15 Nov

Daily Watch – Inflation soars to unchartered territory, Jumia says Black Friday is recession-proof

  • The NBS on Monday released new data showing that the Consumer Price Index, a measure of inflation, rose to a 94-month high of 18.3 percent in October. The 18.3 percent inflation rate, which is about 0.48 percent higher than the 17.9 percent recorded in September, is the highest since January 2009 when the NBS started publishing the revised CPI. The bureau attributed the increase in inflation rate to pressures recorded in some sub-indexes such as housing, electricity, gas, water, lubricants for personal transport and education. It explained that while the prices of food items such as bread, cereals, fish and meat also recorded significant increases, fruit prices moderated during the period. The report added that the least growth pace recorded in October was experienced in communication (5.7 percent), restaurants and hotels (9.4 percent), and recreation and culture (10.3 percent). The NBS noted that the urban index rose by 19.9 percent (year-on-year) in October from 19.5 percent recorded in September, while the rural index increased by 16.95 per cent in October from 16.4 percent in the previous month.
  • The FG is planning to introduce the issuance of promissory notes in 2017 in a move to reduce the huge debts owed local contractors and encourage the restart and continued performance of works at various project sites across the country. Thisday, citing an unnamed top finance ministry official reports that given the level of the federal government’s indebtedness to local contractors, a move towards issuing promissory notes to them next year was in the offing and would be included in the 2017 budget. According to the source, despite the funds released to contractors so far, the required impact was not being felt vis-à-vis the resumption of construction at multiple sites across the federation. The source pointed out that when the first capital release was made to the contractors from the 2016 budget, “it was swallowed by the banks due to the piled up debts”. The source added that it was the release of the second tranche to contractors that inspired some confidence that government was serious about defraying its huge debts to them. The finance ministry official disclosed that with the $600 million budget support loan just released by the AfDB, more money would by paid to local contractors, which he added would begin to impact on the economy as it trickles down. “But going forward, in the 2017 budget, we are introducing promissory notes similar to Sovereign Debt Notes,” the source said.
  • The practice of allowing states to be allocated specific oil acreages and encouraged to enter into joint ventures to explore and exploit oil resources in the allocated acreages was one of the several recommendations by the Petroleum Resources minister, Ibe Kachikwu in one of three new books he authored and launched in Abuja on Monday, with Vice President Yemi Osinbajo, state governors, legislators and industry operators in attendance. The books, ‘Legal Issues in the Nigerian Petroleum Industry’, ‘The Petroleum Industry Bill: Getting to the Yes’ and ‘Compendium of Oil and Gas Cases in Nigeria’, according to the minister, was to draw attention to issues in the oil sector and seek potential resolutions. Currently, oil activities in Nigeria are dominated by the federal government through joint ventures between the NNPC and foreign multinationals with local independent companies operating in marginal fields accounting for the rest of Nigeria’s oil production. But Kachikwu in the book titled, ‘Legal Issues in the Nigerian Petroleum Industry’, noted that allowing states to own these acreages will create the needed sense of ownership, equity and allow them to break out of the country’s choking unitary development.
  • Traders on the Lagos parallel market are still struggling to come to terms with last week’s raid by security operatives, the situation worsening the scarcity of the US currency as traders’ fear that DSS operatives were still disguising as potential foreign exchange buyers in the market. A currency trader, who pleaded anonymity told the News Agency of Nigeria that the situation might further erode the gains made by the CBN in ensuring the sale of the proceeds of diaspora remittances to BDCs. The pound and the euro closed at ₦560 and ₦500 at the parallel market. At the BDC window, a dollar traded between the ₦385 to ₦400 CBN controlled band, while the pound and the euro closed at ₦555 and ₦500 respectively. The naira lost 25 kobo in the interbank market to close at ₦305.25, from ₦304.75 recorded on Friday.
  • Jumia Nigeria’s CCO, Thomas Simonet has said that the economic recession will not impede sales on the e-commerce platform during the forthcoming Black Friday weekend. Simonet stated this on Monday, ahead of the company’s annual bumper sales promotion season, saying though 2016 had been tough, “there still lays an opportunity as some vendors are more eager to have more sales channels to earn more income.” In his words, “Some customers have delayed their sales with the expectation for a fall in prices of commodities. However, this Black Friday will serve as a channel for vendors to make more sales and money; and shoppers to purchase commodities at low rates.” The retailer’s Country Manager, Tolu Yanwah, said, “Black Friday is special for it offers a lot of discounts, offering the platform for the customer to purchase many goods at a lower rate and the vendors can sell in large volume.” On the discount sales, she said that negotiations had been made to ensure good stocks were got at the best prices, adding that, “On operational management, we have entirely moved to full marketplace operations, which means that marketplace is roughly 80 percent of our entire business; so, we have very good partnership and relations with the vendors and better assortment on our website.”