Opinion

Petrol Price Reduction to ₦125/Litre… Laudable yet Questionable

Reeling from the current disruptions caused by the COVID-19 pandemic, fiscal and monetary policymakers are announcing measures to support the economy. The FG through the Petroleum Products Pricing Regulatory Agency (PPPRA) reduced the price of petrol for the first time since 2015 to ₦125.0/litre from ₦145.0/litre, effective March 19, 2020.

Coronavirus: Coordinated action, key to stability in global economy – IMF

The Managing Director, International Monetary Fund (IMF), Kristalina Georgieva, says as COVID-19 (Coronavirus) spreads, increased coordinated action is key to boost confidence and provid stability to global economy.

She said this in a publication titled “Policy Action for a Healthy Global Economy”, part of a special blog series on the response to the coronavirus.

Georgieva said that while quarantining and social distancing was the right prescription to combat COVID-19’s public health impact, the exact opposite was needed to secure the global economy.

Telecoms: Diving into Nigeria’s New SIM Card Policy

According to press reports last week, the Federal Government of Nigeria (FGN), via the Minister of Communications and Digital Economy, issued a directive to the regulator of the telecommunications sector, the Nigerian Communications Commission (NCC), to revise the policy on SIM card registration and usage. The Minister stated that the policy update was based on the need to combat the spate of insecurity in Nigeria. In our view, this will have a neutral effect on telecoms companies (telcos) earnings in the near-term.

The Petroleum Industry Bill (PIB) …So Much Noise, So Little Substance

Nigeria’s legacy of inaction in passing urgent reforms is perhaps best captured by the Petroleum Industry Bill (PIB). The Bill is over a decade in waiting since the original version was put forward by the Executive in 2008. The most recent update was the split of the comprehensive Bill into four parts in 2015 to ease passage. The new versions are the Petroleum Industry Governance Bill (PIGB), Petroleum Host and Impacted Community Bill (PHICB), Petroleum Industry Administration Bill (PIAB) and Petroleum Industry Fiscal Bill (PIFB).

Nigeria in the New Decade: Nothing Ventured, Nothing Gained

The Nigerian economy suffered mixed fortunes in the past decade. In the first half of the decade, an average growth of 6.1% drove unemployment to a low of 5.1%. This was on the back of peak oil prices and stable oil production, which supported oil revenues and a strong exchange rate. In turn, inflation was relatively low, averaging 10.7%, due to a strong currency. However, fiscal and structural reforms were on the backburner while fiscal buffers meant to smoothen budget spending during harsh times were emptied.

Power Sector Tariff Review: Laudable but Success Rests on Effective Implementation

Following the updated Multi-Year Tariff Order (MYTO) as at year-end 2019, the Nigerian Electricity Regulatory Commission (NERC) approved an upward review (starting January 1, 2020) of electricity tariffs paid by consumers across the country. The adjustment was in line with the bi-annual review provided in the MYTO 2015 (as amended). The new update covers an estimated tariff shortfall of ₦534.4bn for 2020, which the government would cover. Hence, implementing the recommended tariff change would ease the burden of electricity subsidies on government’s finances.

2020 Macroeconomic Review & Outlook: At the Cliff's Edge

The global economy faces more turmoil in 2020, but we remain largely optimistic in our outlook, given the continued attempts to find a lasting resolution to the Sino-US trade war. More so, supportive fiscal and monetary policies across major economies, together with structural realignments, should steer the global economy away from a recession, and thus bolster investors' appetite for risk assets.

Moody’s Negative Outlook… A Reflection of Current Realities

Nigeria suffered an outlook downgrade from stable to negative by Moody’s. Increasing fragility in public finances and sluggish growth prospects, which pose great risks to government's fiscal strength and external position were the main concerns. However, the rating agency affirmed the B2 long-term local and foreign currency issuer ratings, the B2 foreign currency senior unsecured ratings, and the (P) B2 foreign currency senior unsecured MTN programme rating.

Q3:2019 GDP Report: Sustained Expansion in the ICT Sector Lifts Economic Growth to 2.3%

The Q3:2019 GDP report published by the National Bureau of Statistics (NBS) revealed soft recovery in economic growth at 2.3% Y-o-Y (vs 2.1% Q2:2019 as revised); the highest since Q4:2018, driven by a slow but increasing growth in the non-oil sector. Growth in the oil sector slowed at 6.5% Y-o-Y in Q3:2019 (vs 7.2% Q2:2019). We attribute this to a weak base given a 5.2% Y-o-Y increase in oil production to 2.04mbpd, also higher by 1.0% on a Q-o-Q basis.

Police ₦16.8b recruitment plan: the battle for official largesse

The current brouhaha rocking the Nigeria Police Force (NPF) and its Service Commission in the recruitment of 10,000 constables has somewhat shown what the real battle is all about. This is a total contrast to the cheers from the College of Policing in the United Kingdom that greeted the recent plans by Prime Minister Boris Johnson to recruit 20,000 new police officers.

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