A Federal High Court in Lagos tuesday adjourned till March 24, 2017, hearing in the suit filed by Miss Oluwatise Aderinokun, the eight-year-old and last child of the late founder and former Managing Director of Guaranty Trust Bank Plc (GTB), Olutayo Aderinokun, against the bank and six others over alleged manipulation of her late father’s shares.
Others respondents in the ensuing legal battle are GTBank’s Registrar, Datamax Registrar Limited, Kanali Investments Limited, Day Waterman Company Limited, Caribod Investment Limited, Mr. Babatunwa Aderinokun, and Investment One Financial Services Limited.
At the resumed hearing of the suit tuesday, the seventh defendant, Investment One Financial Services Limited, one of the vehicles used by late Aderinokun, to acquire shares in GTBank, informed the court that it had filed an affidavit of facts before to assist the court in the judicious determination of the plaintiff’s suit.
In the particulars of the affidavit of facts deposed to by one Mike Okoh, he averred that contrary to the averment of the sixth defendant, Mr. Babatunwa Aderinokun, that the third to fifth defendants companies, namely: Kanali Investment Limited, Day Waterman Company Limited and Cariboo Investment Limited were incorporated as asset holding companies and vehicles through which late Aderinokun acquired invested and held his asset while planning his Estates during his lifetime.
The deponent averred further that other shareholders and board of directors of the above mentioned companies constituting the first wife of the deceased, Mrs. Olufunlola Aderinokun, and the children of late Olutayo Aderinokun were fully aware of the deceased assets protecting strategy via corporate vehicles.
He further stated that none of them paid for the shares neither do they participated in the management of the companies during his lifetime but only him ran the affairs of the companies.
The deponent averred further that the incomes from the assets of the companies were enjoyed by late Aderinokun mixed with his personal incomes, as he used his personal incomes to purchase assets in the various companies, as his assets are intertwined with the corporate assets of the companies during his lifetime. He acquired his assets and GTBank’s shares in the name of the three companies, which by his Will, indicated that his GTBank’s shares held in the names of three companies be distributed equally by his children.
The issues regarding the distribution of his GTBank’s shares have been the subject of various discussions between the executors of his estates.
However, Olumide Aju, lawyer representing Babatunwa Aderinokun, urged the court to strike out the affidavit of fact as it cannot be placed within the realm of any law.
In the ensuing legal battle, Oluwatise Aderinokun who is suing GTBank and other respondents through her mother, Mrs. Salamotu Aderinokun, in a suit marked FHC/L/CS/1723/2015, is urging the court to declare that the recognition of three limited liability companies Kanali Investments Limited, Day Waterman Company Limited and Cariboo Investment Limited (the proxies), as being entitled to the rights accruing to the shares issued by GTBank, held in the proxies’ names and in the name of her late father, Olutayo Aderinokun, is wrong and breach of the implied contract between the defendants and her late father.
The plaintiff who is a minor, is also urging the court for an enquiry into what volume of her late father’s shares issued by GTBank were held in his name and the names the three companies, Kanali Investments Limited, Day Waterman Company Limited and Cariboo Investment Limited (being shares/Properties held in trust of the beneficiaries of her late father’s estate), as at the time of his death on June 14, 2011. And an account of the exact dividends due to the joint executors/trustees of her late father’s estate, being dividend accruals on the shares held in her late father’s names through the companies,
The plaintiff is also seeking a court declaration that the recognition of the proxies by the defendants, as being beneficially entitle to the rights of her late father’s shares (issued by GTBank), held in the names of the proxies, was done in dishonest assistance of the breach of trust of her late father’s Will by the said proxy companies.
She also want the court to make an Order of Specific Performance of the implied contract between her late father, Olutayo Aderinokun, and GTBank, and Datamax Registrar Limited, whereby the said defendants are to accord late Olutayo Aderinokun all the rights and, or beneficial interest in the shares purchased by her late father, and issues by GTBank in the name of his corporate vehicles used as the proxies.
An order of perpetual injunction restraining GTBank and other defendants in the suit from cknowledging/recognising the proxies as being the beneficial owners of the rights accruing to the shares held in their names in GTBank, and paying any sum declared as dividends accruing to her late father’s shares held in his name, and the names of the said proxy companies on the instructions of the directors on record.
The plaintiff, in her statement of claim filed before the court by her lawyer, Osaro Eghobamien (SAN) of Perchstone and Graeys, averred that upon the death of her father, he gave legacies and directive to his two wives and four children and her late father also appointed GTBank Asset Management Limited (now Investment One Financial Services Limited), and Mr. Babatunwa Aderinokun as joint Executors and Trustees, both whom were granted Probate on February 16, 2012.
She also averred that during the lifetime of her father, he had a peculiar manner of acquiring his assets, using the Proxies, among other corporate structures, rather than holding these assets directly in his own name, and that payments that were made for asset acquisition, or funds received in respect of the Proxy companies, were either paid from or into his personal accounts.
Wednesday, 1 March 2017
Tuesday, 28 February 2017
Lawmakers Bicker over Buhari’s ‘Sickness’
The lawmakers disagreed on whether it was appropriate to say President Muhammadu Buhari, who is currently on a prolonged vacation in the United Kingdom for medical reasons, is “sick” or is on “medical vacation”.
The main contenders were the Majority Leader of the House, Hon. Femi Gbajabiamila and the Chief Whip, Hon. Alhassan Ado Doguwa, both vocal supporters of the president.
Doguwa (Kano APC), while opposing a motion completely unrelated to Buhari, had described the president as sick.
The motion moved by Hon. Aliyu Madaki also from Kano, was calling for an investigation into the alleged harassment of members of the Kwankwasiya movement, a political group loyal to the former governor of Kano State, now Senator Rabiu Kwankwaso.
Madaki belongs to the Kwankwaso camp in the crises enveloping the ruling All Progressives Congress (APC) in Kano, while Doguwa has shifted loyalty from Kwankwaso to incumbent Governor Abdullahi Ganduje. Kwankwaso is rumoured to be eyeing the presidency in 2019.
Doguwa, in his argument, accused the Kwankwasiya group of fomenting trouble in the state and raising tension in an environment already on the edge due to the absence of Buhari.
He also considered it unwise that campaigning by the Kwankwaso group for the 2019 presidential polls in “a state as volatile as Kano” had already commenced.
“Our beloved president is sick abroad. These partisan activities are completely unnecessary. The sponsor of the motion failed to lay the facts of the issues as they are,” Doguwa said.
However, his use of the word “sick” did not go down well with Gbajabiamila who shouted “point of order”.
Recognised to speak by the Deputy Speaker, Hon. Yussuff Sulaimon Lasun, who was presiding, the majority leader demanded that Doguwa withdrew the contentious word.
“There is no factual basis for what he is saying, that Buhari is sick. The president is not sick. At best, he can say that the president is on medical vacation.
“There is a difference between being sick and going on a medical vacation,” Gbajabiamila said.
His point of order was what threw proceedings into a turmoil, as lawmakers raised their voices, with some saying there was no difference between going on a medical vacation and being sick.
Above the uproar, some said the president was sick, while others shouted that he was not.
It took several minutes to restore order at the plenary and resume proceedings.
Eventually, Lasun sustained the point of order, but elicited laughter from the lawmakers when he also used the word “sickness” while speaking about the president.
“Let me sustain the leader’s point of order. Ado-Doguwa, you should not lay emphasis on the sickness of our president because of the security implications,” Lasun said.
Madaki, speaking earlier on his motion, had accused the Ganduje administration of using the police to harass opponents and critics of the administration.
“This is like inviting anarchy and we must act quickly before the situation implodes. Even in Bauchi State, the police are stopping groups from conducting themselves peacefully,” he said.
