Connect with us

Top Story

MPC members attribute rising inflationary pressure to food inflation

Published

on

…Seek increased security of farming communities

 …Raise interest rate to 26.25%

By Seun Ibiyemi and Mathew Denis

The Monetary Policy Committee, MPC, members of the Central Bank of Nigeria, CBN, have attributed rising inflationary pressure to food inflation. This was as they increased the benchmark interest rate by 150 basis points from 24.75 percent to 26.25 percent.

The Governor of the CBN, Olayemi Cardoso, who doubles as the Chairman of the MPC disclosed this at the end of the 295th MPC meeting which was held on Monday and Tuesday in Abuja.

Cardoso revealed that while the Monetary Policy Rate was increased, all other rates were retained.

MPC members, however, noted that the inflationary pressure continues to be driven largely by food inflation.

The Committee reiterated several challenges confronting the effective moderation of food inflation to include: rising cost of transportation of farm produce; infrastructure-related constraints along the line of distribution network; security challenges in some food producing areas; and exchange rate pass-through to domestic prices for imported food items.

It urged that more be done to address the security of farming communities to guarantee improved food production in these areas.

It raised the MPR by 150 basis points to 26.25 percent from 24.75 percent, retained the asymmetric corridor around the MPR to +100/-300 basis points, retained the cash reserve ratio of Deposit Money Banks at 45 percent, and held the liquidity ratio at 30 percent.

Revealing the considerations of the MPC, Cardoso said, “The key focus of the MPC at this meeting remained to achieve price stability by effectively using tools available to the monetary authority to rein in inflation. Members observed that while year-on-year inflation in April 2024 rose moderately, the month-on-month headline food and core measures declined significantly.

“This follows a decline in month-on-month headline and food measures in March 2024, suggesting that the recent tight monetary stance of the bank is beginning to yield the desired outcome. The MPC, however, noted that the inflationary pressure continued to be driven by food inflation.

“The committee thus reiterated several challenges confronting the effective moderation of food inflation including rising cost of transportation of farm produce, infrastructure constraints along the line of distribution network, security challenges in some food-producing areas and exchange rate pass-through to domestic prices for imported food items. The MPC urged that more be done to address the security of farming communities to guarantee increased food production in these areas.”

On the continued instability of the Nigerian currency, Cardoso said that it was a function of the free market system.

“Members further observed the recent volatility in the foreign exchange market attributing this to seasonal demand, a reflection of the interplay between demand and supply of a freely functioning market system. The committee also noticed the marginal increase in the foreign reserve between March and April 2024,” he said.

Since the MPC resumed meeting this year, this is the third consecutive increase that has been done. In all, the MPC has increased the MPR by 750 basis points since February.

The MPR was increased by 400 basis points to 22.75 percent from 18.75 percent in February. It was increased by 200 basis points to 24.75 percent in March and currently by 150 basis points to 26.75 percent in May

The MPC has maintained a hawkish stance since in a bid to tackle Nigeria’s persistent inflation.

As of April, Nigeria’s inflation rate had risen to 33.69 percent. The April 2024 headline inflation rate showed an increase of 0.49 per cent points when compared to the March 2024 headline inflation rate, according to the National Bureau of Statistics.

The NBS said that on a year-on-year basis, the headline inflation rate was 11.47 percent points higher compared to the rate recorded in April 2023, which was 22.22 percent. Food Inflation was 40.53 percent in April 2024

Ahead of the MPC meeting, some analysts projected a rate hike in line with the avowed stance of the CBN to fight inflation with some projecting an interest rate of 25.75 percent, which the MPC has surpassed.

In their weekly macroeconomics report ahead of the MPC, analysts at Meristem Research projected that the MPC would hike rates in line with its avowed inflation-fighting stance.

The analysts said, “During the meeting, we expect the committee to deliberate on disinflationary trends observed in advanced economies, as well as the sustained ‘high for longer’ interest rate stance employed by monetary authorities to effectively combat inflation in these economies.

“In the domestic economy, Nigeria’s inflation rate came in lower than expected in April 2024, rising to 33.69 percent from 33.20 percent in the previous month (marking the 16th consecutive month of inflation uptrend). This uptick is primarily attributed to increases in both the food and core indexes, driven by higher food prices and the continued depreciation of the naira.”

