The Nigerian Federal Executive Council (FEC) held its second session under President Goodluck Jonathan on Wednesday with the governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi telling the council that the nation’s economy grew at the rate of 6.4 per cent in the first quarter of this year.
Sanusi also put the overall growth projection for this year at 7.8 per cent
The council was also told that the nation’s push for a cashless economy would start in Lagos, the nation’s commercial capital, where there was already a partnership with the state governor, Mr. Babatunde Fashola, on efforts to “move swiftly into e-banking”.
The brief by the CBN boss covered sectors like agriculture, manufacturing, interest rates, foreign reserves, movement of inflation, including new initiatives by CBN to encourage real sector development and also reform of the financial sector.
Sanusi’s core submissions included that headline inflation peaked at 12.8 per cent in the first quarter of 2011 but decelerated to 10.2 per cent in the second quarter.
Core inflation fell from 12.8 per cent in the first quarter of 2011 to 11.5 per cent in June 2011;
Food inflation declined sharply from 12.2 per cent in May, 2011 to 9.2 per cent in June 2011;
Real GDP estimated at 7.43 per cent in the first quarter and 7.93 per cent in the second quarter of 2011, with the oil sector growing at 2.90 per cent in first quarter and 3.4 per cent in second quarter;
The non-oil sector growth is estimated at 8.4 per cent in first quarter and 8.77 percent in second quarter of 2011.
Largely driven by agriculture, wholesale contributed 1.92 per cent in first quarter, retail trade 2.13 per cent and services 2.39 per cent;
The spot price of Nigeria’s reference crude oil, Bonny light, rose from US$93.37 per barrel at the end of December 2010 to US$118.99 in the first quarter and US$116.66 in the second quarter of 2011.
Crude oil production, which includes condensates and natural gas liquids increased by 8.76 per cent to 2.11 million barrels per-day;
The manufacturing GDP growth is estimated at 6.02 per cent and 7.3 per cent in the first and second quarters of 2011 respectively;
The share of manufacturing was dismally low at not more than six per cent of total GDP; and
Estimated capacity utilisation rose marginally by 1.56 per cent to 57.87 per cent, driven by business confidence, cement and oil.
The Minister of Information, Labaran Maku, who briefed journalists at the end of the council session along with Minister of Education Rukayatu Rufai, said that, “overall growth in 2010 was very robust and GDP growth in 2010 stood at 7.85 per cent. Non oil GDP growth in 2010 was however higher because it stood at 8.5 per cent. Stabilisation of exchange rate in 2010 was important in giving confidence to the economy.
“In the first quarter of this year, the CBN report said the economy has grown at the rate of 6.4 per cent and overall growth projection for this year is put at 7.8 per cent. On inflationary movement, the CBN report said that headline inflation in the first and second quarters of this year stood at 12.8 per cent but generally, the inflation trend has been coming downwards and this is very good for the economy. And he (CBN governor) said the CBN will continue to maintain those policies that stabilised inflation.”
According to the ministers, “CBN also spoke on deadline for the recapitalisation of distressed banks, which he said is 30 September. The banks should be properly recapitalised and working without stress at all. Some international investors have already shown interest and agreements have been signed for three of these distressed banks.
“Efforts are not spared to ensure the banks are recapitalised. Also, the improvement in the oil production in the Niger Delta is due to the success in the amnesty programme. Oil production has gone up to 2.11 million barrels a day and this will be on the upward swing as we maintain those policies and work hard to stabilise the national economy.”
Sanusi also told the council the CBN has decided to start the cashless economy in Lagos, the nation’s commercial capital, adding that already, there is a partnership with the Governor Fashola to effect this.
Mr. Maku noted that “in few months to come, Lagos will move swiftly into e-banking. And there is also the initiative to introduce mobile banking across the country, so that with our telecoms, we can use them to open our bank account, transfer money, receive payment or withdrawals. It will help reduce cost of running banks by 30 per cent. This initiative is very good for the economy, so that even people in rural areas can participate in the financial sector.
“He (Sanusi) also reported the effort CBN is making to transform our credit system in agriculture. This initiative is to transform our credit system in agriculture. Before now, state governments or banks and federal government give loans to farmers to produce crops. Because the loans do not take into account the real problems the farmers face, there have been gradual reduction in the money and the banks willingness to lend.”