04 Jan

Daily Watch – December PMI raises hope of economy rebound, Abuja Airport closure postponed

  • Optimism that Nigeria’s economy has hit rock bottom and is experiencing a turnaround has been shown in a surprise jump in the Purchasing Managers Index reading for December, in data captured separately by FBNQuest and the CBN. FBNQuest/NOI Polls December 2016 PMI reading, came in at 60 from 48.8 in November, which implies that the PMI is in strong positive territory. All the five variables measured by the PMI; output, employment, new orders, delivery times from suppliers and stocks of purchases were also in positive territory. The CBN PMI for manufacturers also showed a strong rebound in December rising to 52.0 index points in December 2016, from 46.0 in November. The index had recorded declines in the preceding 11 months. Eight of the 16 sub-sectors surveyed recorded expansion in the review month in the following order: cement; food, beverage and tobacco products; textiles, apparels, leather and footwear; plastics and rubber products; paper products; appliances and components; chemical and pharmaceutical products, and furniture and related products. “We can only explain the surge in the headline reading from 48.8 to 60.0 in December, in terms of the seasonal boost to household demand. Our index is not seasonally adjusted, and since the launch of the index, December has always provided a strong reading. (Those in 2013 and 2014 were even higher.) Since Nigeria is mired in recession, the extent of the seasonal demand boost this year has come as a surprise,” FBN Quest stated in a note to investors.
  • The aviation ministry has postponed the closure of Abuja’s airport by a month to March 8. The government had initially said the six week closure would begin in February, but a statement issued on Tuesday, which said the aviation minister would discuss the matter with stakeholders, said the “proposed closure” was set to start on 8 March. No reason was given for the change of date. The meeting with aviation industry figures, on Thursday, is to brief them on efforts being made to ensure that the use of Kaduna’s airport is “seamless and hitch-free” said aviation ministry spokesman James Odaudu. The Kaduna Airport handled 12 flights in December 2015, the last month for which FAAN has figures, compared with 812 that used the Nnamdi Azikiwe Airport.
  • Meanwhile, BusinessDay reports that Nigeria’s struggling domestic are facing huge financial losses for the six weeks during which the Nnamdi Azikiwe Airport will be closed to passenger traffic. The Abuja airport is Nigeria’s second busiest. The paper quoted sources in the travel industry as saying that because of concerns around security and infrastructure at the Kaduna airport, as well as the
    four-hour journey by road between Kaduna and Abuja, air traffic on the Abuja route will drop by 40 percent once the closure comes into effect. Each domestic flight operating into Abuja carries an average of 120 passengers, each paying an average of ₦50,000 for a return ticket, which comes to ₦6 billion, or 40% of the ₦15 billion in revenues that could be made on the Abuja route over a six-week period.
  • Minister of Science and Technology, Ogbonnaya Onu, has said that the FG will ban the importation of refined petroleum products into the country next year. Speaking on Monday, Onu noted that the country had relied on a single commodity, oil, which it could not determine its price, and had subsequently relegated the other sources of revenue. “By 2018, Nigeria will stop the importation of refined petroleum products into the country; since independence in 1960, the country has relied on a single commodity and failed to diversify its economy; even now, we export crude oil and import petroleum products. The 2.2 million barrels allocated to Nigeria by OPEC is not being met as a result of the menace of insurgency; the inability to meet our quota is affecting the nation.”
  • The Dangote Tomato Processing Factory in Kadawa, Kura Local Government Area of Kano State is to resume production in February. The company, which began production in Feb. 2016, had to suspend operation due to lack of enough raw materials. The Managing Director of the company, Abdulkadir Kaita, said that preparations for production to resume had reached advanced stages. Kaita said that the company had to suspend production, when most of the tomato farms in about five states were affected by a pest, which destroyed all the tomato species.