A glance at the 2016 economic performance shows that the Consumer Price Index (CPI) which measures inflation increased by 18.48 percent (year-on-year) in November 2016, 0.15 percentage points higher than the rate recorded in October (18.33 percent). Increases were recorded in all Classification of Individual Consumption by Purpose (COICOP) divisions that yield the Headline Index. Communication and Insurance recorded the slowest pace of growth in November, growing at 5.61 percent and 6.76 percent year-on-year respectively. The Food Sub Index increased by 17.19 percent (year-on-year) in November, up by 0.10 percentage points from rates recorded in October (17.09 percent). During the month, all major food sub-indexes increased with Soft Drinks recording the slowest pace of increase at 7.76 percent year on year. Price movements recorded by the All Items less farm produce or Core sub index rose by 18.20 percent (year-on year) in November, up by 0.10 percentage points from rates recorded in October (18.10 percent). During the month, the highest increases were seen in Housing, Water, Electricity, Gas and Other Fuels, Clothing materials and other articles of clothing, books, liquid fuel, passenger transport by air, motor cycles and shoes and other footwear. On a month-on-month basis, the Headline index increased 0.78 percentage points in November, 0.05 percentage points lower than the rate recorded in October (0.83 percent). It should be noted that the Headline Index is made up of the Core Index and Farm Produce items. As. Processed Foods are included in both the Core and Food sub-indices; this Implies that these sub-indices are not mutually-exclusive. The Urban index rose by 20.07 percent (year-on-year) in November from 19.91 percent recorded in October, the Rural index increased by 17.10 percent in November from 16.95 percent in October. On month-on-month basis, the urban index eased by 0.03 percent while the rural index was also down by 0.05 percent. The percentage change in the average composite CPI for the twelve-month period ending in November 2016 over the average of the CPI for the previous twelve-month period was 15.0 percent higher from 14.20 percent recorded in October. The corresponding twelvemonth year-on-year average percentage change for the urban index increased from 15.32 percent in October to 16.19 percent in November while the corresponding rural index also increased from 13.25 percent in October to 13.90 percent in November. ALL ITEMS INDEX COMPOSITION OF THE MAJOR INDEX AND SUB-INDICES All Items = Farm Produce + Core index Food = Farm Produce + Processed Foods Core = All Items – Farm Produce StatisticalNews Price Statistics November 2016. The Composite Food Index rose by 17.19 percent in November 2016. The rise in the index was mainly driven by increase in prices of imported foods, Meat, Bread and cereals and Fish. On a month-on-month basis, the Food sub-index increase by 0.88 percent in November from 0.86 percent recorded in October. The average annual rate of change of the Food sub-index for the twelvemonth period ending in November 2016 over the previous twelve-month average was 14.39 percent (0.57 percent) points from the average annual rate of change recorded in October (13.82 percent). The ‘’All Items less Farm Produce’’ or Core sub-index, which excludes the prices of volatile agricultural produce increased by 18.20 percent during the month, 0.10 percentage points lower from the rate (18.10) recorded in October as all key divisions which contributes to the index increased. On a month-on-month basis, the Core sub-index rose by 0.71 percent in November, down by 0.04 percentage points from the 0.75 percent recorded in October. In November, the highest price increases were reported in Housing, Water, Electricity, Gas and Other Fuels, Clothing materials and other articles of clothing, books, liquid fuel, passenger transport by air, motor cycles and shoes and other footwear The average 12-month annual rate of rise of the index was recorded at 14.54 percent for the twelve-month period ending in November 2016, 0.79 percent points higher from the twelvemonth rate of change recorded in October.
To this end, financial experts expressed expectation of Nigerians in the year 2017. The Principal Consultant of B. Adedipe Associates Limited, Dr. Biodun Adedipe, said the outlook for Nigerian economy is based on three premises namely the structure and the trajectory of the key sectors and also the direction of government policy and spending. He listed sectors in focus to include agriculture, manufacturing, solid minerals, real estate and Small and Medium Enterprises. Oil according to him remains important but more attention will go to gas.
