The Nation Newspaper

Tag: prices

  • Falling oil prices and raining day

    SIR: From Qatar to Kuwait all the way to Venezuela, and even in Nigeria, one sound rings clear on the balance sheets of these countries: revenue from oil is declining. The drastic fall of oil prices is making many of the oil producing nations tighten their belts and make adjustments in the national budget. This fall in revenue will surely necessitate a reduction in spending by oil producing nations across the world.

    Nigeria, which is presently battling lots of challenges, will also have her own share of cuts on spending. However, as price of oil goes on a freefall, Nigeria is being shielded by the Excess Crude Account!

    As a reminder, the Excess Crude Account (ECA) came to reality through Dr. Okonjo-Iweala during the Obasanjo era. ECA was envisaged to warehouse proceeds from oil revenue that shoots above the annual budget projections. The idea behind the establishment of the ECA then was that if oil price, like we are having now, or output unexpectedly falls, Nigeria will be under no pressure to forcibly borrow at high cost in order to fund revenue shortfalls.

    Seeing things in different light, the National Assembly, especially the House of Representatives, have been up in arms battling the Minister for this noble idea. It is amazing that the reps don’t take into consideration that numerous OPEC countries adopt comparatively much lower crude oil budget benchmarks than Nigeria.

    Members of the House Committee on Finance fail to understand the gains inherent in ECA. They fail to understand that the establishment of the ECA is actually empowered through Section 162(1) of the Nigerian Constitution, which provides that the federation shall maintain a special account into which shall be paid all revenue collected by the federal government.

    Likewise, Section 35(1) of the 2007 Fiscal Responsibility Act stipulates that “Where a reference commodity price rises above the predetermined level, the resulting excess proceeds shall be saved”.  In further justification of the rationale for the establishment of the ECA, the Minister cited Section 16(1a) of the 1999 Constitution, which stipulates that “…the State shall harness the resources of the nation, and promote national prosperity and an efficient, dynamic and self-reliant economy”.

    In spite of this constitutional justification for the ECA, the House of Reps didn’t fail every year to invoke Sections 59, 81 and 82 of the 1999 Constitution, as amended, which empower them to juggle the national budget’s estimate by constantly increasing the benchmark of the budget. They believe that the raining days is here and we must spend all that we earn at a go!

    In 2013, the benchmark was increased from $75 per barrel that the executive proposed to $80, while the Senate took a middle position and pegged its own benchmark for $78. In arriving at this decision, the House of Representatives posit that increasing the benchmark will reduce the budget deficit and domestic debts by as much as 66%. While opposing the position of the national assembly, Dr. Okonjo-Iweala warns that jerking the oil benchmark to $80 will affect Nigeria’s credit rating; make borrowing more expensive; lower the Foreign Direct Investment; impact negatively on macroeconomic stability, and the country will lose $20 instead of gaining $5.

    It is obvious that the Minister of Finance has made the right decision by establishing the ECA and ensuring that the account is constantly being enriched despite opposition from the National Assembly. Pray, what would have happened to the Nigerian economy in this season of economic uncertainty as the price of oil goes on downward path? The ECA is coming handy this season guiding against our nation going broke.

    • Abdullahi M. Seidu,

       Abuja.

     

  • World Bank to Nigeria: plan for drop in oil prices

    World Bank to Nigeria: plan for drop in oil prices

    •Nigeria won’t borrow to fund shortfall, says Okonjo-Iweala

    The World Bank Group and the International Monetary Fund (IMF), have urged Nigeria to take proactive steps in readiness to match the expected drop in revenue, arising from the continuous drop in the prices of crude oil.

    The Minister of Finance and the Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, who made this known yesterday in Washington DC, said the drop in oil prices is of great interest to Nigeria, since the economy is largely driven by revenue from oil.

    Mrs Okonjo-Iweala, who addressed the Nigerian press at the World Bank Group headquarters, said the development will naturally arouse interest and lead to questions being asked as to how Nigeria would manage if oil prices continue to decline.

    She said as a consequence of these developments, the IMF and the World Bank Group are asking that countries, especially like Nigeria, the emerging markets and lower income countries, should be ready with contingency plans to be able to continue to manage their economies, “should the mediocre growth continue and oil prices continue on the decline trajectory.

