Business
Spain Emerges from a Two-Year Recession
… Amid Effort to Add Jobs
MADRID – Spain emerged from a two-year recession in the third quarter, strengthening Prime Minister Mariano Rajoy’s efforts to repair the nation’s finances and reduce the 26 percent jobless rate.
Gross domestic product expanded 0.1 percent from the second quarter, when it shrank 0.1 percent, and fell 1.2 percent from a year ago, the Madrid-based Bank of Spain estimated in its monthly bulletin today. The data, which are preliminary, matched the median estimate of 37 economists in a Bloomberg News monthly survey.
Spain is crawling out of its second recession since 2008 as foreign investors are returning to the nation’s bond and stock markets. Signs of export-led economic growth may bolster Rajoy, half-way through his four-year term, as he tries to convince Spaniards that his unpopular austerity policies will allow the nation to leave the sovereign debt crisis behind it.
“We are optimistic on the euro periphery as a whole and Spain in particular,” said Robert Wood, an economist at Berenberg Bank, which forecasts growth of as much as 1.4 percent in 2014. “The country has made big structural changes, it’s been engaged in a lot of deficit reduction, business sentiment is improving and unemployment is probably close to a peak.”
Rajoy said today the recovery from the crisis, which destroyed 3.8 million jobs from the peak of the debt-fueled boom, would be “slow and gradual.”
Growth was driven by overseas sales as domestic demand fell 0.3 percent, the Bank of Spain said today. The decline in investment slowed and private consumption grew 0.1 percent from the previous quarter, when it was unchanged.
The spread between Spain’s 10-year borrowing costs and Germany’s has narrowed to less than half its peak in July 2012 and the government sold a new 30-year bond this month for the first time since 2009. The 10-year yield fell 6 basis points from yesterday to 4.15 percent at 11:.42 a.m. in Madrid, compared with a euro-era high of 7.75 percent last year.
Stocks have surged, with the Ibex-35 index of leading companies gaining 20 percent this year, and Banco Santander SA Chairman Emilio Botin said last week in New York “everyone” was interested in investing in Spain. Microsoft Corp. founder Bill Gates added to the optimism on Oct. 21 by buying a 6 percent stake in Spanish builder Fomento de Construcciones & Contratas SA, while Carrefour SA (CA) Chief Financial Officer Pierre-Jean Sivignon said last week there are signs of stabilization in Spain.
“A positive figure for Spain is a big deal from a psychological point of view because it’s the first in a number of quarters,” Ben May, a European economist at Capital Economics in London, said in a telephone interview.
Rajoy still needs to battle a debt burden that will approach 100 percent of economic output next year and the 56 percent youth jobless rate. Unemployment will remain above 25 percent until 2018, the International Monetary Fund forecasts.
In the three months through September, the decline in employment slowed “significantly” to 0.1 percent amid the country’s peak tourism season, the Bank of Spain said. The number of tourist visits through September reached 48.8 million, its highest level for the nine-month period since at least 2000, Spain’s tourism institute said yesterday.
Austerity Weighs
Rajoy is depending on exports to drive growth as austerity continues to hold back domestic demand. European Union peers have given him until 2016 to bring the deficit, which was the biggest in the euro region at 11 percent of GDP last year, to within the bloc’s 3 percent limit, amid the deepest cuts in Spain’s democratic history.
“In the grand scheme of things, it’s not going to be enough to solve Spain’s existing problems as companies need a period of reasonably solid growth to hire and that’ll take a while,” May said.
Spanish export growth is slowing, data from the Economy Ministry showed today. Exports rose 3.8 percent in August from a year earlier, compared with a pace of 8 percent in the first half.
While Budget Minister Cristobal Montoro yesterday said Spain is close to generating enough growth to create jobs, the IEE, a research institute linked to the country’s largest business lobby CEOE, this week called on the government to deepen spending cuts and lower taxes to help companies.
Economists surveyed by Bloomberg forecast unemployment in the three months through September will decline to 26.1 percent from 26.3 percent. The National Statistics Institute will publish the quarterly data tomorrow at 9 a.m.
The Office of the Auditor-General of the Federation has uncovered financial irregularities amounting to ₦514 billion in the 2021 operations of the Nigerian National Petroleum Company Limited (NNPC Ltd).
The revelations were contained in a comprehensive audit report highlighting non-compliance and internal control weaknesses within Ministries, Departments, and Agencies (MDAs) during the 2021 financial year.
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Breakdown of Infractions
The audit detailed four major financial discrepancies within NNPCL:
“Irregular Deductions: A total of ₦343.64 billion was deducted from domestic crude oil sales at source without proper documentation.
“Sinking Fund Deposits: ₦83.66 billion, categorized as miscellaneous income, was retained in a sinking fund account.
“Unauthorised Refinery Deductions: ₦82.95 billion was deducted from federation revenue purportedly for refinery rehabilitation.
“Unsubstantiated Payments: ₦3.75 billion was flagged for transactions related to petrol sales that lacked proper verification.
The Auditor-General’s report stated that these financial activities violated the 1999 Constitution and the Financial Regulations Act of 2009, underscoring significant lapses in compliance with statutory guidelines.
According to the report, NNPCL generated ₦484.73 billion from domestic crude oil sales in March and May 2021.
However, ₦343.64 billion was deducted for various purposes, including “Value Shortfall,” “Strategic Stock Holding Cost,” and “Pipeline Maintenance.”
The deductions were made unilaterally by NNPCL without adequate documentation or justification.
Additionally, the report flagged ₦50 billion of the net payable amount for May 2021 as unaccounted for, creating a significant gap in the federation’s revenue.
