More reactions have continued to trail the hike in fuel and electricity tariff amid rising inflation rate with analysts warning that the Nigerian economy may face delayed recovery from the impact of the COVID-19 pandemic in the third quarter (Q3) 2020.
Some experts while expressing their concerns, said that due to the Federal Government yielding to pressure to fully deregulate the downstream sector of the nation’s oil and gas industry, recovery in Q3 2020 will be muted due to acute pressure seen in household consumption despite intervention packages by the government and Central Bank of Nigeria (CBN) in critical sectors of the economy.
In a statement sent to Daily Sun, FBNQuest Capital Research, stated that the second quarter (Q2) of 2020 will surely prove the low point in the year, while adding that the scale of the GDP contraction in lockdown was not as bad as widely anticipated.
“The limits to its integration within the global village have given Nigeria some protection. However, for this same reason its recovery next year will underwhelm while household consumption remains under acute pressure. The non-oil revenue is also expected to underperform as fiscal projections for non-oil revenue collection again prove overambitious and the government is likely to post another sizable deficit which could see a return to the Eurobond market in early 2021”, it said.
For his part, the Chief Research Officer, Investdata Consulting, Ambrose Omordion, noted that the lack of coordination among economic managers, government agencies and policy makers may prolong the nation’s economic recovery.
He said, “while the same government is bailing out the economy with different stimulus packages, an increase in the pump price of premium motor spirit (petrol), was also announced on Wednesday, September 2, 2020 from N148.50 per litre to N160, the fourth of such price change in five months, the highest in the history of Nigeria.
Just the day before, electricity tariff was raised by 175 per cent to N66 from N24 kw/h. These will have a direct impact on every facet of life, thus sending inflation rate skyward across the country in no time, with increased operating cost for businesses, and cost of living for individuals and families making the cost of living unbearable. Already, inflation rate is 13 per cent, while the economy has contracted by 6.1 per cent, with the combination of unemployment and under-employment rates at 55.7 per cent, amidst the growing insecurity across the country”.
Meanwhile, the 5-day bullish streak in the nation’s stock market came to a halt yesterday due to price depreciation in Dangote Sugar and tier-1 banks’ stocks which include GT Bank and Zenith Bank.
As a result, the market’s All Share Index (ASI) fell by 0.09 per cent to close at 25,582.23 points while market capitalisation decreased by N13 billion to close at N13.358 trillion from an opening value of N13.345 trillion.
Reacting to the development, analysts at Afrinvest, said, “While we expect the soft gains in the domestic market to be sustained, we note that investors are likely to pocket gains. Also, the resumption of FX sales could provide foreign investors a long-waited opportunity to sell their stakes and limit exposure. Thus, we anticipate a mixed performance this week”.
On the price chart, 16 stocks appreciated while 15 others depreciated in value. Eterna topped the gainers’ chart with 9.13 per cent to close at N2.27 per share, NEM followed with 8.70 per cent to close at N2.25, C&I Leasing increased by 8.33 per cent to close at N3.90, UAC-Prop rose by 7.61 per cent to close at 0.99 kobo while Academy gained 7.41 per cent to close at 0.29 kobo.
Honeywell Flour, on the other hand, topped the losers’ chart with 6.25 per cent to close at 0.90 kobo per share. Chams was next with 4.55 per cent to close at 0.21 per cent to close at 0.21 kobo, Redstarex dropped 4.37 per cent to close at N3.72, as Neimeth lost 3.74 per cent to close at N1.80 while Union Diagnostics declined by 3.70 per cent to close at 0.26 kobo.