Hipoks. Welcome to my podcast the way I see it. My name is calu Aga and well the Nigerian twenty twenty four budget has been passed, so good job. But now the real work begins. I want to take a look at the metrics, we say, the marcroeconomic indicators from the year twenty
twenty two. Let's just pick December, say last in December in twenty twenty two and compared to December twenty twenty three, just to have a sense of the scale of work that this administration has in front of them and to sort of lead the framework of what Nigeria's will start to see in the economy going forward. It's not a pretty picture. Let's take it one by one. Inflation year ago was about twenty one percent twenty one percent a year ago that
December twenty twenty two. Today it's about twenty eight percent twenty eight percent. So if you had money in the bank, if you were on a fixed income like a pension and all that, you've lost purchasing power. And it gets worse if you look at the food infliction numbers. Twenty four percent December twenty twenty two now thirty two percent December twenty twenty three. Why is this important? Like we said, you've lost purchasing power, but it destroys any
idea of savings and planning. I mean, how can you plan with twenty eight percent inflation? What's your bottom what's your hedge? It's difficult to incentivize savings and the economy doesn't save then, of course the economy doesn't have disposable funds that borrower as all lenders can interplay with and create wealth in the economy. So a big problem their internet simipulation. What about the exchange rate exchangerate to the dollar a year ago four hundred and sixty one, today's about nine
hundred and seven, So big jump there. The jump, of course explained by the float of the Nyra, in which case the peg was removed. You want to say it's clear, you will say the subsidy on the dollar
was removed. Hence the nira is reflecting its real exchange rate. Again, nine oh seven is the official you know, the CBN average price on the streets of legos and the streets of administ to Nigeria, the dollar goes about a twelve hundred thousand, two hundred part US dollars, so it's very weak and it reflects the lack of supply of dollars officially into Nigeria, so very
very weak. There. Let's take a look, should we say at the GDP or the GDP growth rate, how much out protest Nigeria producing a year ago were three point five four growth. Now December we're two point five four percent growth. So growth has stalled. Why has good stalled the niger economy? It's not really an oil gyber economy. Well it's about less than fifteen percent of GDP. But the trade, the telecoms side, those have been
hit hard. But lack of purchasing power of Nigeria. We see minimal nationals leave Nigeria. And also agriculture has stalled with insecurity in the food baskets in Nigeria. And that's what you're seeing reflected in the GDP growth numbers. The largest contributors to GDP agriculture, trade, telecoms are really not posted stellar returns. The retorts are coming from say banking and all that, and while that is good, they are contribution to the overall economy is not as large as
the agriculture. So you have seen those numbers not showing up. Intel GDP growth as we should want them to Remember, Niger the largest economy in Africa. The population grows about three percent or so, so we should be growing more than the population to just keep pace and create jobs for the new Nigeria's as they say, so disappointing numbers they INTEGDP growth. And what about external reserves? This is the really the claims on imports right that the Central Bank
of Nigeria manages. So rest when I sells crude oil or Nigeria exports, reserves get built up and those reserves are held or managed by the Central Blank of Nigeria. Last year we're about tenty seven billion US dollars. Currently this
year we're posting about tenty two billion. Again, if you've been following and you've seen the reports that gipanas done the reserves, how most of the is have been spoken to or tied down by borrowings made of balance ship by the Central Black of Nigeria in terms of swaps and in terms of forwards that have not been cleared. You would then see them this today two billion if you metted it off. Those claims that we haven't seen materialize on the books of
SEBN. Well, looking at anywhere from twenty four billion, which is really really really quite dangerous for an important heavy nation like Nigerian. So again flag there one of our interest rates measured about the monetary policy rate a year ago to a sixteen point five to this about eighteen point seventy five. So it's gonna, of course it's gonna because the central bank has got to fight inflation by increasing interest rates. But what that does mean, sorry, but it's
the SME is smaller. In those gain enterprises will then struggle to get cheap funds. At eighteen point seven to five, you will you will you would borrow at anywhere in double digit twenty two, twenty three, making it's extremely
difficult for the small skill and the priceses to borrow. I mean, credit to the practice sector is up. It's up from forty one trillion last year December to fifty eight trillion this year, so it's up, but the cost of that credits is now up. And hence, if you then look at the Purchasing Manager's Index last year fifty three now forty eight, the PMI is telling you or it's just an index of how the purchasing managers what level of
confidence do they have in the economy. So if they are buying most of they have a higher level of confidence. But the numbers at forty eight, you seems the confidence of the purchasing managers, the manufacturing producing managers, it's not as high as it was last year. I mean, if you look across the board, what's the world the area you could say, okay, let's point to and we're doing pretty good. You could see in Nigerian stockaging
capitalization right last year about only seven trillion. This year about forty trillion. Niger is top ten in terms of cattle market capitalization. So that's a big, big, big positive. But then you want to ask yourself how much that is driven by organic growth or how much is that you're driven by the devaluation the Nira with then bring means that a dollar coming in can buy more, but still positive. It's one slaver of good news that we have.
Then, of course, the last in this is a just point up and it's I would say the most important right is a crude oil production numbers. Last year we're about one point one nine. Now we're about one point two, five million buyers per day. Significance increase, but still nowhere near the two point two two point three numbers of the NAGER was posting in twousand and five and all that. This is very very important because without crude oil being
exported to generate foreign reserves nijas for reserves cannot rise. Our ability to should we say, lower the interest rate to should we say, fund the imports to begin to affect the exchange rate becomes very very limited. The Nigerian economy if it's facing two serious headwinds, you know, and number one is lack of for x into the central bank because crude oil production is down, and number two is full inflation, and this too sticky, very sticky. Change
that whole. Now the economy have to be broken before the budget can then start to see or have a positive effect in the economy. If we're able to break this to IgE low supply of dollars and high inflation, it becomes a drag on the economy as a whole. It restricts the the effectiveness of the treellions that are going to be spent by the administration to grow their economy.
So these two things have got to be prior to number one. I think the point here is that there's a lot of work ahead of this administration. They don't have the time. They really have to hit the ground running and start to reverse and post better macroeconomic numbers which then attract foreign direct and for powerfulio investments which hopeless you create jobs, boost consumption and then start the process in that you're fixing the economy that has really been on the back burner
for a few years. All right, folks, that's our show. Thanks so much for listening again. My name is Calu Lager. I hope you guys would pull the podcast. Let's Talk Us the way I see it, available on all podcast channels. Do have a good day and by