President Bola Ahmed Tinubu now has the time to face the Nigerian perennial economic problems that keep pushing more Nigerians into poverty, following his triumph at the Supreme Court last Thursday. Affirming his victory at the February 25, 2023 presidential election, the apex court ruled on all the grounds of appeal in his favour.
The capital and foreign exchange markets reacted positively to the apex court’s judgment. This is because in spite of losing for three consecutive days out of the five trading days last week, the nation’s capital market closed on October 27, 2023 positively, with the Nigerian Exchange Group’s All Share Index ending the week at 66,915.41 points, amounting to a year-to-date appreciation in listed equities to the tune of 31 percent.
Thirty-nine stocks appreciated in price last week as against 28 in the previous week, just as the prices of 76 stocks remained unchanged last week compared to 83 stocks in the previous week.
Positive development was also seen in the foreign exchange market. According to the FMDQ’s Nigerian Autonomous Foreign Exchange Fixing (NAFEX), which is the reference rate for on-the-spot naira to dollar exchange rate, the nation’s currency, the naira, appreciated against the dollar last week as it opened on Friday, October 27, 2023 at N801.75/$ but closed the week at N789.94/$.
Notwithstanding the knee-jerk reactions to the Supreme Court ruling, Nigeria’s gargantuan problems mean that President Tinubu’s daily scorecard starts reading from October 27.
Headline inflation soared to 26.72 percent in September with the associated food inflation at 30.64 percent. In Kogi, Rivers, Lagos, Kwara and Ondo states, food inflation ranged from 34.70 percent to 39.37 percent in September.
The rising inflationary pressures on households and businesses have prompted the World Bank to project weaker economic growth rate for sub-Saharan Africa in the coming year, according to its October 2023 Africa’s Pulse.
“Economic growth in sub-Saharan Africa is set to decelerate from 3.6% in 2022 to 2.5% in 2023 due to rising instability, weak growth in the region’s largest economies, climate shocks, and lingering uncertainty in the global economy.
“Overall, growth in the region has been inadequate to reduce extreme poverty, boost shared prosperity, and create jobs. Current growth patterns generate only 3 million formal jobs annually, thus leaving many young people underemployed and engaged in casual, piecemeal, and unstable work that does not make full use of their skills,” the World Bank said.
Price of a litre of Automotive Gas Oil (AGO), popularly known as diesel, rose by 12.8 percent year-on-year to N890.80 in September 2023 from N789.90 as of September 2022. This is already exerting pressures on the financials of manufacturing businesses in Nigeria.
Dangote Cement, one of the most capitalized listed companies on the Nigerian Exchange Group (NGX), reported a 28.9 percent surge in the cost of fuel and power consumed, from January to September 2023 compared to a similar period in 2022. Its cost of fuel and power rose to N255.45 billion in the nine-month period ended September 2023 as against N198.15 billion incurred same period in 2022.
Energy cost for BUA Cement at half-year ended June 30, 2023 increased by 9.9 percent to N47.91 billion compared to N43.58 billion as of June 2022.
Beta Glass, another industrial giant listed on the NGX, showed that most of the surge in energy cost at half-year 2023, was recorded after the reforms in the nation’s energy sector. From January to June 2023, the firm incurred a total of N5.81 billion as energy cost whereas from April to June this year, its energy cost was N2.92 billion, representing 50.3 percent of the energy cost incurred by the firm during the first half of 2023.
In 2022, its half-year energy cost was N5.29 billion of which N2.62 billion was incurred between April and June 2022, which amounted to 49.5 percent of the cost, implying that while the half-year energy cost rose by 9.8 percent, the second quarter 2023 energy cost increased by 11.6 percent when compared to the comparable period in 2022.
It should be recalled that the Nigerian economy grew in real terms by 2.51 percent at the end of the second quarter of 2023. While the second quarter (Q2) 2023 real growth was higher than that of 2.31 percent at the end of the Q1 of 2023, it was lower than 3.54 percent recorded in Q2 2022.
“Growth in the region has also been inadequate to reduce extreme poverty and boost shared prosperity. This has been compounded by the lower responsiveness of poverty to growth spells in sub-Saharan Africa vis-à-vis other regions,” the World Bank said.
President Tinubu, just like other presidents in sub-Saharan Africa, has been advised to focus on programmes that will boost creation of semi-skilled and high-skilled occupations, pursue efficient debt reduction and to strengthen state capacity to such an extent that markets could function efficiently.