    She said the World Bank Group President, Dr.Jim Yong Kin and his IMF counterpart, Christine Largard, have urged that “we should have the right mix of policies, including building up our buffers to be able to sustain the economy,” adding that the Nigerian team to the conference, including the Central Bank Governor, Godwin Emefiele, Director of Budget, Dr. Bright Okogu, the Central Bank Deputy Governor, Economic Policy, Dr.Sarah Alade, and others on the Nigerian team to this year’s meetings, have been strategising and articulating the options open to Nigeria, in conjunction with the global financial institutions so as to be able to come up with strategies on how to manage the economy.

    They said we should be ready with contingency plans and that we need to continue with our structural reforms, as well as “build up buffers and be ready with a contingency plan,” Mrs Okonjo-Iweala, stated.

    But the Minister ruled out any recourse to borrowing from the Brettenwood institutions to manage any fiscal shocks and vulnerabilities arising from  the declining crude oil price at the international market.

    She gave the assurance against  the backdrop of anxiety in some quarters that the nation’s rising external debt profile and declining revenues may cripple the business of governance,even as the two development finance institutions have advised governments of developing and frontier economies to adopt contingency plans to manage downside effects of expected revenue shortfalls.

    Nigeria’s crude Bonny Light like the Brent crude fell from about $100 per barrel to about $84 per barrel over the last few days raising fears that the 2014 and 2015 budget implementation may suffer a setback.

    But responding on options for these contingencies in the light of falling revenues, Okonjo Iweala said that Nigeria would not take further external borrowings from the Brettenwood institutions, but may tighten government expenditure profile and build up the country’s buffer.

  • Poultry faces rising feeds’ prices

    Poultry  is facing hard times following the soaring prices of feeds.

    Poultry  feeds account for  about 70  per cent of  the  total  cost of  chicken production.

    Speaking with The Nation, the   President, Poultry Association of Nigeria(PAN), Dr Ayo Oduntan  said  the  increase is  affecting   poultry  producers,  which relies heavily on animal feeds.

    He said the  prices of   soya bean  and  maize  which are   major components  in the  feed formulation matrix is responsible for this. Soya beans, he explained, has risen sharply , while  that  of  maize  has  come down in the  last few  months, attributed  the  efforts of the  Minister  of  Agriculture and Rural Development , Dr Akinwumi  Adesina  to  improve  local  production  of maize.

    This, however, he  explained  has not helped  to bring  that the  cost of  feed since soya beans  is  still  in key factor. Proper  chicken feed includes corn, soyabean  meal besides minerals and vitamins.

    Feeds are going up due to  poor production of soyabeans nationwide.

    To watchers, the   cost  of   animal feeds have gone up by between 40 and 50 per cent since 2012, an unprecedented rise. This has locked hundreds of thousands of livestock   farmers out of the feeds market which are key in complementing the dwindling pasture occasioned by failing rains.

    A  report   said   feed producers  are  facing  a challenge  producing  cheap  products, blaming  it  on  acute shortage of raw materials, high import duty and prohibitive cost of energy.

    While   demand for the feeds has grown, feed manufacturers unable to satisfy the rising appetite and  that  the  mismatch between production and demand is worrying.

    According to him,  feed manufactures are faacing challenges, operating at half c1apacity and struggling to cover their costs.

    A  farmer, Mr Stephen  Oladipupo  said    the  abnormally high  price  of maize and soyabean have  pushed  the industry into  deep  crisis.

    This  is because  the  industry  required  thousands  of   feed mixtures and supplements, but  that  the  country is  unable to produce it  because  it  had to import some of the raw materials such  as   fishmeal, cereal bran, fishmeal, oil seed cakes and feed premixes to bolster production.

    Currently, the poultry industry is the largest consumer of livestock feeds, accounted for more  50 percent of the national feed production including chick and duck mash, growers mash, layers mash, broiler starter and broiler finisher.

    At present, the key challenges faced by the poultry industry are high feed cost.

    In the last two years, the industry has been facing severe crisis due to abnormal increase in the prices of feed ingredients (mainly maize and soyabean) and led to an increase in the cost of production.

  • Experts push for improved seeds to tackle food prices

    Improved seeds produced commercially to attain higher yields hold the key to resolving an imminent  food crisis, the Programme Coordinator,Farmers Development Union (FADU) Mr Victor Olowe  has said.