Analysts at Cordros Asset Management echoed similar sentiments that the MPC may increase their benchmark rate, projecting a 0.5 percent hike.

They pointed out that aside from global central banks approaching the end of the interest rate hiking cycle, “we think the MPC has reached a point where overtightening becomes a concern even as the debate remains on what constitutes a neutral interest rate that will not hurt domestic growth.”

“As such, we think the dilemma for the committee at the meeting will remain whether to continue its rate hike to further dampen the rising inflation trajectory or adopt a hold stance to observe emerging developments and allow for the impact of the last rate hikes to permeate the economy.

“In our view, given that the end of rate hikes by systemic global central banks is in sight amid sticky domestic inflation, we think the MPC is likely to maintain a slower rate hike at this meeting. Indeed, at the post-MPC conference in March, the CBN governor stated that maintaining aggressive tightening poses a risk to financial system stability.”

Reacting, Commercio Partners firm said the Apex Bank’s rate hike is expected to exert increased strain on the economy, particularly on businesses. The economy, already grappling with numerous social and economic challenges, may face further destabilisation. An increase in the minimum cost of borrowing could slow down the corporate sector, potentially leading to a decline in the stock market.

Additionally, the recent interest rate hike is expected to stimulate activity in the fixed-income market by making new securities more attractive. New bonds will be issued with higher yields to reflect the increased policy rate. Investors will demand higher returns to compensate for the elevated interest rate environment. As a result, long-duration bonds, which are more sensitive to interest rate changes, are likely to experience greater price declines compared to short-duration bonds as rates rise.

On the macroeconomic front, the increased interest rate may slow GDP growth and hinder stock market appreciation. Furthermore, this policy could exacerbate the unemployment issue facing the Nigerian economy. Despite these challenges, there is a slim possibility that inflation rates may ease somewhat by the end of the year.

Also reacting Director, Upfront Enterprise, Dr. Faiva Haruna stressed the Monetary Policy Committee (MPC) hike of  the Monetary Policy Rate (MPR) to 25.25 percent increase in the rate may discourage people and businesses from going to the Nigerian Stock Exchange Market as it may not be safe for them.

“They will have to smell the coffee, I know in a matter of weeks, their banks will start writing them for a review of rate, and for those that want to start a business that needs funding, they will be affected by the rate as well- that is why we say when you increase rate (monetary) it will crowd out employment,” he said of business owners.

Also speaking, the Executive Director of Nigerian Workforce and Enlightenment Center (NIWOSEC), Dr. David Ehindero advised that the decision of the MPC would further impact the real economy, which is already facing several macroeconomic difficulties.

According to him, “The decision was consistent with the typical policy response of the Central Banks globally, it failed to reckon with domestic peculiarities. The key drivers of Nigeria’s inflation are largely supply-side variables and the CBN ways and means of financing.

“Over the last two years, there has been persistent monetary policy tightening, yet there has not been any significant impact on the inflationary pressures. If anything, the general price level has been continuously on the increase,” he said.

He pointed out that the impact of monetary policy on the Nigerian economy is still quite limited, with weak transmission effects.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Top Story

Anxiety as Rivers Govt issues ultimatum to LG Chairmen to vacate councils

Published

on

…Police tighten security, as youths dare Chairmen to resume

By Barth Ndubuwah, Port Harcourt

Anxiety has gripped Rivers State following the ultimatum issued to Local council Chairmen to vacate their offices following the expiration of their tenure.

Some youths on Monday prevented the Chairmen from resuming at the office while singing war songs, appeared battle ready as they insisted that they would not allow the chairmen to remain in office after serving out their tenure.

The angry youths said they will remain there to ensure the outgoing local government chairman does not return to the council.

Singing in their local dialects, the youths chorused that the council chairman has failed, saying, ‘He is a failure. You must go.’

At Asari-Toru Local Government Area, hundreds of youths stormed the council headquarters in Degema and occupied the facility.

Many of the youths were seen in different groups in front of the secretariat and the entire stretch of the road leading to the entrance, even as some could be heard saying, ‘Asawana’ a popular slang among the Ijaws which signifies solidarity, even as others arrive the scene in droves.

The youths said they will remain until Wednesday when work resumes and dared the council chairmen to come to the secretariat.

Reports from the 23 LGAs indicate that the Chairmen of councils, councilors and the entire council workers did not turn up for duties given  the fact that yesterday was a public holiday to mark Eid-el-Kabir.

