Business
IMF Executive Board Concludes 2014 Article IV Consultation with Nigeria
ABUJA – On February 21, 2014, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Nigeria.
Real GDP is projected to grow at 6.4 percent in 2013 owing to continued strong performance in the non-oil sector. Inflation declined to 7.9 percent at year end, supported by lower food price, fiscal consolidation, and a tight monetary policy stance. The external current account surplus fell to 3.1 percent of GDP from 7.8 percent at end-2012, but reserves remained at a comfortable 5.6 months of next year’s imports, despite uncertainties about the timing of the tapering of unconventional monetary policies. The non-oil primary deficit of the consolidated government is projected to narrow from expenditure restraint, but a shortfall in oil revenues resulted in a drawdown of the Excess Crude Account (ECA), a key fiscal buffer. Despite significant job creation, unemployment and poverty are high and social indicators lag those of peers. Continued weaknesses in labor markets, access to electricity, cost of doing business, and small and medium enterprises’ access to finance have prevented a transition to a more robust and inclusive growth path.
Economic growth is expected to improve further in 2014, driven by agriculture, trade, and services. Inflation should continue to decline, with lower food prices from higher rice and wheat production and supported by a tight monetary policy and a budget execution that maintains medium-term consolidation objectives. The current account is also expected to improve. Key risks to be managed include: (i) uncertainty about the pace of global recovery; (ii) unwinding of UMP; (iii) persistently lower oil prices; (iv) persistent oil production losses; (v) continuation of insurgency in the North; and (vi) slow implementation of reforms.
Sound and balanced economic policies over the medium term are critical. Policies should focus on rebuilding external and fiscal buffers, avoiding spending pressures from the political cycle, strengthening the transparency and governance of the oil sector, and enhancing financial stability, while promoting the availability of and access to finance. Over the medium term, it will be vital to ensure the steady implementation of the wide-range of structural reforms necessary to improve competitiveness and productivity, boost growth and job creation, strengthen governance, and build social cohesion.
Executive Board Assessment
Executive Directors welcomed Nigeria’s continued strong macroeconomic performance, underpinned particularly by sustained high growth in the non oil sector. Inflation has continued to decline and the reserves position is adequate. While the economic outlook remains favorable, key risks include continued lower oil revenues from oil production losses and lower oil prices, the impact from the unwinding of unconventional monetary policy in advanced economies, and domestic political and security uncertainties. Directors underscored that steadfast implementation of prudent macroeconomic policies and reforms will be essential to address the risks and vulnerabilities, generate more inclusive and balanced growth, and reduce unemployment.
Directors welcomed the authorities’ continued commitment to fiscal consolidation and noted the improvements made to the fiscal framework. However, to ensure macroeconomic stability, they emphasized the need to rebuild fiscal buffers and to strengthen the framework further. Efforts should be geared towards boosting non oil revenue by broadening the tax base, improving tax administration and curtailing exemptions, and further reducing oil subsidies. Directors underscored that adopting a rule based reference oil price in fiscal projections and further strengthening public financial management should help the authorities achieve their consolidation objectives. They also highlighted the need for improving oil revenue management, including by completing the transition from the Excess Crude Account to the Sovereign Wealth Fund. These measures should be supported by full implementation of the Treasury Single Account and the integrated information management systems. Maintaining fiscal discipline in the run up to the elections is also important.
Directors called for strong action to address oil theft and production losses. They advised the authorities to strengthen the regulatory framework by passing a sound Petroleum Industry Bill with enhanced oversight and transparency provisions. The framework for anti money laundering and combating the financing of terrorism could support these efforts.
Directors commended the authorities for lowering inflation and considered the current tight monetary policy stance to be appropriate, given the risks associated with potential capital flow reversals. To better manage liquidity, they generally encouraged more reliance on open market operations to guide short term interest rates. With regard to exchange rate policy, Directors noted that greater exchange rate flexibility could serve as an important buffer against external shocks.
Directors noted that the financial system is well capitalized with low nonperforming loans. They recommended continued improvements in the supervisory framework, especially with regard to increased exposure from cross border financial activities. Directors encouraged the authorities to build on the progress made in strengthening prudential policies, including by further enhancing the framework for anti money laundering and combating the financing of terrorism, and implementing the remaining Financial Sector Assessment Program (FSAP) recommendations. They welcomed the plan to wind down the operations of the Asset Management Corporation of Nigeria.
Directors emphasized that structural reforms remain critical to improve competitiveness and productivity, and reduce poverty and inequality. They encouraged the authorities to persevere with their Transformation Agenda with continued focus on education and health reforms, the improvement of power supply, and broadening agricultural production. Reform efforts should also aim at enhancing the business environment, improving productivity, boosting financial access to small and medium sized enterprises, and strengthening governance and institutional capacity. The upcoming release of re based GDP data and further improvements in statistical data collection should strengthen the basis for policy and private sector decision making in Nigeria.
Business
Tesla Aims for 2028 Commercial Production of Flying Car
Tesla has set a 2028 commercial production date for its new Roadster sports car that can briefly rise into the air using rocket technology.
According to CNN, the date was revealed when the manufacturers demonstrated its functionality on Thursday at a SpaceX testing facility in Texas, United States, where the two-seater vehicle performed a series of manoeuvres, including driving upside down before making a short airborne movement.
