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Nigerian manufacturers want govt to clear $7bn forex backlog

Published

11 months ago

January 3, 2024

The Manufacturers Association of Nigeria (MAN) has begged the Nigerian government to clear the current $7 billion forex backlog, which they argue might lead to a challenging first six months of the year for players in the industry.

This position was expressed by the association’s Director-General in its “Manufacturing Sector Outlook for 2024” report, where it was also predicted that the Manufacturers’ CEOs’ Confidence Index would surpass 55 points by the end of Q42023, that sectoral real growth would likely reach roughly 3.2%, and that the sector’s contribution to the economy would probably surpass 10%.

Since the difficulties with foreign exchange and the high rate of inflation are likely to persist until the middle of the year, average capacity utilisation is predicted to remain close to the 50% mark.

Due to speculation and excess demand being directed to the black market, the naira has been losing value on the parallel market, creating a larger disparity with the official market, where trading restrictions were removed in June.

The report read in part, “Judging from the observed trend, it is obvious that the outlook for the manufacturing sector in 2024 may not be a positive one, at least in the first half of the year. The period will be challenging, with a subtle possibility of recovery from the third quarter.

“The envisaged recovery is highly dependent on the deployment of policy stimulus supported by a synthesis of domestic growth-driven, export-focused, and offensive trade strategies. This will promote resilience and steady growth and ensure that the sector gains meaningful traction in the later part of the year.”

According to MAN, increased manufacturing output is anticipated to start in the third quarter of the year when the government allocates budgetary funds for new, ongoing, and abandoned capital projects, with an anticipated preference for locally produced goods.

The association recommended that to counteract the unique inflationary pressures arising from insecurity, as well as energy and transportation costs, the government should use the money saved from the fuel subsidy to implement various production-focused policies, supported by more structural measures.

November saw a worsening of the cost-of-living crisis in the largest economy in Africa, as annual inflation reached its highest level in eighteen years— 28.20%.

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IMF mission concludes 4th loan program assessment in Egypt

Published

15 hours ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.