    He said government efforts  through the research institutes to bolster the development of improved  seeds  would  ease pressure on rising food  prices.

    Olowe said farmers need to be supported with adapted positive technologies that will improve the productivity, help crops to grow faster and produce higher yields.

    He said the government must take necessary steps to ensure that food quality and safety considerations form an integral part of food security systems.

    He said the use of these technologies could help manage issues of food security, food safety and environment.

    According him, post-harvest technology, storage, drying, food processing, can help food security and safety.

    The Director-General,Kaduna Business School Dr  Dahiru Sani  said  the  government has  retooled its policies to focus on agribusiness as a critical driver of future development.

    He said the foremost requirements is a substantive recovery and growth of the agricultural sector.  Such a development, according  to him  is essential for a meaningful recovery of the economy and a prerequisite to national wellbeing.

    After years of neglect, he  said  agriculture  has   seized  the attention of government and that  current efforts could have  a major impact on food security, at both household and country levels.

    The Agricultural Transformation Agenda,according to him, is an  incentive to produce more for the market, making more food available while also improving access to it, as poor farmers’ incomes increase.

  • Prices of chicken, turkey rise in Asaba

    Prices of frozen chicken and turkey have increased in Asaba,  the Delta State capital forcing some of the consumers to resort to frozen fish.

    A survey by the News Agency of Nigeria (NAN) in the two major markets in Asaba, revealed that one kilogramme of frozen chicken, which was sold for N800 some weeks ago, sells for N900.

    A carton of the commodity, which sold for N8000 at Ogbe-ogonogo and Abraka markets, sells for N10,000.

    The survey also showed that the price of turkey has recorded some increase as a kilogramme of the commodity now sells for N1000 as against N900 last month.

    Some of the dealers attributed the price increase to the exchange rate of the dollar.

    According to Mrs Jane Ewere of the Zanvic Frozen Foods, the prices of frozen chicken and turkey went up because of the increase in the exchange rate.

    “The recent increase from N8000 to N10,000 for a carton of frozen chicken was not intentional and we never intended to increase the price on our own,” she said.

    Another dealer, Oluchi Okolie, said: “The yuletide season has nothing to do with the increase in the price of frozen chicken; it is the exchange rate.

    “There is increase in the various charges we pay from Cotonou to this place. My prayer is that since the yuletide season is fast approaching, it does not increase further,’’ she said.

    She said the increase in the price of the commodity had affected the patronage by consumers, adding that before the increase, she could sell as many as 50 cartons a day.

    “Since this recent increase, we hardly sell up to 25 cartons a day and I have observed that most of my customers are buying frozen fish which is cheaper,’’ she added.

    A housewife, Mrs Gloria Uzodinma, said the price increase had forced her to consume frozen fish, nsaying it is far cheaper.

  • ‘Food prices to rise’

    Nigerians should brace for massive food price rises in the year, experts have warned.

    Speaking with The Nation, the Country Manager, Cassava Adding Value for Africa (C:AVA), Dr Kola Adebayo, said farmers have not been able to cover up for the short fall of supply following the impact of the floods that hit farmland in many areas of the country.

    For this reason,Adebayo said food prices will remain high, except there are good harvests in July and August for most basic foods to help prices to fall back.

    He said the severe weather damaged supplies and devastated harvests of most staples in places such as Delta and Kogi states.

    As a result, he said production is expected to be lower this year .

    According to him, production is expected to lag behind the growing demand for food, is a key factor pushing up prices.

    Crop damage from 2012 flooding, he said, was more severe than initially reported.

    There were significant flood-related crop losses, infrastructure damage, and atypical trade flows were observed.

    Cassava, yam, maize, and sorghum losses were, particularly, high.

    There are fears of drought and water shortages blighting parts of the North.

    A Consultant to the World Bank, Prof Abel Ogunwale, said farmers must prepare for higher temperatures later in the year.

    According to him, climate change is going to have a domino effect on food security, going by predictions.

    Right now, he said farmers are planting and there is little rain.

    According to him, the climate condition is not convincing enough to prove there will be no adverse weather.

    He, however, said there are indications that suggest climatic conditions could worsen later in the year.

