The hike in the benchmark interest rate from 15.5 to 16.5 per cent by the Central Bank of Nigeria in order to rein in inflation and maintain economic stability dominates the headlines of Nigerian newspapers on Wednesday.
The Punch reports that the Monetary Policy Committee of the Central Bank of Nigeria has raised the benchmark interest rate from 15.5 to 16.5 per cent in order to rein in inflation and maintain economic stability.
Speaking at the end of a two-day Monetary Policy Committee meeting on Tuesday in Abuja, the CBN Governor, Godwin Emefiele, said the committee voted to raise the rate to 16.5 per cent while retaining the asymmetric corridor of +100/-700 basis points around the benchmark interest rate, also known as the monetary policy rate.
He said the MPC also voted to retain the cash reserve ratio at 32.5 per cent and the liquidity ratio at 30 per cent.
“The Committee’s choices were on whether to further hike rates or pause for the impact of the last three rate hikes to continue to feed through the economy. At this MPC, therefore, the options considered were primarily to hold or further tighten the policy rate. The option to loosen was not considered as this would gravely undermine the gains of the last three rate hikes,” Emefiele said.
This was the fourth time the committee would be raising the benchmark interest rate since May when the rate was moved upwards from 11.5 to 13 per cent. The rate has since increased to 14 per cent in July, 15.5 per cent in September, and to 16.5 per cent in November.
“At this meeting, the MPC was concerned that the global inflationary pressures have continued to trend higher and financial markets were also facing challenges. It observed that this was indeed the trend in Nigeria, with inflation attaining 21.09 per cent in October, 2022,” he said.
Inflation has risen from 15.92 pr cent in March to 21.09 per cent in October, due to cost of production, demand and external factors.
The newspaper says that operators in the nation’s manufacturing sector saw their combined debts to Nigerian banks rise from N4.09tn in December 2021 to N5.1tn in September 2022, according to the CBN’s Sectoral Analysis of Deposit Money Banks’ Credit.
This showed that they borrowed the sum of N1.01tn between December 2021 and September 2022.
With the increase in debts, stakeholders have maintained that the current double-digit lending rate was unfavourable as it had a direct impact on the cost of production and the competitiveness of the sector.
Members of the organised private sector and economists have however reacted to the MPC’s interest rate hike, saying it will lead to production shutdowns and higher bad loans.
The Guardian reports that 66 years after crude oil discovery in Nigeria, President Muhammadu Buhari, yesterday, officially flagged off the anticipated drilling of crude oil at the Kolmani field, which is lapping on the border of Bauchi and Gombe states.
The first phase of the exploration will entail an in-situ oil refinery of up to 120,000 barrels per day capacity, a gas processing plant of about 500 million standard cubic feet per day, a power plant of up to 300-megawatt capacity and a fertiliser plant of 2,500 tons per day, according to the Nigerian National Petroleum Company (NNPC) Limited.
President Buhari said one billion barrels of crude oil reserves and 500 billion standard cubic feet of gas exist in Kolmani River Oil and Gas Field. He further declared that his administration has attracted over $3 billion in the oil and gas sector at a time of near-zero appetite for investment in fossil energy.
By the announcement, the President became the second person to put a figure to the oil finds after the nation’s petroleum industry was thrown into divergent views when the Minister of State for Petroleum Resources, Timipre Sylva, first mentioned the figure about two years ago.
Speaking at the official groundbreaking ceremony of the Kolmani Oil Prospecting Licenses (OPLs) 809 and 810 at the Kolmani field site in Gongola basin, President Buhari said the development remained significant considering that, “efforts to find commercial oil and gas outside the established Niger Delta Basin was attempted for many years without the desired outcomes.”
According to him, the successful discovery of the Kolmani Oil and Gas field by NNPC and her partners has broken the jinx with the confirmation of huge commercial deposits of hydrocarbons in Kolmani River field.
“We are pleased with the current discovery of over one billion barrels of oil reserves and 500 billion Cubic Feet of Gas within the Kolmani area and the huge potentials for more deposits as we intensify exploration efforts.
“It is good to note that the discovery has now attracted investment for an end-to-end integrated development and monetisation of the hydrocarbon resources,” President Buhari, who doubles as the Petroleum Minister, said.
He added that upstream production, oil refining, power generation and fertiliser are anticipated at the region.
Admitting that the land locked location will create huge capital requirement, making the economics of the project a challenging proposition, the President said NNPC would de-risk the project to attract the much-needed investment.
“It is, therefore, to the credit of this administration that at a time when there is near zero appetite for investment in fossil energy, coupled with the location challenges, we are able attract investment of over $3 billion to this project.
“This will surely be a reference subject for favourable discussion in the industry as we pursue the just energy transition programme that will culminate in our country achieving Net-Zero position by the year 2060,” he said.
The newspaper says that cases of fiscal mismanagement leading to high levels of trust deficit and lack of confidence in public institutions have been identified as factors limiting Nigeria’s potential and aggravating its economic woes.
Economists believe that the inability of most Nigerians to identify an economic growth policy is hinged on the trust deficit and lack of confidence in policymakers over the years.
For instance, a critical look at the campaign promises since the 1979 elections reveals that the themes and promises are the same from achieving food sufficiency, constant electricity, and building of roads, coupled with the provision of quality education and healthcare to tackling insecurity. Fighting corruption has not been truly addressed and eliminated from the list of developmental challenges.
According to stakeholders, Nigerians seem to have run out of patience in trusting their politicians and those who hold public office on their behalf. Many international organisations have blamed the spate of insecurity, banditry, kidnapping, and farmers-herders clashes ravaging Nigeria on a lack of synergy and trust deficit among the citizens.
Despite its abundant resources, Nigeria has maintained its infamous position as the poverty capital of the world, with the disclosure that 133 million citizens currently live below the poverty line owing to lingering challenges of fiscal governance.
This figure represents 63 per cent of its population living in poverty, according to a survey conducted by the National Bureau of Statistics (NBS), National Social Safety-Nets Coordinating Office (NASSCO), United Nations Development Programme (UNDP), United Nations Children’s Fund (UNICEF) and the Oxford Poverty and Human Development Initiative (OPHI).
A new World Bank report on Nigeria’s Public Finance Management and Fiscal Issues unveiled on Tuesday, stated categorically that the way forward for the nation’s lingering economic misfortune is to win the trust and confidence of the people by creating a governance structure that is all-inclusive and people-oriented.
At the presentation ceremony held in Abuja, the Country Director, of World Bank for Nigeria, Shubham Chaudhuri said: “Nigeria is currently facing huge developmental challenges, Nigeria has not been able to afford what the government needs to spend and meet those basic developmental needs. But really, Nigeria cannot continue to spend more by just borrowing, with this, it becomes imperative that the financial resources that Nigeria has should be spent in a much better way.
GIK/APA