Contributing to the motion, Minority Leader, Hon. Leo Ogor backed the argument that the police were being used by the powers that be.
He recalled that the police, without any justification, stopped a meeting of the Ahmed Makarfi-led members of the Peoples Democratic Party (PDP) two weeks ago.
“We came together as a party to review the decision of the Federal High Court (sic) on our party. The police came and blocked the whole place. I wept,” Ogor said.
Other members also accused the police of harassment in several states including Rivers and in the Federal Capital Territory (FCT).
The arguments led the House to summon the police commissioners of Kano, Rivers and the FCT.
Dangote Ends Nigeria’s Dependence on Imported Cement
Having ramped up cement output from its factories within Nigeria to nearly 30 million tonnes per annum, the Dangote Group tuesday announced that it had officially ended the nation dependence on imported cement.
The company also hinted that it exported 400,000 tonnes of the product to other nations in 2016.
In its 2016 full year audited results presented on the floor of the Nigerian Stock Exchange (NSE) in Lagos yesterday, Dangote Cement sold 8.6 million metric tonnes of cement outside Nigeria, which is 54 per cent more than what was sold in 2015.
Analysts said the export is significant, given that the nation used to be a net importer of cement.
As at 2011, Nigeria was one of the world’s largest importers of cement, buying 5.1 million metric tonnes of foreign cement at huge expense to the country’s balance of trade.
The company’s Pan-African cement plants continued to perform well, contributing significantly to its turnover and profitability.
While presenting the results, the company’s Chief Executive Officer, Onne van der Weijde, assured the investors of better returns on their investment in the Dangote Cement.
According to him, “The new year has started well and we expect much higher profitability in Nigeria in 2017, even though we may not see the volume growth we achieved in 2016. I am confident that we will deliver an even stronger performance in 2017 as we increase market share and extend our reach across Africa.”
The economic challenges notwithstanding, Weijde revealed that Dangote Cement achieved sales and revenue growth of 25 per cent and consolidated its position as Africa’s leading producer of cement.
While sales from Nigerian operations increased by 13.8 per cent to nearly 15.1 million metric tons at a growth rate far higher than the country’s GDP, which fell in 2016, its total revenue leaped by 25.1 per cent to 615.1 billion
To the delight of the investors, Dangote Cement earnings per share increased by 4.5 per cent to 11.34 and the dividend payout to the shareholders also increased significantly by 6.3 per cent to N8.5 kobo per share.
Dangote Cement is Africa’s leading cement producer with nearly 46 million metric tons’ capacity across Africa.
It is a fully integrated quarry-to-customer producer with production capacity of 29.25Mta in Nigeria; Obajana plant in Kogi State is the largest in Africa with 13.25Mta of capacity across four lines; Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12Mta and Gboko plant in Benue State has 4Mta.
The company has also concluded arrangements to build new factories in Ogun State (3-6Mta) and Edo State (6.0Mta). Through its recent investments, Dangote Cement has eliminated Nigeria’s dependence on imported cement and has transformed the nation into a net exporter of cement serving neighbouring countries.
In addition, the company has invested several billion dollars to build manufacturing plants and import/grinding terminals across Africa. Its operations are in Cameroon (1.5Mta clinker grinding), Congo (1.5Mta), Ghana (1.0Mta import), Ethiopia (2.5Mta), Senegal (1.5Mta), Sierra Leone (0.7Mta import), South Africa (3.3Mta), Tanzania (3.0Mta), Zambia (1.5Mta).
In its 2016 full year audited results presented on the floor of the Nigerian Stock Exchange (NSE) in Lagos yesterday, Dangote Cement sold 8.6 million metric tonnes of cement outside Nigeria, which is 54 per cent more than what was sold in 2015.
Analysts said the export is significant, given that the nation used to be a net importer of cement.
As at 2011, Nigeria was one of the world’s largest importers of cement, buying 5.1 million metric tonnes of foreign cement at huge expense to the country’s balance of trade.
The company’s Pan-African cement plants continued to perform well, contributing significantly to its turnover and profitability.
While presenting the results, the company’s Chief Executive Officer, Onne van der Weijde, assured the investors of better returns on their investment in the Dangote Cement.
According to him, “The new year has started well and we expect much higher profitability in Nigeria in 2017, even though we may not see the volume growth we achieved in 2016. I am confident that we will deliver an even stronger performance in 2017 as we increase market share and extend our reach across Africa.”
The economic challenges notwithstanding, Weijde revealed that Dangote Cement achieved sales and revenue growth of 25 per cent and consolidated its position as Africa’s leading producer of cement.
While sales from Nigerian operations increased by 13.8 per cent to nearly 15.1 million metric tons at a growth rate far higher than the country’s GDP, which fell in 2016, its total revenue leaped by 25.1 per cent to 615.1 billion
To the delight of the investors, Dangote Cement earnings per share increased by 4.5 per cent to 11.34 and the dividend payout to the shareholders also increased significantly by 6.3 per cent to N8.5 kobo per share.
Dangote Cement is Africa’s leading cement producer with nearly 46 million metric tons’ capacity across Africa.
It is a fully integrated quarry-to-customer producer with production capacity of 29.25Mta in Nigeria; Obajana plant in Kogi State is the largest in Africa with 13.25Mta of capacity across four lines; Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12Mta and Gboko plant in Benue State has 4Mta.
The company has also concluded arrangements to build new factories in Ogun State (3-6Mta) and Edo State (6.0Mta). Through its recent investments, Dangote Cement has eliminated Nigeria’s dependence on imported cement and has transformed the nation into a net exporter of cement serving neighbouring countries.
In addition, the company has invested several billion dollars to build manufacturing plants and import/grinding terminals across Africa. Its operations are in Cameroon (1.5Mta clinker grinding), Congo (1.5Mta), Ghana (1.0Mta import), Ethiopia (2.5Mta), Senegal (1.5Mta), Sierra Leone (0.7Mta import), South Africa (3.3Mta), Tanzania (3.0Mta), Zambia (1.5Mta).
CBN Black Market Attack is Just a Stopgap Until Nigeria Floats the Naira
VIEW FROM ABROAD
Don’t be fooled by the biggest black-market gain in a year for Nigeria’s naira.
The rally, sparked by increased sales of foreign exchange forwards and looser capital controls, is contingent on the central bank continuing to sell down its reserves. And until it devalues or makes a clear switch to a free-floating currency, Africa’s most-populous country will struggle to lure back foreign investors, according to JPMorgan Chase & Co. and Renaissance Capital.
Forwards suggest more declines to come, investors are shunning naira assets, and a web of alternative exchange rates only adds to the confusion over the currency’s real value.
After sales of $600 million of one- and two-month forwards last week, the naira’s black market rate rose 13 per cent to 460 per dollar from an all-time low of 520. It appreciated another 2.2 per cent to 450 on Monday after the central bank sold $100 million of 60-day forwards. That narrowed the gap with the official rate, which the central bank has kept at around 315 since August, to the smallest since September.
The number of exchange rates in the country “further complicates” an already convoluted system, according to John Ashbourne of London-based Capital Economics.
Nigeria, which has always managed its currency tightly, charges people different prices for foreign exchange depending on their needs. Last week, Nigerians going on business trips abroad or paying overseas medical and school bills were lured away from the black market with a rate 20 per cent above the official interbank level, equating to about 370 per dollar.
Even after the rebound, the currency remains 32 per cent weaker on the black market than on the official one. Naira forward contracts maturing in three months trade at 357 per dollar, suggesting the currency will drop 12 per cent in the period. Naira six-month contracts are quoted at 385.
Nigeria’s Eurobond yields have dropped to the lowest since May 2015, showing that investors are keen to get more exposure to the nation amid higher oil prices and waning pipeline attacks by militants in the Niger River delta. It’s a different story for naira-denominated assets. Local-currency bonds average 16.4 percent, the second highest after Egypt among 31 major emerging markets tracked by Bloomberg.
