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MONDAY 18/4/2022 – FUEL SUBSIDY PUTS NIGERIAN ECONOMY AT HIGH RISK –WORLD BANK The World Bank says increasing fuel subsidy puts the Nigerian economy at a high risk as subsidy payments could significantly impact public finance and pose debt sustainability concerns. The Washington-based lender said this in a new biannual report known as Africa’s Pulse. According to the bank, Nigeria is projected to have a 3.8 per cent growth in 2022, adding that as an oil-dependent country, weak oil production hampers economic recovery. It added that the increasing fuel subsidy poses a high risk to the country’s economic growth, despite the increase in oil prices. The bank said, “Growth in Nigeria is forecast to increase to 3.8 per cent in 2022 and stabilise at 4 per cent in 2023-24. Real GDP growth was revised up by 1.2 percentage points for both periods compared with the previous forecast. Nigeria’s economy is still dependent on the oil sector. Oil-related revenue contributes 40 to 60 per cent of fiscal revenue, while oil and gas account for 80 to 90 per cent of total exports. “Weak oil production, below the OPEC quota, held back the recovery process. Although at a slower pace than the average seven per cent during the boom period, growth prospects for the Nigerian economy are somewhat bright thanks to high oil prices coupled with reforms initiated by the passing of the Petroleum Industry Act and the completion of the Dangote refinery expected in 2023. “Risk remains high on increasing fuel subsidies, which could weigh heavily on public finance and pose debt sustainability concerns. Nevertheless, public debt as a percentage of GDP is currently moderate.”   TUESDAY 19/4/2022 – IS DEREGULATION SOLUTION TO NIGERIA’S FOREIGN EXCHANGE RATE PROBLEM? Against the backdrop of debilitating domestic and exogenous shocks to the Nigerian economy in recent years, the foreign exchange market has experienced notable challenges which have elicited the attention of different stakeholders and economic agents. These challenges have included mounting pressure on the exchange rate and foreign exchange reserves against the backdrop of excessive demand for foreign exchange concerning supply (limited export earnings and capital inflows, and weak accretion to foreign exchange reserves). Options have been proffered to address the foreign exchange market crisis and the one that seems to be gaining traction recently is the call on the Central Bank of Nigeria (CBN) to liberalise or deregulate the foreign exchange market by letting the exchange rate be determined by market forces. The proponents put it forward as “a necessary option to achieve a dynamic equilibrium as opposed to the static equilibrium that pervades the current arrangement”, courtesy of a report on the front page of The Guardian of Monday, April 4, 2022 titled, ‘Amid pressure on the naira, experts proffer options to shore up forex”. Some even argue that “the foreign exchange market should operate like a commodity market where every operator buys and sells currencies at market price”. In this piece, I front-load my conclusion that foreign exchange market deregulation is a quick-fix and escapist option that does not address the fundamental factors of the foreign exchange market crisis.   WEDNESDAY 20/4/2022 – 10 BANKS LEND CUSTOMERS N2.9TN IN 12 MONTHS Between December 2020 and December 2021, the combined loan portfolio of 10 Deposit Money Banks in Nigeria rose by N2.9tn, data collated from their audited financial statements show. The banks are Stanbic IBTC, Fidelity Bank Plc, Sterling Bank, Wema Bank, First City Monument Bank, Access Bank Plc, Guaranty Trust Bank Plc, United Bank for Africa Plc, Zenith Bank Plc, and Union Bank Plc. The loans and advances to their customers grew to N17.63tn as of December 31, 2021, from N14.64tn at the end of 2020. This indicates an increase of about 20 per cent growth in their loan books. According to their financial statements, all the reviewed banks expanded their loan portfolios during the period. Loans and advances to customers, which account for the major proportion of the banks’ total assets, rose in 10 of the lenders. Nigerian banks’ loan books have grown in recent years on the back of the Central Bank of Nigeria’s push for more lending.   THURSDAY 21/4/2022 – EXTERNAL RESERVES RETURN TO GROWTH PATH, GAIN $243.83M Nigeria’s external reserves rose by $243.83m in 19 days, according to figures obtained from the Central Bank of Nigeria. The CBN revealed in its data on movement in reserves that the value rose from $39.54bn as of April 1, 2022 to $39.78bn as of April 19, 2022. The external reserves fell by $313m in March, after starting the month at $39.86bn, before falling to $39.55bn on March 30. The Governor, CBN, Godwin Emefiele, said at the last Monetary Policy Committee meeting that “The moderate accretion to reserves reflects the duality of Nigeria’s position as an oil exporter and importer of refined petroleum products.” A member of the Monetary Policy Committee, Prof. Mike Obadan, said for a long time, the oil sector had contributed over 90 per cent of the nation’s foreign exchange earnings and external reserves accretion. It has also been a significant contributor to the government’s naira revenue through crude oil and gas export receipts, he said. Obadan said, “But for some time now, this has not been so due to two factors: a huge volume of crude oil theft which has prevented the country from meeting even the OPEC-approved production quota, and the inability of the NNPC, for many months, to make any remittance from direct oil export sales into the Federation Account and external reserves account.   FRIDAY 22/4/2022 – MARKET SUSTAINS RALLY, GAINS N46 BILLION Bullish sentiments persisted in the equities sector of the Nigerian capital market, yesterday, as almost all the blue-chip companies recorded price appreciation, lifting market capitalisation by N46 billion. The all-share index (ASI) rose by 85.15 points, representing an increase of 0.2 per cent, to close at 48,223.86 points while the overall market capitalisation value gained N46 billion to close at N25.998 trillion. The upturn was impacted by gains recorded in medium and large capitalised stocks, amongst which are Berger Paints, PZ Cussons Nigeria, Skyway Aviation Handling Company, Eterna and Oando. On market outlook, GTI Securities Limited said: “The equity market maintained its bullish trend with the Oil & Gas sector dominating activities. We expect this positive trend to persist in the coming trading days.”