ABUJA — THE Governor of the Central Bank of Nigeria, CBN, Mallam Sanusi Lamido Sanusi, was guest at the weekly Federal Executive Council, FEC, meeting, yesterday, where he x-rayed the performance of the economy with a submission that Gross Domestic Product, GDP, in the last seven months stood at 6.4 per cent, while it is expected to hit 7.85 per cent by December.
Briefing State House correspondents after the FEC meeting presided over by President Goodluck Jonathan with Vice President Namadi Sambo in attendance, Minister of Information, Mr Labaran Maku, said Council deliberated on a number of issues but first was an overview report on the performance of the economy by the Governor of the CBN on how the economy has performed in the first two quarters.
On specifics, he disclosed that headline inflation picked up at 12.8 per cent in the first quarter of 2011 but decelerated to 10.2 per cent in the second quarter; while core inflation fell from 12.8 per cent in the first quarter of 2011 to 11.5 per cent in June 2011. Maku said food inflation declined sharply from 12.2 per cent in May, 2011 to 9.2 per cent in June 2011, adding: “Both food and non-food contributed to the deceleration recorded in the second quarter.
“Real GDP estimated at 7.43 per cent and 7.93 per cent for the first and second quarter of 2011, with the oil sector growing at 2.90 per cent and 3.4 per cent, respectively. The non-oil sector growth is estimated at 8.4 per cent and 8.77 per cent respectively for the first and second quarters.”
According to him, “largely driven by agriculture, wholesale and retail trade and services contributing 1.92%, 2.13% and 2.39% respectively. The spot price of Nigeria’s reference crude oil, Bonny light, rose from $93.37per barrel at the end of December 2010 to $118.99 in the first and $116.66 in the second quarter of 2011″.
Crude oil production which includes condensates and natural gas liquids, he noted, increased by 8.76% to 2.11million barrels per-day; while the manufacturing GDP growth is estimated at 6.02% and 7.3% in the first and second quarter of 2011 respectively.
He added that the share of manufacturing was dismally low at not more than 6% of the total GDP. Estimated capacity utilisation rose marginally by 1.56% to 57.87% driven by business confidence, cement and oil; saying that “overall growth in 2010 was very robust and GDP growth in 2010 stood at 7.85 percent; just as non oil GDP growth in 2010 was however higher because it stood at 8.5 percent.
The Minister said “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 percent and overall growth projection for this year is put at 7.8 percent.
On inflationary movement the CBN report said that headline inflation in the first and second quarter of this year stood at 12.8 percent but generally the inflation trends has been coming downwards and this is very good for the economy and he said the CBN will continue to maintain those policies that stabilised inflation”
According to him, the CBN governor also spoke on deadline for the recapitalisation of distressed banks which he said is September 30 when 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.
He talked extensively and reported to us about output in the improvement in the oil production in t eh Niger Delta due to the success in the amnesty programme. Oil production has gone up to 2.4 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”.
He added “FEC also discussed new initiatives the bank is taking to reform the economy. CBN has decided to start the cashless economy in Lagos, using Lagos as the hub and has taken in partnership with the Governor of Lagos state and 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 percent and this initiative is very good for the economy so that even people in rural areas can participate in the financial sector”.
He also reported the effort CBN is making to transform the credit system in agriculture; saying that “this initiative is to transform our credit system in agriculture, as before now we always state government 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.
Dissolution of marketing Boards make it impossible to CBN in focusing in about 10 crops and will lend not only to farmers but also to those who want to produce fertiliser.
Another memo as approved by FEC, according to him, is the provision of a minimum standard by the National University Commission, NUC, which every university where new or old must strictly adhere to at all times.
The National Planing commission also came to council with proposal to repeal the law which established the Nigerian Council for Management Development, to enable it become a regulating agency, for all other management related bodies across the country.
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