The prototype was operated without a driver during the test, with Musk saying the decision was taken “to make sure we don’t kill anyone.”
“Success is not guaranteed. I mean that. It’ll probably work, but if it doesn’t work, we’re at a safe distance,” he said.
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CNN reported that the vehicle uses 10 nozzles and high-pressure air tanks to generate thrust, with Musk claiming it could accelerate from zero to 60 miles per hour in less than a second.
The Tesla boss attributed the development to cooperation between the electric vehicle manufacturer and SpaceX, the rocket company he also leads.
He described the project as “the results of what happens when you have a collaboration with the world’s best car company and the world’s best rocket company.”
Musk also sought to assure spectators that the demonstration was genuine, saying, “We need an audience to prove that it’s not AI or SI. So you guys can tell people you saw it with your eyes, because what you see with your eyes, you will not believe.”
Despite the display, questions remain about whether the vehicle can achieve sustained flight and how practical it would be for everyday transportation.
Roger Conner, curator for vertical flight at the Smithsonian’s National Air and Space Museum, told CNN that combining the requirements of road vehicles and aircraft presented significant engineering challenges.
“Aircraft are extremely sensitive to weight, whereas with ground vehicles you want them to have bumpers and crumple zones and all that,” he said.
“Inevitably, something that is a hybrid between the two is going to be a poor performing aircraft and a poor performing vehicle, and also quite expensive,” he added.
Conner questioned whether the demonstration amounted to flying in the conventional sense.
“We’re not talking about sustained flight. We are literally talking about hopping,” he said.
However, Jim Dukhovny, chief executive of flying car startup Alef, said the technology was achievable, while pointing to the difficulties involved in making such vehicles transition safely from vertical take-off to forward flight.
“It absolutely is 100% feasible,” he told CNN.
“That being said, the hardest part on all eVTOLs, and for us, it’s a transition from (rising) vertical to (moving) forward. It needs to be extremely careful, making sure you do not lose lift, and making sure it’s very stable,” he added.
CNN also reported that Alef’s prototype weighs about 254 pounds, uses eight propellers and is designed to carry one person.
Musk said Tesla intended to begin production of the new Roadster in 2028.
CNN reported that the latest display adds to Musk’s ambitions to push Tesla’s vehicle technology beyond conventional electric cars, although the prototype’s ability to operate as a practical flying vehicle has yet to be established.
Business
Marketers Eye Portion of FG’s Petrol Discount
The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has urged the Federal Government to add its member-stations to the petrol discount programme.
It cautioned that the current arrangement could limit the reach and deny vast consumers in underserved communities the benefits of the 30-day discount window.
The PETROAN also urged the FG to allocate at least 30 percent of the discounted petrol volume to outlets operated by its members.
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The calls followed last week’s announcement by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, of a petrol discount at Nigerian National Petroleum Company Limited (NNPC Ltd) retail outlets, with priority given to public transport operators nationwide.
According to the National Publicity Secretary, Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, the exclusion of independent marketers could undermine the programme’s effectiveness, particularly in communities where NNPC retail outlets have limited presence.
He argued that independent marketers, with their extensive nationwide distribution networks, were better positioned to extend the benefits of the intervention to consumers in remote and underserved areas.
“Independent oil marketers have over 90 percent coverage and presence in the nooks and crannies of this country. You are giving NNPC that is situated only in the town. So how do the poor masses, whom you intend to ensure that this petroleum product will alleviate their sufferings, how would they now get it?” Ukadike asked.
He said the association was not opposed to the government’s policy but insisted that independent marketers should be included to ensure wider access to the discounted product.
“But it’s government policies; we are not against government policies, but let it be all-inclusive; let independent marketers be part of it,” he said.
Ukadike also urged the government to extend the discount period to 60 days, citing logistical challenges that could delay the movement of petrol from coastal depots to other parts of the country.
“And the 30 days should be extended to 60 days. Because of the circulation of petroleum products, most times it takes two weeks for a truck to leave Apapa and get to Gombe, Maiduguri, because of the bad road and all the rest of them and loading process,” he added.
Similarly, PETROAN National President, Billy Gillis-Harry, urged the Federal Government to allocate 30 per cent of the discounted petrol volume to the association’s retail outlets to facilitate broader national distribution.
Business
Tanzania Nears Completion of $42bn Equinor, Shell-Led LNG Project
In the bid to transform Tanzania into the East African regional energy hub, the country is on the verge of concluding an agreement with a consortium of energy companies, including a $42 billion LNG project.
It was gathered that the project is designed to tap the 47.13 tcf of gas discovered in Tanzania’s deep offshore fields, part of the country’s estimated 57.54 tcf in total discovered reserves, the sixth-largest in Africa, behind Nigeria, Algeria, Senegal, Mozambique and Egypt.
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Equinor and Shell would be the lead operators, alongside involvement from ExxonMobil Pavilion Energy and Medco Energi, while state oil major, the Tanzania Petroleum Development Corporation (TPDC), would also hold an equity stake in the project.
“It’s almost there,” Khamis Mussa Omar, Tanzania’s finance minister, told Reuters.