It’s the same story with equities. Nigerian stocks, languishing near a 10-month low, are the cheapest in Africa, with a price-to-earnings ratio based on estimates for the next 12 months of 7.6, barely half the level of South Africa. Yet the market capitaliSation of the dollar-based Global X MSCI Nigeria Exchange Traded Fund, listed in New York, has more than doubled in the last year to $35 million. That suggests investors are keen on Nigerian stocks, just not in naira.
Don’t be fooled by the biggest black-market gain in a year for Nigeria’s naira.
The rally, sparked by increased sales of foreign exchange forwards and looser capital controls, is contingent on the central bank continuing to sell down its reserves. And until it devalues or makes a clear switch to a free-floating currency, Africa’s most-populous country will struggle to lure back foreign investors, according to JPMorgan Chase & Co. and Renaissance Capital.
Forwards suggest more declines to come, investors are shunning naira assets, and a web of alternative exchange rates only adds to the confusion over the currency’s real value.
After sales of $600 million of one- and two-month forwards last week, the naira’s black market rate rose 13 per cent to 460 per dollar from an all-time low of 520. It appreciated another 2.2 per cent to 450 on Monday after the central bank sold $100 million of 60-day forwards. That narrowed the gap with the official rate, which the central bank has kept at around 315 since August, to the smallest since September.
The number of exchange rates in the country “further complicates” an already convoluted system, according to John Ashbourne of London-based Capital Economics.
Nigeria, which has always managed its currency tightly, charges people different prices for foreign exchange depending on their needs. Last week, Nigerians going on business trips abroad or paying overseas medical and school bills were lured away from the black market with a rate 20 per cent above the official interbank level, equating to about 370 per dollar.
Even after the rebound, the currency remains 32 per cent weaker on the black market than on the official one. Naira forward contracts maturing in three months trade at 357 per dollar, suggesting the currency will drop 12 per cent in the period. Naira six-month contracts are quoted at 385.
Nigeria’s Eurobond yields have dropped to the lowest since May 2015, showing that investors are keen to get more exposure to the nation amid higher oil prices and waning pipeline attacks by militants in the Niger River delta. It’s a different story for naira-denominated assets. Local-currency bonds average 16.4 percent, the second highest after Egypt among 31 major emerging markets tracked by Bloomberg.
It’s the same story with equities. Nigerian stocks, languishing near a 10-month low, are the cheapest in Africa, with a price-to-earnings ratio based on estimates for the next 12 months of 7.6, barely half the level of South Africa. Yet the market capitaliSation of the dollar-based Global X MSCI Nigeria Exchange Traded Fund, listed in New York, has more than doubled in the last year to $35 million. That suggests investors are keen on Nigerian stocks, just not in naira.
South African Government Deports 97 Nigerians
The South African government yesterday deported 97 Nigerians resident in that country to Nigeria, just as the National Assembly condemned in strong terms the xenophobic attacks against African immigrants, particularly Nigerians, and resolved to send a delegation to meet with the South African parliament on measures to be adopted to stop the attacks.
The deportation of the 97 Nigerians may be a fallout of the recent xenophobic attacks against African immigrants in the Southern African country.
THISDAY learnt that the 97 Nigerians were deported for civil and criminal offences.
Of the total, six of the deportees were said to have been returned to the country for drug offences, 10 were arrested and deported for criminal offences while others committed immigration offences.
According to Nigerian Immigration sources, who spoke to THISDAY tuesday, the deportees arrived the Murtala Muhammed International Airport (MMIA), Lagos, onboard a chartered aircraft with registration number GBB710 from Johannesburg, South Africa.
The deportees comprised 95 males and two females.
Those deported for drug and criminal offences were immediately handed over to the police for prosecution while those with civil cases were left to go home after screening by the officials of the Nigerian Immigration Service (NIS) at the airport.
But as Nigerians were being deported to Nigeria from South Africa for alleged criminal and immigration offences, the National Assembly was condemning in strong terms the recent resurgence of xenophobic attacks against African migrants in the Southern African country, particularly Nigerians, who have lost properties valued at millions of dollars.
The federal lawmakers in both chambers of the National Assembly also resolved to send a delegation to South Africa to meet with the country’s parliament to agree on measures to stop the attacks.
At plenary yesterday, the Senate decried the resurgence of the xenophobic attacks and what it described as the extra-judicial killings of Nigerians by both the South African police and South Africans.
The Senate also advised the federal government to reconsider Nigeria’s diplomatic ties with South Africa with a view to averting the recurrence of the xenophobic attacks and extra-judicial killings of Nigerians in South Africa.
It also resolved to send a delegation to South Africa to engage their fellow parliamentarians on the matter.
Moving a motion on the issue, Senator Rose Oko (Cross River North) expressed concern over recurring xenophobic attacks and extra-judicial killings of Nigerians in South Africa.
She said on February 18, South Africans attacked and looted businesses belonging to Nigerians in Pretoria, pointing out that the acts violated Article 5 of the United Nations Universal Declaration on Human Rights, which provides that “no one shall be subjected to torture or cruel, inhuman or degrading treatment”.
She also recalled that in 2016, 20 Nigerians were killed under similar circumstances over allegations of drug trafficking without recourse to legal processes and the principle of fair hearing.
But while appearing before the joint National Assembly Committee on Foreign Affairs yesterday, the Minister of State for Foreign Affairs, Mrs. Khadijat Abbah Ibrahim, denied claims that Nigerians were killed in the recent wave of attacks.
According to her, available information showed that there was no record that any life was lost in the recent xenophobic attacks which began on February 18.
But the chairman of the joint committee, Senator Monsurat Sunmonu, said henceforth attacks on Nigerians in South Africa would be handled on a “tit for tat basis”.
She said if the attacks continued, South Africans and the country’s businesses should be prepared for reprisals in Nigeria, insisting that their firms would also suffer similar attacks being meted to Nigerian businesses in South Africa.
Also, the House of Representatives constituted a delegation yesterday to meet with the South African parliament over the recent xenophobic attacks on Nigerians and their businesses in Pretoria.
The delegation will be led by Majority Leader, Hon. Femi Gbajabiamila.
Gbajabimaila and five other members, including the Chairman of the House Committee on Foreign Affairs, Hon. Nnenna Elendu-Ukeje, are expected to interface with the South African parliament on how to stop further attacks on Nigerians in the country.
The House last week condemned the recurring attacks on Nigerians living in South Africa, despite Nigeria’s contribution to the liberation of the country from apartheid.
Ukeje had suggested an inter-parliamentary interface, stating that legislators are the closest arm of government to the citizens and would be able to assist with the reorientation of their citizens on the role played by Nigerians in the liberation of South Africa.
Other members of the delegation are Hon. Sadiq Ibrahim (Adamawa APC), Hon. Henry Nwawuba (Imo PDP), Hon. Nasiru Zango Daura (Katsina APC) and Hon. Shehu Aliyu Musa (Bauchi APC).
The deportation of the 97 Nigerians may be a fallout of the recent xenophobic attacks against African immigrants in the Southern African country.
THISDAY learnt that the 97 Nigerians were deported for civil and criminal offences.
Of the total, six of the deportees were said to have been returned to the country for drug offences, 10 were arrested and deported for criminal offences while others committed immigration offences.
According to Nigerian Immigration sources, who spoke to THISDAY tuesday, the deportees arrived the Murtala Muhammed International Airport (MMIA), Lagos, onboard a chartered aircraft with registration number GBB710 from Johannesburg, South Africa.
The deportees comprised 95 males and two females.
Those deported for drug and criminal offences were immediately handed over to the police for prosecution while those with civil cases were left to go home after screening by the officials of the Nigerian Immigration Service (NIS) at the airport.