“The expectations and opportunities are as follows: the best case for Nigeria will be if the Crude Oil price rise up to $75 per barrel. Nominal interest rate at lower double digit, Monetary Policy Rate (MPR) 12 per cent and lending rat at22.5 per cent. Inflation rate drop to 13.2 per cent in quarter 3, 2017. Exchange rate (official N280/ US$ by 2018. Improvement in power supply, gas to power Independent Power Projects (IPPs) and proliferation off- grid power systems, transport infrastructure renewal, Public Private Partnership (PPP) delivery model for commercially viable assts. This will be largely driven by improved agricultural output and productivity and a strongly expanding manufacturing sector”, he said.
He however, stated that most likely case the Crude oil price will rise to $55 per barrel in 2017. Nominal inflation rate at upper double digits (MPR 11 percent and lending rate at 22.75 per cent in 2017. Inflation rate according to him goes to 22.4 per cent until third quarter of 2017. Exchange rate (official) N325/US$ by 2017/2018.
Dr. Adedipe listed critical things to include improved power supply, Gas supply improves and progress made with alternative, renewable power. Improved transport infrastructure renewal.
The full kit for Nigeria he said include fiscal, monetary an commercial policy harmonization. Spend massively on to drive inclusive growth and be ready to live (for the time being) with the inflationary implications.
“So also stimulus across all policy planks, focused on made in Nigeria in production, consumption and trade activities. Boost domestic production and value added, devote particular percentage of public spending to goods and services produced in and provided by Nigerian entities”, he said.
Supporting this view, the Acting Director, Trade and Exchange Department, Central Bank of Nigeria (CBN), Wutrika Gotring, said there should be diversification of the economy, increased investment in Agriculture, Mining and Solid Minerals, increased investment in Infrastructure to lower cost of doing business, enhancement of local manufacturing capacity and import substitution.
He maintained that there should be policy consistency that would encourage capital flows and promote local production. So also fiscal discipline, increased patronage of made-in-Nigeria products and services, sustained implementation of the cashless initiatives and closer collaboration of CBN with fiscal authorities.
Speaking in the same vein, the Director, Research, Policy and International Relations Department, Nigeria Deposit Insurance Corporation (NDIC), Mohammed Umar, said government need to remain focused on its efforts at diversifying the economy and other policies put in place to ensure quick economic recovery from current recession. When that is done, he said the economic environment will be conducive for the banks to operate safely which reduces risk of failure and hence negative consequences on NDIC.
“There should be more intensive and synergistic collaborations between and among the safety- net participants who incidentally are also members of the Financial Services Regulation Coordinating Committee (FSRCC). The activities of the committee through regular meetings as well as subcommittees and working groups should be intensified. Considering the inter-connectedness of the sub-sectors in the system, such collaboration should include cooperation with regards to issues of smooth information sharing, capacity building for all regulators and greater co-ordination of regulatory activities in the financial system”, he said.
This, he said, could lead to efficiency in activities of all the members, greater ability to take prompt decisions as well as better position all the regulators to tackle any challenges that might arise in the sub-sectors resulting from the down-turn being experienced.
The director maintained that this would encourage continued stability of the entire system as well as confidence in the system.
Also speaking in the same vein, the director, Special Insured Institutions Department (SIID) NDIC, Joshua Etopidiok, said the government should pursue strong macroeconomic policies, implement high impact and priority capital expenditure projects, contain fiscal deficits, improve tax collection and expanding the tax base.
He listed others to include adopting Safe Net for the vulnerable, a more forward looking Monetary Policy Strategy, enhance vigilance of the financial services sector and reducing impediment to growth by building physical and social infrastructure.
Supporting this view, the director, Banking Examination department, NDIC, Adedapo Adeleke, said full recovery from the recession is hinged on the recovery of the economy itself.
“The Supervisory Authorities would continue to take proactive measures to assure financial system stability, active collaboration of all stakeholders is crucial, the press must be factual and not create avoidable panic through sensational headlines and NDIC would continue to take measures to engender confidence in the financial system”, he said.