NewsDirect  gathered that ex-agitator and warlord, Alh Asari Dokubo and his boys had as early as 6am besieged headquarters of the three Kalabari local government areas of Asari-Toru,Akuku-Toru and Degema, baricading  their gates to prevent the chairmen and their aides from gaining access into the council premises.

Asari was quoted to have told the outgoing chairmen to go home, as their tenures have expired.

It was also reported that the Police  took over the council headquarters of Port Harcourt City, Obio-Akpor and Ahoada East local government areas, possibly to prevent breakdown of law and order in the State.

This came on the heels of threats from some council chairmen that they won’t leave office at the expiration of their tenures.

Notable among them were Ikwerre Council Chairman, Samuel Nwaosike,Emohua- Council Chairman, Dr Chidi Lloyd  and Eleme Chairman, Abarilor Mate Ollor.

However, feelers from the closed door stakeholders meeting at Government House, presided over by Gov Siminalayi Fubara indicated that the Council Chairmen will be given up to 12midnight today to vacate their seats,or risk the consequence of disobedience.

Responding to the perceived political instability that may erupt, the Commissioner of Police in the state, Olatunji Disu, declared his readiness to protect the lives and properties of the people of the state.

Speaking in Port Harcourt, Disu warned individuals against taking the law into their hands. He stressed that anyone found doing so would face the full wrath of the law.

Disu said, “My job as a police policeman is to protect lives and properties. And that is what we have gone out to do since morning.

“We are aware of the crisis that has to do with the tenure of the Local Government Chairmen and we have gotten one court order or the other.

“And the Court of Appeal has given an order for everybody to exercise restraints till the 20th of this month — just three days.

“So we expect everybody to respect it and not take laws into their hands and allow peace to continue as it is,” he said.

Continue Reading

Top Story

Fidelity Bank ranked amongst top banks in ESG Rating

Published

on

By Seun Ibiyemi

A recent survey commissioned by the Independent Project Monitoring Company (IPC) Limited has ranked Fidelity Bank Ple fourth out of 29 Nigerian banks in Environmental, Social and Governance (ESG) practices and reporting. The bank achieved a score of 57.73 percent.

The result shows that ahead of Fidelity Bank, Zenith Bank was ranked first at 65.22 percent, followed by Access Bank at 60.33 percent and Stanbic IBTC Bank at 60.16 percent.

The United Bank for Africa (UBA) was ranked fifth at 57.19 percent.

In a post hosted on MSN.com, the IPC stated that the ratings were benchmarked against the leading global ESG rating companies such as S & P Global and MSCI Sustainability Ratings.

These weightings were determined following a comprehensive analysis of both global rating standards and the specific nuances of the Nigerian business landscape, resulting in allocations of 13 percent for environmental factors, 43 percent for social factors and 44 percent for governance factors.

In his welcome address at the launch of the ESG report in Lagos, Managing Director IPM C, Mr Robert Ode Odiachi, said the Nigerian banking and insurance sector have played key roles in the economic stability of the country.

He said in the midst of growing challenges facing the two sectors, there is a growing need for banks to integrate Environmental, Social and Governance (ESG) practices into their operations especially in the area of risk management and reporting.

“This proactive approach helps them stay adaptive to changing regulations, amidst the rising expectations of consumers,” he stated.

Also speaking at the event themed, ‘Driving Impact: Harnessing ESG for Sustainable Finance,’ Rukaiya el-Rufai, Special Adviser to the President on NEC and Climate Change, said companies that prioritise ESG are not only contributing to a more sustainable and an equitable world but are also positioning themselves for value creation that not only ensures greater financial performance but embeds value levers that will sustain the performance.

According to el-Rufai, corporates must ensure that they attain the fine balance of creating sustainable value for their enterprises as well as for society in what is understood as share value creation.

This means that corporates must look beyond themselves to seek to understand and incorporate what value means to their stakeholders.

“Corporates can leverage frameworks, standards, ratings and guidelines to establish clear expectations and avoid blind spots in their operations.

“Companies that proactively address these issues through sustainable practices, such a s reducing carbon footprints, investing in renewable energy and promoting circular economies, are better positioned to thrive in a resource-constrained world,” she stated.