But as Nigerians were being deported to Nigeria from South Africa for alleged criminal and immigration offences, the National Assembly was condemning in strong terms the recent resurgence of xenophobic attacks against African migrants in the Southern African country, particularly Nigerians, who have lost properties valued at millions of dollars.
The federal lawmakers in both chambers of the National Assembly also resolved to send a delegation to South Africa to meet with the country’s parliament to agree on measures to stop the attacks.
At plenary yesterday, the Senate decried the resurgence of the xenophobic attacks and what it described as the extra-judicial killings of Nigerians by both the South African police and South Africans.
The Senate also advised the federal government to reconsider Nigeria’s diplomatic ties with South Africa with a view to averting the recurrence of the xenophobic attacks and extra-judicial killings of Nigerians in South Africa.
It also resolved to send a delegation to South Africa to engage their fellow parliamentarians on the matter.
Moving a motion on the issue, Senator Rose Oko (Cross River North) expressed concern over recurring xenophobic attacks and extra-judicial killings of Nigerians in South Africa.
She said on February 18, South Africans attacked and looted businesses belonging to Nigerians in Pretoria, pointing out that the acts violated Article 5 of the United Nations Universal Declaration on Human Rights, which provides that “no one shall be subjected to torture or cruel, inhuman or degrading treatment”.
She also recalled that in 2016, 20 Nigerians were killed under similar circumstances over allegations of drug trafficking without recourse to legal processes and the principle of fair hearing.
But while appearing before the joint National Assembly Committee on Foreign Affairs yesterday, the Minister of State for Foreign Affairs, Mrs. Khadijat Abbah Ibrahim, denied claims that Nigerians were killed in the recent wave of attacks.
According to her, available information showed that there was no record that any life was lost in the recent xenophobic attacks which began on February 18.
But the chairman of the joint committee, Senator Monsurat Sunmonu, said henceforth attacks on Nigerians in South Africa would be handled on a “tit for tat basis”.
She said if the attacks continued, South Africans and the country’s businesses should be prepared for reprisals in Nigeria, insisting that their firms would also suffer similar attacks being meted to Nigerian businesses in South Africa.
Also, the House of Representatives constituted a delegation yesterday to meet with the South African parliament over the recent xenophobic attacks on Nigerians and their businesses in Pretoria.
The delegation will be led by Majority Leader, Hon. Femi Gbajabiamila.
Gbajabimaila and five other members, including the Chairman of the House Committee on Foreign Affairs, Hon. Nnenna Elendu-Ukeje, are expected to interface with the South African parliament on how to stop further attacks on Nigerians in the country.
The House last week condemned the recurring attacks on Nigerians living in South Africa, despite Nigeria’s contribution to the liberation of the country from apartheid.
Ukeje had suggested an inter-parliamentary interface, stating that legislators are the closest arm of government to the citizens and would be able to assist with the reorientation of their citizens on the role played by Nigerians in the liberation of South Africa.
Other members of the delegation are Hon. Sadiq Ibrahim (Adamawa APC), Hon. Henry Nwawuba (Imo PDP), Hon. Nasiru Zango Daura (Katsina APC) and Hon. Shehu Aliyu Musa (Bauchi APC).
Senate to Screen Onnoghen Tuesday
Onnoghen, who will be screened before the Committee of the Whole Senate, may also be confirmed today as the substantive CJN, almost four months after the former CJN, Justice Mahmud Mohammed, bowed out of service having attained the mandatory retirement age of 70.
His screening and possible confirmation will lay to rest the tension which arose from the failure of the Muhammadu Buhari administration to send Onnoghen’s name to the Senate for confirmation ahead of the retirement of the immediate past CJN last year.
Weeks before Justice Mohammed’s retirement, Justice Onnoghen was recommended to Buhari for appointment as CJN by the National Judicial Council (NJC).
Following the recommendation, Buhari was in accordance with the constitution, expected to send Justice Onnoghen’s name to the Senate for confirmation.
But the president did not, raising speculations that he was not favourably disposed towards his emergence as the CJN.
The perception was further fuelled by the president’s decision to swear him in as acting CJN on November 10, 2016.
However, in view of constitutional provisions that the acting CJN can only serve in this capacity for three months, concern was raised early last month that Justice Onnoghen’s tenure may be short lived.
However, in the heat of the controversy, Osinbajo, on the instructions of Buhari, sent Justice Onnoghen’s name to the Senate for confirmation as the substantive CJN.
It is expected that the Senate will expeditiously screen and confirm Justice Onnoghen today as the substantive CJN.
The Senate will also today take a motion focusing on the alleged diversion of N5.1 trillion subsidy funds by the Nigeria National Petroleum Corporation (NNPC).
Raising a point of order during yesterday’s plenary, Senator Dino Melaye (Kogi West), said every month, between five and 10 cargoes of refined products are imported into Nigeria while the equivalent of five cargoes are refined locally in the country.
He said whilst the federal government had been prosecuting only private sector oil marketers whom he said have been importing only 49 per cent of refined petroleum products since 2006, the NNPC which accounts for 51 per cent of the refined products imported into the country, is not being investigated for false subsidy scams.
According to him, whereas subsidy proceeds accruable to marketers amounted to only about N3.83 trillion, NNPC collected N5.1 trillion on subsidy, lamenting that “this has never been investigated; this has never been looked at and we are busy chasing independent marketers”.
After presenting his point of order, the Senate resolved to formally adopt a motion on the matter today and consequently refer it to a committee for investigation.
Nigerian Economy Contracts by 1.5% in 2016, Marginally Beating IMF Forecast
The Nigerian economy contracted by 1.5 per cent in 2016, the first full-year contraction since 1991, and slightly beat the forecast by the International Monetary Fund (IMF), which initially predicted a contraction in the country’s Gross Domestic Product (GDP) by 1.8 per cent, but later revised it to 1.7 per cent.
In contrast, the Nigerian economy grew by 2.8 per cent in 2015.
GDP data released tuesday by the National Bureau of Statistics (NBS) also showed that the economy shrank by 1.30 percent in the fourth quarter of last year (Q4 2016), compared to -2.26 per cent in the previous quarter.
Though the decline was less severe than the contraction in the previous quarter, it was lower than the 2.11 percent growth attained in Q4 2015.
Reacting to the latest growth data from the NBS tuesday, the presidency stated that there were indications that the country was on its way out of the recession, considering the overall contraction in 2016 and the NBS data showing that the contraction in the last quarter of 2016 had slowed down.This is just as the Nigerian National Petroleum Corporation (NNPC) announced that the country’s oil output has risen to 2.1 million barrels per day (mbpd), signaling the in-roads the federal government has made in restoring peace in the Niger Delta, where attacks by militants on oil installations last year slashed Nigeria’s production to 1.3mbpd.
According to the NBS, in real terms, Nigeria’s GDP was valued at N18.29 trillion in Q4 2016, compared to N18.53 trillion in Q4 2015.
For the full year, NBS said GDP contracted by 1.51 per cent, indicating a real GDP of N67.98 trillion.
However, nominal GDP in Q4 2016 was valued at N29.29 trillion at basic prices, representing a year-on-year nominal growth of 12.97 per cent.
For the entire year, aggregate nominal GDP stood at N101.59 trillion, compared to N94.14 trillion in Q4 2015.
In contrast to real growth, this was 5.84 per cent higher than Q4 2015, implying that the GDP deflator increased faster than the earlier period, the NBS stated.
The contraction in the quarter under review, it added, reflected “a difficult year for Nigeria, which included weaker inflation-induced consumption demand, an increase in pipeline vandalism, significantly reduced foreign reserves and a concomitantly weaker currency, and problems in the energy sector such as fuel shortages and lower electricity generation”.
