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Nigeria inflation remains high at 33.95% despite month-on-month slowdown

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Nigeria’s annual inflation rate ticked up to 33.95 percent in May.

However, month-on-month headline inflation slowed to 2.14 percent in May 2024 from 2.29 percent in April 2024 which is the second broad-based decline since October 2023.

According to the National Bureau of Statistics, inflation quickened to 33.95 percent May 2024 from 33.69 percent in April 2024, for the seventeenth consecutive month driven by food and non-alcoholic beverages.

The Financial Derivatives Company, an economic think-tank, had predicted that headline inflation would increase by 0.63 percent to 34.32 percent from 33.69 percent in April.

It stated that the increase in price level combined with other exogenous factors, such as the proposed minimum wage review and increase in the rate of money supply, shows that price inflation is still very potent.

Money supply growth (M3), which declined in March by 10.26 percent to N92.34 trillion has reversed itself, jumping by 3.98 percent to N96.97 trillion in April, posing a major threat to the inflation trajectory. Research findings show that every 1 percent increase in money supply will lead to a 0.22 percent increase in headline inflation

The NBS noted that the top five contributors of inflation are food & non-alcoholic beverages 17.59 percent, housing, water, electricity, gas & other fuel 5.68 percent, clothing & footwear 2.60 percent, transport 2.21percent and furnishings & household equipment & maintenance 1.71 percent.

Food inflation also rose by 15.84 percent to 40.66 percent, year-on-year. This was a result of an increase in the rate of the average prices of Potatoes, Yam & Other Tubers, Bread and Cereals, Fish, Meat, Fruit, coffee, tea, and Vegetables according to the report.

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Dangote refinery attains double Nigeria’s 11-yr power output

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…Generates 1,500MW versus FG’s 760MW

Nigeria took eleven years to add just 760 megawatts of power to the national grid, while the Dangote refinery doubled that output, generating 1,500mw in a shorter time.

For decades, the country has suffered from chronic power shortages, and repeated promises to fix the problem have long dominated election campaigns.

Data sourced from the Nigeria Electricity System Operator showed Generation Companies (Gencos)’ delivery to the Distribution Companies (Discos) via the Transmission Company of Nigeria (TCN) has increased by 22 percent from an average of 3,400mw in November 2013 to an average generation of 4,160mw, as at 12 June 2024.

However, Dangote’s oil refinery produced 1,500mw of power after construction in 2018, surpassing the total national grid expansion achieved in over a decade.

“We don’t put pressure on the grid. We produce about 1,500 megawatts of power for self-consumption,”

Aliko Dangote said at the Afreximbank Annual Meetings and AfriCaribbean Trade & Investment Forum in Nassau, The Bahamas.

This development has raised concerns about the snail pace of growth in Nigeria’s power sector despite billions of dollars in investment and an 11-year-old privatisation exercise.

“The government and some operators in the sector may say there has been some form of growth since 2013, but in actual terms, how many people are benefiting from the privatised power sector? most conglomerates are generating their power,” Charles Akinbobola, a senior energy analyst at Sofidam Capital said.

He added, “The challenge of the power sector has not entirely been the scarcity of funds, several trillions of naira have been pumped into that industry. The sector has been plagued by the shortcomings of its managers”.

Nigeria can produce 13,000mw of power compared with more than 58,095mw for South Africa, which has a similar-sized economy and a quarter of the population.

Nigeria’s ageing grid however delivers only about 4,000mw of power to its over 200 million citizens — roughly what the city of Edinburgh provides for 548,000 residents.

GoodLife’s analysis shows that although Nigeria’s transmission capacity has increased by 20 percent to an average of 4,200mw since 2013, Nigeria’s population has soared by 57 percent within the same period from 131 million people to 206 million, according to the latest World Bank estimates.

For instance, Egypt, a country with a population of 114 million inhabitants, added a total of 28,229mw to its national grid between December 2015 and December 2018, resulting in a total installed capacity of 58,818mw.

According to the United States Department of Commerce, International Trade Administration, this has been achieved through a fast-track project that worked on installing 3,636mw of electricity in 8.5 months and is worth $2.7 billion.

Egypt also signed another project with Siemens in March 2015, which added 14,400mw in 2.5 years by building three mega combined power cycle stations.

“By converting old simple cycle power plants to combined cycle, another 1,850mw were installed,” the US report said.

In Ghana, between 2000 and 2020, electricity generation capacity increased at a rate of 6.4 percent a year from 1,358mw to 4,695mw, according to data from the country’s energy agency.