“Audit observed from the review of NNPC SAP payment record for March and May 2021 payments that the sum of ₦484.73bn was the gross amount generated for the sale of domestic crude for the months of March and May 2021.
“The sum of ₦343.64bn from the gross amount was unilaterally deducted from the gross domestic crude sales as NNPC Value shortfall, Strategic Stock Holding Cost, Crude Oil and Products Pipeline Losses, as well as the pipelines maintenance and management costs.
“The details of each of the cost components deducted were not provided for audit review. Hence, the reasons for the deductions could not be justified by the management.”
On the unremitted ₦50 billion from May 2021, the report noted: “In the month of May, the net payable that could have been remitted ought to have been ₦127.075bn, but only the sum of ₦77.075bn was remitted, leaving an unremitted balance of N50bn to the Federation Account, which has remained unaccounted for.”
The report attributed these anomalies to weaknesses in NNPCL’s internal control systems, warning of the risks they pose to public funds.
It read, “The above anomalies could be attributed to weaknesses in the internal control system at NNPC, now NNPC Ltd. This is a potential loss of Federation revenue, diversion of public funds, or misapplication or misappropriation of funds.”
The success of the maiden edition of the Lagos Shopping Festival (LSF), Africa’s first 72-hour non-stop commerce and entertainment event has been credited to the Governor of Lagos State, Babajide Sanwo-Olu.
This is the view of Managing Director/Chief Strategist of Chain Reactions Africa Ltd, Israel Jaiye Opayemi, one of the main organisers of the event.
According to Opayemi, though Chain Reactions Africa conceptualised the event, the festival could be rightly described as the Governor’s baby and owes its success to his leadership. “Firstly, the Lagos Shopping Festival could not have come to fruition if the Governor did not buy into our audacious plan when we first presented the idea to him during the Covid-19 pandemic in 2020. Secondly, it was the Governor’s exemplary leadership of the project as its Chief Marketing Officer which attracted the buy-in of key sponsors like Zenith Bank, Tolaram Group, First Bank Plc, and Guinness Nigeria Plc,” Opayemi revealed.
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While the duo of Zenith Bank and First Bank provided their bank on wheel platforms for buyers at the Lagos Shopping Festival, they also supported the Vendors with special Point of Sale Machines with which to process payments from buyers. The banks were also seen marketing their diverse banking products to guests within the shopping arena.
For Tolaram, it was a time to support the citizens and give back to society. Guests at the Lagos Shopping Festival were freely given some of the products of the group such as PowerOil, Indomie and Kellogg’s packaged into goodie bags and given out to prospective buyers at the shopping arena. The Children’s Arena was however activated by Indomie with the children entertained by Santa Claus within a well-equipped arena manned by the Indomie Brands team and the Lagos State Safety Marshalls. The children were daily treated to free Indomie meals daily and given various gifts to go home with.
On its part, Guinness Nigeria came through as the real life of the Nigerian party by organizing product sampling activation for the teeming guests at the festival using brands such as Singleton, Johnnie Walker, Ciroc, Don Royale and Captain Morgan to deliver pleasant experiences to guests aside from Guinness and Malta Guinness.
While unveiling the identity of the festival last month, Governor Babajide Sanwo-Olu had thanked the management of Zenith Bank Plc, Tolaram Africa Group, Guinness Nigeria Plc and First Bank of Nigeria for supporting the idea of a Lagos Shopping Festival, describing it as a value addition on the state’s tourism calendar and the overall efforts to grow the State’s GDP. The Governor further said, “I must specially acknowledge your pioneering sponsorship role. It is easy for a corporate sponsor to jump on the sponsorship band wagon of an already established festival and fund it. But you are supporting the maiden edition of this Lagos Shopping Festival with us. The competition is watching you now. Do not build this brand with us and yield the space for the competition to take over. I do hope you would all commit long term to this brilliant initiative.”
On his part, Girish Sharma, CEO Guinness Nigeria Plc, expressed enthusiasm for the initiative. “Lagos is the commercial heartbeat of Nigeria and Africa’s entertainment capital, and the Lagos Shopping Festival captures its essence. We see opportunities in this initiative because it is a creative fusion of commerce and entertainment. This partnership reflects our dedication to fostering economic opportunities and support the nation’s vibrant entertainment industry.”
A first-of-its-kind, the festival was a convergence of commerce and entertainment, bringing together buyers and sellers in the MSME ecosystem, and hordes of fun-seekers who were entertained with thrilling performances by A-list entertainers, including Adekunle Gold, Wande Coal, Teni, Young Jonn, BNXN, Ayo Maff, SB Live and EmmaOMG. The list also included some of Nigeria’s most sought after DJs such as DJ Neptune, DJ YK Mule, DJ Baddo while Gbenga Adeyinka the 1st and Larry J dished out rib-cracking comedy performances.
Held from 23rd to 25th Day of December 2024, at the iconic Mobolaji Johnson Arena, Onikan Stadium, Lagos, the Lagos Shopping Festival saw thousands of fans throng the main venue and select Lagos malls during the three-day period to bag the latest bargains from local and top global brands.
The Nigerian Naira experienced mixed movements in the foreign exchange markets on Monday, as it depreciated to N1,665 per dollar in the parallel market, down from N1,660 per dollar recorded over the weekend.
In contrast, the official exchange rate saw the Naira appreciate to N1,534.56 per dollar, improving slightly from N1,535 per dollar last Friday, according to data released by the Central Bank of Nigeria (CBN).
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This reflects a marginal gain of 44 kobo in the official Nigerian Foreign Exchange Market (NFEM).
As a result, the gap between the parallel market rate and the NFEM rate widened to N130.44 per dollar, compared to the N125 per dollar margin recorded over the weekend.
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