Quarter-on-quarter, real GDP increased by 4.09 per cent, which partly reflected seasonal factors, as well as a rise in the general price level, NBS added.
Oil production was estimated at 1.90mbpd in Q4, 0.27mbpd higher than the 1.63mbpd production volume in the previous quarter but lower than Q4 2015 estimates by 0.25mbpd when output was put at 2.16mbpd.
For the full year 2016, however, oil production was estimated at 1.833mbpd, compared to 2.13mbpd in 2015.
The oil sector contracted by 13.65 per cent in the year, representing a more significant decline of -5.45 per cent in 2015.
The oil sector’s share of real GDP also declined to 8.42 per cent in 2016 compared to 9.61 per cent in 2015.
According to the NBS, “This reduction has largely been attributed to vandalism in the Niger Delta region. As a result, the sector contracted to -13.65 per cent, a more significant decline than in 2015 of -5.45 per cent.”
The oil sector also declined to -12.38 per cent in real terms (year-on-year) in Q4, indicating an improvement relative to the previous quarter, when the sector declined to -22.01 per cent, but a more severe decline than in Q4 2015, when a contraction of -8.23 per cent was recorded.
Quarter-on-Quarter, real oil sector GDP grew by 8.07 per cent and represented 7.15 per cent as a share of the economy, compared to 8.19 per cent in Q3 2016 and 8.06 per cent in Q4 2015.
On the other hand, the non-oil sector shrank by 0.33 per cent in real terms in Q4, but increased its share of GDP to 92.85 per cent from 91.94 per cent in Q4 2015.
In 2016, the sector shrank by 0.22 per cent in real terms, compared to a growth rate of 3.75 per cent in 2015, a difference of 3.97 per cent.
A breakdown of the non-oil sector showed that real estate shrank by 9.27 per cent and contributed –0.77 per cent to year-on-year growth in total real GDP.
According to the NBS, manufacturing, construction and trade also shrank, ameliorated slightly by continuing strong growth in agriculture especially crop production.
Mining and quarrying contributed 7.32 per cent to real GDP in Q4, representing a decline of 0.89 per cent relative to the corresponding quarter of 2015 and a decline of 1.02 percentage points relative to the third quarter of 2016.
Agriculture contributed 25.49 per cent to overall GDP in the quarter under review, higher than its share of 24.18 per cent in Q4 2015, but less than its share in the previous quarter of 28.65 per cent.
For 2016 as whole, agriculture increased its share relative to 2015 to 24.43 per cent due to relatively strong growth in the sector.However, the contribution of manufacturing to nominal GDP was 8.34 per cent, lower than the 9.09 per cent in the corresponding period of 2015, and 8.59 per cent in the third quarter of 2016.
Real GDP growth in manufacturing remained negative in Q4 2016, contracting by 2.54 per cent (year-on-year).
For 2016, the manufacturing sector in real terms contracted by 4.32 per cent compared to a decline of 1.46 per cent in 2015.
According to the NBS, this was reflective of the number of challenges faced by manufacturing in 2016 such as higher costs of imported inputs as a result of the exchange rate and higher energy costs as a result of the fall in electricity generation and more expensive fuel.
Recession Has Bottomed Out
In its reaction to the latest GDP data from the NBS tuesday, the presidency expressed confidence that the country was on the mend, considering the overall contraction in 2016 and data showing that the contraction in the last quarter of 2016 had slowed down.
The Presidential Adviser on Economic Matters, Dr. Adeyemi Dipeolu said this in a statement released by Mr. Laolu Akande, media aide to acting President Yemi Osinbajo.
Dipeolu said a review of the GDP figures released tuesday by the NBS showed a contraction of 1.30 per cent in the fourth quarter of 2016, translating to an estimated economic growth rate of -1.51 per cent for the full year.
According to him, these figures reflected the slowdown in the economy for most of 2016, but also showed that the recession may have bottomed out because of improving trends in several key sectors.
He said: “The Nigerian economy actually performed better overall last year as the growth rate was higher with a contraction of -1.5 per cent, compared to -1.8 per cent predicted by the International Monetary Fund (IMF), raising hopes that the recession may have bottomed out with the improving trends in several key sectors of the economy including agriculture and mining.“Overall, the Nigerian economy performed better than expected, even though we are still in the early stages of recovery. It is indeed noteworthy.”
He said government was also optimistic that with the ongoing engagement with the oil producing communities in the Niger Delta, increased oil production will be sustained.
“In a similar vein, the ongoing implementation of the Social Investment Programme (SIP), significant infrastructure spending of the federal government, and possible early passage of the 2017 budget, are all expected to trigger a positive multiplier effect on the Nigerian economy,” he added.
Dipeolu said government would not relent in its efforts and comprehensive approach to bring about the full recovery of the Nigerian economy and set it on a solid path of sustainable growth.
“Our work continues and we renew the pledge to do it with diligence and the firm commitment it deserves,” he stated.
He noted that even though the oil sector contracted to -12.38 per cent on a year-on-year basis, this, he said, was a relative improvement compared to the third quarter when the decline amounted to -22.01 per cent.
He said: “This outcome was due mainly to the increase in (oil) production such that the quarter-on-quarter growth for the oil sector between the third and fourth quarters was 8.07 per cent.
“The non-oil sector however declined by 0.33 per cent after showing some resilience in the third quarter when it grew by 0.03 per cent at the height of the recession.”
The NBS figures showed that agriculture grew at 4.03 per cent in the fourth quarter of 2016, a marginal decrease over the 4.54 per cent growth in the third quarter, he said.
Dipeolu explained that this was mainly because agriculture (especially crop production, which accounts for the bulk of agricultural production) is seasonal, with growth in the third quarter of the year usually higher than others.
He observed that the overall outcome for the year showed that the agricultural sector grew by 4.11 per cent, higher than 3.72 per cent in 2015.
He further observed that manufacturing actually grew on a quarter-on-quarter basis by 1.89 per cent but declined over the year by 4.32 per cent, reflecting the problems that the sector faced in the course of the year due to a combination of factors including the depreciation of the naira and higher energy costs.
“The metal ores sub-sector grew by 7.03 per cent in Q4 of 2016, compared to 6.93 per cent in the last quarter of 2015, thus justifying the priority that the federal government continued to give to solid minerals.
“The services sector, which accounted for 53.55 per cent of GDP in 2016, experienced a decline in growth to -0.82 per cent over the year, compared to a growth of 4.78 per cent in 2015.Dipeolu explained that this slowdown in the services sector arose from generally fragile economic conditions.
“This is because its fortunes depend to a large extent on consumer spending and government expenditure which were both adversely affected by difficult economic conditions,” he added.
He explained that the Social Investment Programme of the federal government, relatively high level of infrastructure spending in late 2016, as well as 2017 capital spending plans should begin to have a multiplier effect on the economy.
He stated that the data for nearly all the sectors showed an improvement in growth in nominal terms although such effects were outweighed by inflationary factors.
“The expectation is that this trend and the slowing down of month-on-month inflation will enable an early return to positive growth in the economy. This positive trajectory will also receive a boost from the positive news emerging from other parts of the economy,” he observed.
He cited the approval and release of the Nigerian Economic Recovery and Growth (NERG) plan by the Federal Executive Council, which sets the stage for the government’s economic reform programme, as being critical to the country’s recovery path.
Dipeolu also expressed hope that the likely early passage of the 2017 budget estimates would also lend further momentum to economic growth.
“Similarly, the recent Eurobond issue of $1 billion which was oversubscribed by almost 8 times will reinforce the trend of increasing reserves.
“Indeed, foreign reserves rose from $23.9 billion in October 2016 to $27.8 billion in January 2017,” he added.
In his views, the outlook for revenue from the petroleum sector was also positive, adding: “This improved outlook for the oil and gas sector is closely linked to the ongoing engagement and dialogue between the federal government and various communities in the Niger Delta.”