“While other countries seem to be getting it right in terms of power; Nigeria’s power sector issue has become a major conundrum in the economy. There is a major funding and liquidity crisis which is posing significant risk to investments in the electricity value chain,” Muda Yusuf, the chief executive officer, the Centre for the Promotion of Private Enterprise said.

He added,

“Some fundamental issues need to be addressed in the electricity value chain. There are issues of technical and commercial losses which are yet to be addressed. These are inefficiencies costs that consumers are compelled or expected to pay for as part of the cost recovery argument. And these costs are in billions of naira”.

GoodLife’s findings showed that rising energy costs are disrupting productive activities in Africa’s most populous nation as factories self-generate more than 14,000 megawatts of electricity due to poor supply from power distribution companies.

According to documents compiled by the Manufacturers Association of Nigeria, member companies spent N639 billion on alternative energy sources between 2014 and 2021.

Manufacturers spent N25 billion in 2014, N59 billion in 2015 and N129.95 billion in 2016.

Moreover, they spent N117.38 billion in 2017; N93.11 billion in 2018; N61.38 billion in 2019; N81.91 billion in 2020, and N71.22 billion in 2021.

Findings showed the figures have varied over the years due to the effects of inflation and the number of member companies in the association, among other factors.

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FAAC shares N1.143trn May revenue to FG, States, LGs

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A complete amount of N1,143.210 billion May 2024 Federation Accounts Revenue has been shared to the Federal Government, States and Local Government councils in the country.
Bawa Mokwa, Director of Press and Public Relations in the office of the Accountant -General of the Federation declared this in a proclamation Monday night.
Mokwa said the revenue was shared at the June 2024 gathering of the Federation Accounts Allocation Committee (FAAC), led by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun.
The gathering was held on Monday in Abuja.
In a report gave by the Federation Accounts Allocation Committee (FAAC), the N1,143.210 billion complete distributable revenue compromised distributable statutory revenue of N157.183 billion, distributable Value Added Tax (VAT) revenue of N463.425 billion, Electronic Money Transfer Levy (EMTL) revenue of N15.146 billion and Exchange Difference revenue N507.456 billion.

”Total revenue of N2,324.792 billion was available in the month of May 2024.
“Total deduction for cost of collection was N76.647 billion while total transfers, interventions and refunds was N1,104.935 billion.
“Gross statutory revenue of N1,223.894 billion was received for the month of May 2024. This was lower than the sum of N1,233.498 billion received in the month of April 2024 by N9.604 billion.
“The gross revenue of N497.665 billion was available from the Value Added Tax (VAT) in May 2024.
“This was lower than the N500.920 billion available in the month of April 2024 by N3.255 billion,”

the communique said.

It confirmed that from the N1,143.210 billion total distributable revenue, the Federal Government received total sum of N365.813 billion, the State Governments received total sum of N388.419 billion and the Local Government Councils received total sum of N282.476 billion.
A total sum of N106.502 billion (13% of mineral revenue) was shared to the benefiting States as derivation revenue.
On the N157.183 billion distributable statutory revenue, the communiqué stated that the Federal Government received N61.010 billion, the State Governments received N30.945 billion and the Local Government Councils received N23.857 billion.
The sum of N41.371 billion (13% of mineral revenue) was shared to the benefiting States as derivation revenue.
The Federal Government received N69.514 billion, the State Governments received N231.713 billion and the Local Government Councils received N162.199 billion from the N463.425 billion distributable Value Added Tax (VAT) revenue.
A total sum of N2.272 billion was received by the Federal Government from the N15.146 billion Electronic Money Transfer Levy (EMTL).
The State Governments received N7.573 billion and the Local Government Councils received N5.301 billion.
From the N507.456 billion Exchange Difference revenue, the Federal Government received N233.017 billion, the State Governments received N118.189 billion and the Local Government Councils received N91.119 billion.
A total sum of N65.131 billion (13% of mineral revenue) was shared to the benefiting States as derivation revenue.
According to the communiqué, in the month of May 2024, Companies Income Tax Oil (CIT) and Petroleum Profit Tax (PPT) increased significantly while Import and Excise Duties, Royalty Crude and Gas, Electronic Money Transfer Levy (EMTL), CET Levies and Value Added Tax (VAT) recorded considerable decreases.
The balance in the ECA was $473,754.57.

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MSNBC finishes first in primetime basic cable for first time ever

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