    According to him, the devastating floods that wrought havoc happened around August.

    He noted that it was too early to pronounce that floods are not coming.

    Most staple crops are expected to be badly hit by increasing severity of weather.

    Ogunwale expects more incidents of heavy rains to affect food production.

    He said with farmers cultivating a lower number of acreage ,he said supplies will be reduced and prices may rise.

    The rising incidence of weather extremes will have increasingly negative impacts on crop and livestock productivity, because critical thresholds are already being exceeded. In most part of the North, crop losses are increasingly being caused by extreme weather events, insect attacks and diseases.

    As a result, many states have seen food production decline significantly.

  • Naija flags, regalias prices hit the roof

    As the Super Eagles sets to battle for a third AFCON trophy against Burkina Faso on Sunday, prices of Nigerian flags and other regalia depiting the green-white-green colour of the most populos black country in Africa has hit the roof in Johannesburg.

    SportingLife gathered in areas like Santon, Ranburg, Ros and other popular surburbs of Jo’Burg that vendors are making good money as a price of a Nigerian flag which used to sell for 100Rand (about N1,700)or less, now goes for 150R and depending on the quality and others like the Eagles mufflas, car decorations.

  • Activists to protest high fuel prices

    Activists to protest high fuel prices

    The Civil Society Network Against Corruption (CSNAC) has vowed to launch protests, should the government fail to address unregulated fuel pump prices across the country.

    The Chairman of CSNAC, Mr. Olarewaju Suraju, who spoke in Lagos yesterday, said other groups had been put on the alert, in case the Federal Government removes fuel subsidy.

    Besides, he declared December 9, which is the International Anti-Corruption Day, as the “Yellow Flag Day Against Corruption in Nigeria.

    The CSNAC is a coalition of over 150 anti-corruption organisations whose aim is to combat corruption and monitor the anti-graft agencies.

    Suraju decried scarcity of petroleum products across the country for about two months with no explanation from the government, adding that it is a conspiracy to force another price hike on Nigerians.

    Mr. Suraju said: “In several filling stations across the country, the pump prices of petrol are higher than the official pump price, without any explanation by the government. The Department of Petroleum Resources (DPR), under the Federal Ministry of Petroleum Resources, is responsible for inspection and control of filling stations, but it has not acted against the increases by marketers.

    “For CSNAC, this indicates a conspiracy on the part of the government to force another price hike on the people, which will increase hardship.

    “We are for this reason, beginning strategic network with stakeholders to mark the anniversary of the January 2012 uprising, with a repeat of civil disobedience, if the trend of fuel scarcity and arbitrary price fixing is not reversed by the government.

    “An x-ray of the oil and gas sector has shown the level of scandalous, monumental and shameful corruption in the sector. The culture of impunity and conspiracy, which this present administration displays, provides the added impetus for perpetuating the graft that has become the trade mark of the sector.”

    The group, which also x-rayed the judiciary and other sectors, noted that corruption remains a major hindrance to development in the country, adding that the problem of corruption lies inside ‘Aso Rock’ and with the cronies or associates of those in power across the three tiers of government.

     

     

     

     

     

    CSNAC, which admitted that corruption was deeply rooted in the Nigerian society and needed an urgent solution, expressed worry over the increasing ownership of private jets and speed boats by individuals without any justifiable source of income.

    The group, which objected the recommendation of death penalty for those convicted of corruption, said it was a human rights violation, even as it suggested a life imprisonment without an option of fine for convicted individuals.

    Suraju said: “No penalty can be considered too severe for those convicted of corruption and corrupt practices. As human rights advocates, we are opposed to death penalty for those convicted of corruption. Life imprisonment with community service without an option of fine or prerogative of mercy will act as a deterrent.

    “The National Assembly should partner anti-corruption agencies in realising their mandate of zero tolerance for corruption by passing the Civil Forfeiture Bill.

    “There should be further synergy and coordination between the Economic and Financial Crimes Commission (EFCC), National Drug Law Enforcement Agency (NDLEA), Independent Corrupt Practices and Other Related Offences Commission (ICPC), Code of Conduct Bureau, Nigeria Police and other anti-corruption entities in the country, even as there is need to promote and sustain public education and enlightenment on the negative effect of corruption in our daily lives.”