Analysts React
Also commenting on the fourth quarter GDP figures released yesterday, Chief Economist for Africa, Standard Chartered Bank, Razia Khan, while acknowledging that she was expecting a full-year contraction, the -1.5 per cent growth rate recorded for 2016, was marginally better than expectation of -1.7 per cent year-on-year.
Khan, in a note yesterday, said: “The very shallow contraction in non-oil GDP growth in Q4 2016, raises hope for a more meaningful recovery in non-oil GDP in Q1 2017, buoyed both by improved budget spending and some improvement in FX availability.
“We have not yet seen a sufficient turnaround in oil production, but even in Q4 last year, the extent of contraction had lightened. This is a good sign.
“Recovery in the oil sector in 2017 will be driven by higher prices and production gains. A continued double digit contraction in the oil sector, especially given the weak base, is unlikely.
“So while today’s GDP release for Q4 confirms the full year contraction in Nigerian GDP, recovery is nonetheless underway.
“How quickly the Nigerian authorities put in place much-needed reforms will determine the strength of that recovery.”
The Chief Executive Officer of Cowry Assets Management Limited, Mr. Johnson Chukwu also said the slow pace of economic contraction was an indication that there was some improvement in the performance of the economy.
He, however, said if the appropriate policies are put in place, the economy might fully recover latest by the end of the second quarter of the year.
Chukwu stressed that for the economy to fully recover, the government must facilitate business transactions.
“There is need to continue to liberalise the forex market as we have seen with the new forex policy, to make forex easily accessible by businesses.
“The sectors that experienced a decline are sectors that are heavily dependent on forex, such as manufacturing, telecommunications, and others.
“So, we need to stimulate those sectors that account for eight per cent and above of GDP. The government also needs to ensure that peace and tranquility is restored in the Niger Delta so that our oil production would continue to recover,” Chukwu added.
Also, Research Analyst at FXTM, Lukman Otunuga said that the country’s full-year economic contraction of 1.5 per cent for 2016 highlighted how the terrible combination of depressed oil prices, foreign exchange shortages, and overall sluggish economic fundamentals exposed the nation to downside shocks.
“While the outlook for Nigeria still remains bearish in the short term, it must be kept in mind that markets have acknowledged that the nation is currently in the process of a critical structural transformation.
“Since the start of the year, the positive report of a successful Eurobond issue coupled with recent interventions from the CBN have bolstered the investor risk sentiment towards the nation.
“It should be understood that Nigeria’s web of alternative foreign exchanges remains a major stumbling block to sustainable economic recovery while also effectively repelling foreign direct investment (FDI).
“While recent reports of the CBN releasing an additional $180 million to the forex market in an effort to ease business transactions may strengthen the naira further, speculation is rife on the central bank’s devaluation of the local currency to improve liquidity and regain more stability,” the Cyprus-based analyst added.
Oil Production RisesMeanwhile, NNPC tuesday announced that Nigeria’s oil production has risen to 2.1mbpd as a result of the government’s sustained peace initiatives in the Niger Delta.
The state-run oil firm also stated that with the current peaceful atmosphere in the oil-rich region, it was expecting tthe country’s oil production to grow above 2.2mbpd, effectively exceeding the 2017 budget benchmark of 2.2mbpd.
The Group Managing Director of NNPC, Dr. Maikanti Baru, stated this when he spoke on the corporation’s commercial strategy and priorities at the 2017 Nigeria Oil and Gas Conference and Exhibition in Abuja.
Baru’s remarks came at the same time the Minister of State for Petroleum Resources Dr. Ibe Kachikwu described Nigeria’s continued importation of petroleum products as shameful and fraudulent.
Kachikwu equally stated that the country’s refineries in Warri, Kaduna and Port Harcourt have continued to operate below profitability levels, adding that their inoperative condition had resulted in the waste of crude oil and human capacity.
The minister said the country has an oil sector infrastructure gap of over $45 billion which would need to be bridged within the next five years to reactivate the efficiency levels of Nigeria’s oil and gas sector.
Baru, in his presentation at the conference, said: “Crude production declined to as low as 1.5mbpd in July 2016, but this has steadily increased to 2.1mbpd in recent times due to the strategic steps taken by the NNPC and her partners to produce from assets that were affected by pipeline vandalism.
“We must also mention that the improvement in production is also as a result of the success of the recent dialogue held by the federal government in the Niger Delta areas.
“We are hoping that by the end of Q2, 2017, we should ramp up production above the budget benchmark of 2.2mbpd.”
He stated that NNPC encountered considerable challenges that impacted on its operations in the past year, adding however that the final resolution of joint venture cash call obligations in December 2016 re-established the confidence of joint venture partners in the business capacity of the corporation.
“The problem of the joint venture cash calls has been addressed after rigorous negotiations with our joint venture partners.
“The initial sum of about $8.1 billion was reduced to about $5.1 billion that will be paid over five years through incremental production. This notable achievement has saved the nation about $3 billion.
“The resolution of cash call arrears is expected to increase the confidence of JV operations in the system and therefore ginger more investments in new capital projects,” Baru stated.
Kachikwu also said that the infrastructure gap was limiting productivity levels in the sector.
In an apparent plea for a revision of the government’s policy of holding on to oil and gas sector assets, which it cannot fund, he said for Nigeria to bridge the gap, the nation would have to attract and allow private investment in the upgrade of most of the oil assets that are moribund.
“There is a sense of urgency needed here on infrastructure. The government is not in a position to fund most of the infrastructure and so we are left with little alternatives than to bring in private investors and work out terms that will enable us to begin to massively address the $45 billion infrastructure gap.
“Over the next four or five years, we have to find a way of bringing into this country an average of about $10 billion every year and that is essential whether in infrastructure, in pipelines, refineries or depots.
“We also have to be bold enough to take steps that have not been taken before, and they are steps that could be challenged by people but make a lot of commercial sense.
“It is no longer profitable to handhold all the assets, we have got to release those assets to the private sector under some operational and corporation mechanisms that enable us to reactivate those assets, charge the right tariff and get them to work efficiently.
“Whether it is for the gas pipelines, crude pipelines or refined products pipelines, the time has come to move away from the old model.”
On the importation of petroleum products and government’s commitment to end it, Kachikwu said: “Importation of petroleum products would have to cease, there is absolutely no reason why a country with the resources that we have will continue to import petroleum products.
“It is a shame to this country, it is fraud on the system and we have got to end it. We are committed to do this by 2018/2019.
“The refineries are not performing in the capacity they are supposed to perform. It is waste of crude and a waste of everybody’s intellectual capacity.
“If we do that, the downstream sector will survive. But if we don’t, by the first quarter of 2020 when the Dangote refinery would have come on stream, then we will have an issue in our hands.”
In contrast, the Nigerian economy grew by 2.8 per cent in 2015.
GDP data released tuesday by the National Bureau of Statistics (NBS) also showed that the economy shrank by 1.30 percent in the fourth quarter of last year (Q4 2016), compared to -2.26 per cent in the previous quarter.
Though the decline was less severe than the contraction in the previous quarter, it was lower than the 2.11 percent growth attained in Q4 2015.
Reacting to the latest growth data from the NBS tuesday, the presidency stated that there were indications that the country was on its way out of the recession, considering the overall contraction in 2016 and the NBS data showing that the contraction in the last quarter of 2016 had slowed down.This is just as the Nigerian National Petroleum Corporation (NNPC) announced that the country’s oil output has risen to 2.1 million barrels per day (mbpd), signaling the in-roads the federal government has made in restoring peace in the Niger Delta, where attacks by militants on oil installations last year slashed Nigeria’s production to 1.3mbpd.
