27 Jul

Daily Watch – CBN ramps key interest rate to 14%, Buhari commissions Abuja-Kaduna line

  • The CBN ramped up its benchmark interest rate by a bigger than expected 200 basis points to 14 percent on Tuesday in a bid to underpin its battered currency and attract more investment. The economy last month ditched its 16-month-old dollar peg to let the naira trade freely and lure back foreign investors who fled both the equities and bond markets in the wake of the plunge in crude prices. But the currency has since plunged and the supply of dollars has dried up, putting pressure on the CBN to hike interest rates to attract investment. Faced with the choice to spur growth by cutting rates or tackle galloping inflation, five out of eight members of the monetary policy committee opted for a rate increase, central bank governor Godwin Emefiele told reporters.
  • Nigeria’s revenue fell to the lowest in at least one year in May as militant attacks in the oil-producing Niger River delta caused crude production to slump. The federal government collected ₦384.9 billion in May, down 1.6 percent from April, the CBN said in a report posted on its website on Tuesday. That was 53 percent below the government’s budget estimate of ₦814.9 billion, the apex bank said.
  • President Muhammadu Buhari on Tuesday inaugurated the $1.46 billion Abuja-Kaduna train service. After a series of postponements, the President finally signalled the launch of the rail project. The railway modernisation project commenced with the signing of the contract for the construction of the Abuja (Idu) to Kaduna (Rigasa) rail line in 2009. Buhari said the Abuja-Kaduna train for passengers and freight was Nigeria’s first-ever standard gauge rail track to go into operation. According to him, the project was conceived by a previous administration, started by the last government and was completed and inaugurated by the current government under his leadership.
  • Power supply slumped by 4,446 MW on the weekend of 22-23 July following attacks on gas pipelines by various militant groups in the Niger Delta. The Nigeria System Operator of the TCN could only send out 2,902 MW to the 11 electricity distribution companies, according to the Nation. The Nigeria Electricity Supply Industry, on its website on Tuesday 26 July, said there was no water constraint on the day in review. It, however, noted that the electricity sector which recorded a 214 MW line constrain lost an equivalent of ₦2,237 billion. Without constraints, the electricity market would have supplied 7,562 MW to DisCos.