, with greater compliance.
Ogbuku revealed that although its revenue has improved, the commission had thought it wise not to borrow but to deploy the surplus to execute more projects.
According to him, the commission has gone digital in its documentation and data generation to address its human capital development projects, ensuring the even deployment of resources, which allows people to take turns being trained in their chosen profession.
He stated that the NDDC was committed to addressing environmental challenges in erosion-prone areas in Edo, Delta, and other states, contingent upon the availability of funds.
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Replace Nipa Palms With Mangroove In Ogoni, Group Urges FG, HYPREP

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A concerned group of stakeholders under the auspices of Khana Coastal Communities has made a passionate appeal to the Federal Ministry of Environment and the Hydrocarbon Remediation Restoration Project (HYPREP) to include the removal of Nipa palms which has taken over the positions of mangroves in the area as part of the ongoing Ogoni Clean Up Exercise.
The group, which decried the invasive and destructive effects of Nypa fructicans, commonly known as Nipa palms, on the ecosystem of the affected communities, made their appeal in a Press Statement issued shortly after the  inspection and survey of the creeks and coastlines of  affected communities.
The communities are Kwiri, Kereken, Kaa, Gwara, Sii, Kpean, Tehnnama, Bane, Kalaoku, and Opuoku, all in Khana Local Government Area of Ogoni, Rivers State.
Signed on behalf of the affected communities by comrades Emmanuel Goteh Bie, Raymond Nwibani, and Chief Barineka Tonwe, the statement emphasized the need for urgent intervention to clear the Nypa fructicans and replace them with mangroves which provided sustainable habitat for aquatic species in the affected communities.
The group commended the Federal Ministry of Environment and HYPREP for their commitment to the Ogoni cleanup process and urged all stakeholders involved in the process not to renege on their complementary roles.
The statement read in part: “As you have seen, the Nypa fructicans has taken over our creeks, displacing native mangroves and aquatic life. The impact on our communities has been severe, with many of our people struggling to make a living due to the depletion of fish and other aquatic resources.
“We commend the Hydrocarbon Pollution Remediation Project (HYPREP) for its efforts in restoring native mangroves in Ogoni, particularly in the Bomu Community. However, we are alarmed by the unintended consequences of removing invasive Nypa fructicans, which has led to the disappearance of fish and aquatic life, threatening the livelihoods of our coastal communities.
“We believe that the removal of Nypa fructicans and replanting of native mangroves will help revive our aquatic life and sustain the livelihoods of our people.”
The group passed a vote of confidence on the Minister of Environment, Balarabe Abbas, and HYPREP Coordinator, Prof. Nenibarini Zabbey, for what it described as their unwavering efforts in ensuring the success of the Ogoni cleanup exercise.
They  called on the Federal Government to release their counterpart funding to HYPREP without delay to sustain the pace of progress recorded in the clean up process.
“The cleanup exercise is commendable, and any delay in funding could stall the progress and undermine the efforts of all stakeholders. We urge the government to prioritize the Ogoni cleanup exercise and provide the necessary support to ensure its success”, they stated.
They also used the opportunity to caution against the antics of self-inflicted activists or bodies that might attempt to hijack the cleanup agenda and create unnecessary agitation, and assured the total support of the affected  communities to HYPREP’s activities to enhance the holistic success of the Ogoni clean up exercise.
Bemene Taneh
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