According to the NBS, in real terms, Nigeria’s GDP was valued at N18.29 trillion in Q4 2016, compared to N18.53 trillion in Q4 2015.
For the full year, NBS said GDP contracted by 1.51 per cent, indicating a real GDP of N67.98 trillion.
However, nominal GDP in Q4 2016 was valued at N29.29 trillion at basic prices, representing a year-on-year nominal growth of 12.97 per cent.
For the entire year, aggregate nominal GDP stood at N101.59 trillion, compared to N94.14 trillion in Q4 2015.
In contrast to real growth, this was 5.84 per cent higher than Q4 2015, implying that the GDP deflator increased faster than the earlier period, the NBS stated.
The contraction in the quarter under review, it added, reflected “a difficult year for Nigeria, which included weaker inflation-induced consumption demand, an increase in pipeline vandalism, significantly reduced foreign reserves and a concomitantly weaker currency, and problems in the energy sector such as fuel shortages and lower electricity generation”.
Quarter-on-quarter, real GDP increased by 4.09 per cent, which partly reflected seasonal factors, as well as a rise in the general price level, NBS added.
Oil production was estimated at 1.90mbpd in Q4, 0.27mbpd higher than the 1.63mbpd production volume in the previous quarter but lower than Q4 2015 estimates by 0.25mbpd when output was put at 2.16mbpd.
For the full year 2016, however, oil production was estimated at 1.833mbpd, compared to 2.13mbpd in 2015.
The oil sector contracted by 13.65 per cent in the year, representing a more significant decline of -5.45 per cent in 2015.
The oil sector’s share of real GDP also declined to 8.42 per cent in 2016 compared to 9.61 per cent in 2015.
According to the NBS, “This reduction has largely been attributed to vandalism in the Niger Delta region. As a result, the sector contracted to -13.65 per cent, a more significant decline than in 2015 of -5.45 per cent.”
The oil sector also declined to -12.38 per cent in real terms (year-on-year) in Q4, indicating an improvement relative to the previous quarter, when the sector declined to -22.01 per cent, but a more severe decline than in Q4 2015, when a contraction of -8.23 per cent was recorded.
Quarter-on-Quarter, real oil sector GDP grew by 8.07 per cent and represented 7.15 per cent as a share of the economy, compared to 8.19 per cent in Q3 2016 and 8.06 per cent in Q4 2015.
On the other hand, the non-oil sector shrank by 0.33 per cent in real terms in Q4, but increased its share of GDP to 92.85 per cent from 91.94 per cent in Q4 2015.
In 2016, the sector shrank by 0.22 per cent in real terms, compared to a growth rate of 3.75 per cent in 2015, a difference of 3.97 per cent.
A breakdown of the non-oil sector showed that real estate shrank by 9.27 per cent and contributed –0.77 per cent to year-on-year growth in total real GDP.
According to the NBS, manufacturing, construction and trade also shrank, ameliorated slightly by continuing strong growth in agriculture especially crop production.
Mining and quarrying contributed 7.32 per cent to real GDP in Q4, representing a decline of 0.89 per cent relative to the corresponding quarter of 2015 and a decline of 1.02 percentage points relative to the third quarter of 2016.
Agriculture contributed 25.49 per cent to overall GDP in the quarter under review, higher than its share of 24.18 per cent in Q4 2015, but less than its share in the previous quarter of 28.65 per cent.
For 2016 as whole, agriculture increased its share relative to 2015 to 24.43 per cent due to relatively strong growth in the sector.However, the contribution of manufacturing to nominal GDP was 8.34 per cent, lower than the 9.09 per cent in the corresponding period of 2015, and 8.59 per cent in the third quarter of 2016.
Real GDP growth in manufacturing remained negative in Q4 2016, contracting by 2.54 per cent (year-on-year).
For 2016, the manufacturing sector in real terms contracted by 4.32 per cent compared to a decline of 1.46 per cent in 2015.
According to the NBS, this was reflective of the number of challenges faced by manufacturing in 2016 such as higher costs of imported inputs as a result of the exchange rate and higher energy costs as a result of the fall in electricity generation and more expensive fuel.
Recession Has Bottomed Out
In its reaction to the latest GDP data from the NBS tuesday, the presidency expressed confidence that the country was on the mend, considering the overall contraction in 2016 and data showing that the contraction in the last quarter of 2016 had slowed down.
The Presidential Adviser on Economic Matters, Dr. Adeyemi Dipeolu said this in a statement released by Mr. Laolu Akande, media aide to acting President Yemi Osinbajo.
Dipeolu said a review of the GDP figures released tuesday by the NBS showed a contraction of 1.30 per cent in the fourth quarter of 2016, translating to an estimated economic growth rate of -1.51 per cent for the full year.
According to him, these figures reflected the slowdown in the economy for most of 2016, but also showed that the recession may have bottomed out because of improving trends in several key sectors.
He said: “The Nigerian economy actually performed better overall last year as the growth rate was higher with a contraction of -1.5 per cent, compared to -1.8 per cent predicted by the International Monetary Fund (IMF), raising hopes that the recession may have bottomed out with the improving trends in several key sectors of the economy including agriculture and mining.“Overall, the Nigerian economy performed better than expected, even though we are still in the early stages of recovery. It is indeed noteworthy.”
He said government was also optimistic that with the ongoing engagement with the oil producing communities in the Niger Delta, increased oil production will be sustained.
“In a similar vein, the ongoing implementation of the Social Investment Programme (SIP), significant infrastructure spending of the federal government, and possible early passage of the 2017 budget, are all expected to trigger a positive multiplier effect on the Nigerian economy,” he added.
Dipeolu said government would not relent in its efforts and comprehensive approach to bring about the full recovery of the Nigerian economy and set it on a solid path of sustainable growth.
“Our work continues and we renew the pledge to do it with diligence and the firm commitment it deserves,” he stated.
He noted that even though the oil sector contracted to -12.38 per cent on a year-on-year basis, this, he said, was a relative improvement compared to the third quarter when the decline amounted to -22.01 per cent.
He said: “This outcome was due mainly to the increase in (oil) production such that the quarter-on-quarter growth for the oil sector between the third and fourth quarters was 8.07 per cent.
“The non-oil sector however declined by 0.33 per cent after showing some resilience in the third quarter when it grew by 0.03 per cent at the height of the recession.”
The NBS figures showed that agriculture grew at 4.03 per cent in the fourth quarter of 2016, a marginal decrease over the 4.54 per cent growth in the third quarter, he said.
Dipeolu explained that this was mainly because agriculture (especially crop production, which accounts for the bulk of agricultural production) is seasonal, with growth in the third quarter of the year usually higher than others.
He observed that the overall outcome for the year showed that the agricultural sector grew by 4.11 per cent, higher than 3.72 per cent in 2015.
He further observed that manufacturing actually grew on a quarter-on-quarter basis by 1.89 per cent but declined over the year by 4.32 per cent, reflecting the problems that the sector faced in the course of the year due to a combination of factors including the depreciation of the naira and higher energy costs.
“The metal ores sub-sector grew by 7.03 per cent in Q4 of 2016, compared to 6.93 per cent in the last quarter of 2015, thus justifying the priority that the federal government continued to give to solid minerals.
“The services sector, which accounted for 53.55 per cent of GDP in 2016, experienced a decline in growth to -0.82 per cent over the year, compared to a growth of 4.78 per cent in 2015.Dipeolu explained that this slowdown in the services sector arose from generally fragile economic conditions.
“This is because its fortunes depend to a large extent on consumer spending and government expenditure which were both adversely affected by difficult economic conditions,” he added.
He explained that the Social Investment Programme of the federal government, relatively high level of infrastructure spending in late 2016, as well as 2017 capital spending plans should begin to have a multiplier effect on the economy.
He stated that the data for nearly all the sectors showed an improvement in growth in nominal terms although such effects were outweighed by inflationary factors.