It would be recalled that in November 2023, Fidelity Bank became an official signatory of the UN Principles for Responsible Banking — a single framework for a sustainable banking industry developed through a collaboration between banks worldwide and the United Nations Environment Programme Finance Initiative (UNEPFI).

Ranked as one of the best banks in Nigeria, Fidelity Bank is a full-fledged commercial bank with over 8.3 million customers serviced across its 251 business offices in Nigeria and the United Kingdom as well as on digital banking channels.

The bank has won multiple local and international awards including the Export Finance Bank of the Year at the 2023 BusinessDay Banks and Other Financial Institutions (BAFI) Awards, the Best Payment Solution Provider Nigeria 2023 and Best SME Bank Nigeria 2022 by the Global Banking and Finance Awards; Best Bank for SMEs in Nigeria by the Euromoney Awards for Excellence 2023; and Best Domestic Private Bank in Nigeria by the Euromoney Global Private Banking Awards 2023.

Continue Reading

Top Story

Cholera outbreak: Lagos Island records highest number of 106 suspected cases — Commissioner

Published

on

By Sodiq Adelakun

Lagos State Commissioner for Health, Prof. Akin Abayomi, has disclosed that Lagos Island has recorded the highest number of suspected cholera cases, with 106 cases out of 350 suspected cases in the state.

The Commissioner made this known through his official social media account on Monday, while providing an update on the state’s cholera outbreak.

According to the World Health Organisation (WHO), cholera is a highly infectious disease caused by the ingestion of food or water contaminated with the bacterium Vibrio cholerae.

If left untreated, cholera can lead to severe acute watery diarrhoea and even death within hours.

Prof. Abayomi confirmed that laboratory tests have confirmed the outbreak to be caused by cholera, with the identified strain being highly aggressive and contagious, posing a significant risk of widespread dissemination.

The Commissioner’s disclosure has raised concerns about the potential spread of the disease in the state.

Speaking on morbidity and mortality, Abayomi disclosed that 350 suspected cases of cholera were reported in 29 wards across multiple local government areas (LGAs) in the state.

According to him, there are 17 confirmed cases and 15 fatalities attributed to severe dehydration caused by delayed presentation at health facilities.

The commissioner further said that the geographical distribution of suspected cases by LGAs revealed that Lagos Island was the epicentre of the outbreak with 106 cases; followed by Kosofe 49; Eti-Osa 38; Lagos mainland 30 and Ojo 17.

Other LGAs affected are Ikorodu 16; Kosofe 16; Shomolu 11, Surulere has nine; Apapa -eight; Mushin-eight; Ifako Ijaiye -eight; Mushin -five; Alimosho -four; Ajeromi Ifelodun -four; Oshodi-Isolo -three; Ikeja three; Ibeju Lekki -two; Badagry -two; and Amuwo-Odofin -one.

“Through community-based case finding and contact tracing, we have observed that the number of cases has peaked and is now significantly declining,” he said.

He stressed that the state was intensifying its public health prevention campaigns to prevent a resurgence.

According to him, suspected cases are receiving free treatment at the state’s public health facilities, in line with public health response protocols.

Abayomi said that the state was receiving support from the Nigeria Centre for Disease Control (NCDC), and International partners, including the World Health Organisation (WHO) and UNICEF.

He added that local non-governmental organisations are actively involved in raising awareness and conducting community-based surveillance efforts.

On cholera causes and transmission, Abayomi disclosed that cholera is caused by contaminated water and food and transmission common in areas with inadequate water treatment, poor sanitation, and insufficient hygiene.

He said that common symptoms include severe diarrhoea, vomiting, dehydration, rapid heart rate, low blood pressure, thirst and muscle cramps.

“Symptoms can appear within a few hours to five days after infection,” he warned.

On prevention measures, Abayomi advised citizens to drink safe water that’s boiled, treated, or bottled and eat food that’s thoroughly cooked and hot, and avoid raw foods.

He advised citizens to maintain high hygiene by washing hands with soap and clean water regularly and using proper sanitation facilities and disposing of waste properly.

Speaking on treatment, Abayomi stressed that immediate action on rehydration was key, adding that oral rehydration salts (ORS) are crucial.

He added that medical treatment would be required for severe cases that may require intravenous fluids and antibiotics.

Abayomi advised the public to seek prompt medical help if symptoms occur and report any suspected cases to health hotlines: 08023169485 08137412348, or call 767 or 112.

Continue Reading

Trending