“The expectation is that this trend and the slowing down of month-on-month inflation will enable an early return to positive growth in the economy. This positive trajectory will also receive a boost from the positive news emerging from other parts of the economy,” he observed.
He cited the approval and release of the Nigerian Economic Recovery and Growth (NERG) plan by the Federal Executive Council, which sets the stage for the government’s economic reform programme, as being critical to the country’s recovery path.
Dipeolu also expressed hope that the likely early passage of the 2017 budget estimates would also lend further momentum to economic growth.
“Similarly, the recent Eurobond issue of $1 billion which was oversubscribed by almost 8 times will reinforce the trend of increasing reserves.
“Indeed, foreign reserves rose from $23.9 billion in October 2016 to $27.8 billion in January 2017,” he added.
In his views, the outlook for revenue from the petroleum sector was also positive, adding: “This improved outlook for the oil and gas sector is closely linked to the ongoing engagement and dialogue between the federal government and various communities in the Niger Delta.”
Analysts React
Also commenting on the fourth quarter GDP figures released yesterday, Chief Economist for Africa, Standard Chartered Bank, Razia Khan, while acknowledging that she was expecting a full-year contraction, the -1.5 per cent growth rate recorded for 2016, was marginally better than expectation of -1.7 per cent year-on-year.
Khan, in a note yesterday, said: “The very shallow contraction in non-oil GDP growth in Q4 2016, raises hope for a more meaningful recovery in non-oil GDP in Q1 2017, buoyed both by improved budget spending and some improvement in FX availability.
“We have not yet seen a sufficient turnaround in oil production, but even in Q4 last year, the extent of contraction had lightened. This is a good sign.
“Recovery in the oil sector in 2017 will be driven by higher prices and production gains. A continued double digit contraction in the oil sector, especially given the weak base, is unlikely.
“So while today’s GDP release for Q4 confirms the full year contraction in Nigerian GDP, recovery is nonetheless underway.
“How quickly the Nigerian authorities put in place much-needed reforms will determine the strength of that recovery.”
The Chief Executive Officer of Cowry Assets Management Limited, Mr. Johnson Chukwu also said the slow pace of economic contraction was an indication that there was some improvement in the performance of the economy.
He, however, said if the appropriate policies are put in place, the economy might fully recover latest by the end of the second quarter of the year.
Chukwu stressed that for the economy to fully recover, the government must facilitate business transactions.
“There is need to continue to liberalise the forex market as we have seen with the new forex policy, to make forex easily accessible by businesses.
“The sectors that experienced a decline are sectors that are heavily dependent on forex, such as manufacturing, telecommunications, and others.
“So, we need to stimulate those sectors that account for eight per cent and above of GDP. The government also needs to ensure that peace and tranquility is restored in the Niger Delta so that our oil production would continue to recover,” Chukwu added.
Also, Research Analyst at FXTM, Lukman Otunuga said that the country’s full-year economic contraction of 1.5 per cent for 2016 highlighted how the terrible combination of depressed oil prices, foreign exchange shortages, and overall sluggish economic fundamentals exposed the nation to downside shocks.
“While the outlook for Nigeria still remains bearish in the short term, it must be kept in mind that markets have acknowledged that the nation is currently in the process of a critical structural transformation.
“Since the start of the year, the positive report of a successful Eurobond issue coupled with recent interventions from the CBN have bolstered the investor risk sentiment towards the nation.
“It should be understood that Nigeria’s web of alternative foreign exchanges remains a major stumbling block to sustainable economic recovery while also effectively repelling foreign direct investment (FDI).
“While recent reports of the CBN releasing an additional $180 million to the forex market in an effort to ease business transactions may strengthen the naira further, speculation is rife on the central bank’s devaluation of the local currency to improve liquidity and regain more stability,” the Cyprus-based analyst added.
Oil Production RisesMeanwhile, NNPC tuesday announced that Nigeria’s oil production has risen to 2.1mbpd as a result of the government’s sustained peace initiatives in the Niger Delta.
The state-run oil firm also stated that with the current peaceful atmosphere in the oil-rich region, it was expecting tthe country’s oil production to grow above 2.2mbpd, effectively exceeding the 2017 budget benchmark of 2.2mbpd.
The Group Managing Director of NNPC, Dr. Maikanti Baru, stated this when he spoke on the corporation’s commercial strategy and priorities at the 2017 Nigeria Oil and Gas Conference and Exhibition in Abuja.
Baru’s remarks came at the same time the Minister of State for Petroleum Resources Dr. Ibe Kachikwu described Nigeria’s continued importation of petroleum products as shameful and fraudulent.
Kachikwu equally stated that the country’s refineries in Warri, Kaduna and Port Harcourt have continued to operate below profitability levels, adding that their inoperative condition had resulted in the waste of crude oil and human capacity.
The minister said the country has an oil sector infrastructure gap of over $45 billion which would need to be bridged within the next five years to reactivate the efficiency levels of Nigeria’s oil and gas sector.
Baru, in his presentation at the conference, said: “Crude production declined to as low as 1.5mbpd in July 2016, but this has steadily increased to 2.1mbpd in recent times due to the strategic steps taken by the NNPC and her partners to produce from assets that were affected by pipeline vandalism.
“We must also mention that the improvement in production is also as a result of the success of the recent dialogue held by the federal government in the Niger Delta areas.
“We are hoping that by the end of Q2, 2017, we should ramp up production above the budget benchmark of 2.2mbpd.”
He stated that NNPC encountered considerable challenges that impacted on its operations in the past year, adding however that the final resolution of joint venture cash call obligations in December 2016 re-established the confidence of joint venture partners in the business capacity of the corporation.
“The problem of the joint venture cash calls has been addressed after rigorous negotiations with our joint venture partners.
“The initial sum of about $8.1 billion was reduced to about $5.1 billion that will be paid over five years through incremental production. This notable achievement has saved the nation about $3 billion.
“The resolution of cash call arrears is expected to increase the confidence of JV operations in the system and therefore ginger more investments in new capital projects,” Baru stated.
Kachikwu also said that the infrastructure gap was limiting productivity levels in the sector.
In an apparent plea for a revision of the government’s policy of holding on to oil and gas sector assets, which it cannot fund, he said for Nigeria to bridge the gap, the nation would have to attract and allow private investment in the upgrade of most of the oil assets that are moribund.
“There is a sense of urgency needed here on infrastructure. The government is not in a position to fund most of the infrastructure and so we are left with little alternatives than to bring in private investors and work out terms that will enable us to begin to massively address the $45 billion infrastructure gap.
“Over the next four or five years, we have to find a way of bringing into this country an average of about $10 billion every year and that is essential whether in infrastructure, in pipelines, refineries or depots.
“We also have to be bold enough to take steps that have not been taken before, and they are steps that could be challenged by people but make a lot of commercial sense.
“It is no longer profitable to handhold all the assets, we have got to release those assets to the private sector under some operational and corporation mechanisms that enable us to reactivate those assets, charge the right tariff and get them to work efficiently.
“Whether it is for the gas pipelines, crude pipelines or refined products pipelines, the time has come to move away from the old model.”
On the importation of petroleum products and government’s commitment to end it, Kachikwu said: “Importation of petroleum products would have to cease, there is absolutely no reason why a country with the resources that we have will continue to import petroleum products.
“It is a shame to this country, it is fraud on the system and we have got to end it. We are committed to do this by 2018/2019.
“The refineries are not performing in the capacity they are supposed to perform. It is waste of crude and a waste of everybody’s intellectual capacity.
“If we do that, the downstream sector will survive. But if we don’t, by the first quarter of 2020 when the Dangote refinery would have come on stream, then we will have an issue in our hands.”
Subscribe to:
Posts (Atom)