Total Pension Assets Hit N12.4T as Investment Preference Drift Towards LMMS

A recently released report on pension fund assets by National Pension Commission (NPC) showed that the total value of pension assets rose month on month (m-o-m) by 0.41% to N12.39 trillion in April 2021 from N12.34 trillion printed in March 2021. According to the report, most of the pension fund assets were invested in FGN Securities.

However, its share of the total assets moderated to 67.15% (or N8.32 trillion) in the month under review, from a 68.96% (or N8.51 trillion) recorded in April 2021 as pension managers stood on the sidelines to see where the rising interest rates in the money and bond markets would halt before investing more funds.

Hence, the money managers invested more funds in relatively high corporate debt securities and placements with deposit money banks. Notably, interest rates moved northward in the first four months of 2021 despite CBN’s desire to maintain a dovish monetary policy plan throughout the year 2021.

Pension asset

The increase in rate was amid the apex bank’s struggle with the depreciating Naira against other foreign currencies and inflationary pressure.

As Pension Fund Administrators (PFAs) slowed down investment in FGN securities, we saw investment preference drift towards Local Money Market Securities (LMMS) as total funds invested in this space rose m-o-m by 3.58% to N1.74 trillion in April 2021 (lifting its share of the total assets to 14.04%), from N1.68 trillion in March 2021 (or 13.57% of total assets).

Total invested fund in Corporate Debt Securities as a percentage of total pension fund assets stood at 6.41% (or N0.79 trillion) in April 2021 from 5.03% (N0.62 trillion) in March 2021.

However, funds invested in Real Estate Properties as a fraction of the total pension fund assets fell marginally to 1.26% (or N0.16 trillion) from 1.27% (or N0.17 trillion) in the period under review. Similarly, we saw Cash and Other Assets which constituted 0.87% (or N107.45 billion) of the total pension fund assets in April 2021 build-up from 0.62% (or N76.01 billion) in March 2021.

Further breakdown of the N8.32 trillion FGN Securities revealed that investment in FGN Bonds gulped N7.45 trillion in April 2021, falling from a N7.67 trillion in March 2021. Also, investment in Treasury Bills plunged to N0.69 trillion in April 2021, from N0.72 trillion in March 2021.

Investments in Sukuk was relatively low as its share of allocated pension assets dropped to N79.81 billion from N85.07 billion. On the flip side, investment in LMMS showed that more pension fund assets were invested in Banks (which include Open Market Operations, OMO, and DMBs fixed deposits) than in commercial papers.

Funds invested in Banks, constituting 94.25% of investment in LMMS, rose to N1.64 trillion in April 2021 from N1.58 trillion in March 2021 while investment in commercial papers, constituting 5.56% of investment in LMMS, barely increased to N96.52 billion from N91.77 billion. Also, we saw investments in Green Bonds rose to N79.81 billion, down from N12.88 billion in the month under review.

Meanwhile, pension fund assets invested in the domestic equities market declined to N830 billion in April 2021 from N841 billion in March 2021; thus, decreasing the weight of total pension funds in the local equities market to 6.69% from 6.82% as “patronage” received from “RSA FUND II” and “RSA FUND III” dropped – total invested funds in the respective funds moderated to N564.39 billion and N121.31 billion, from N566.78 billion and N122.88 billion respectively in April 2021.

The pension fund managers were forced to stay on the sidelines given the rising yields which amounted to a capital loss for the old positions in their portfolios thus, impacting their performance negatively.

However, with the recent reversal in the upward trend in yields, we expect the PFAs to lock in more investment in FGN bonds and T-bills with the aim of disposing them at lower yield in order to book capital gain and return higher value to pensioners.

You Have Not Disappointed Me And Your People – Obasanjo To Udom At Flyover Inauguration

A flyover with 16 meters dual carriageway has been inaugurated by former President of Nigeria, Chief Olusegun Obasanjo in Uyo, Akwa Ibom State.

The inauguration of the Flyover which took place on Friday, at Ikot Oku Ikono, Uyo, was witnessed by the political class, captains of industry, and persons across all walks of life.

Chief Obasanjo commended Governor Udom Emmanuel on his performance in transforming the state through quality projects, affirming his competence in the prudent management of resources.

You Have Not Disappointed Me And Your People – Obasanjo To Udom At Flyover Inauguration

“Governor I am very happy that you have not let me down and you have not disappointed the good people of this State, what you have here 1 km of Flyover is worth celebrations anywhere in the world but I will say to you that you have made me a lucky man.

“You said that this road was named after me and this flyover is a continuation of that road, and so Olusegun Obasanjo Road is not only a road it has a flyover”, he stated.

“Governor I am particularly happy that the background you had before taking up this job which is how to manage finances and how to manage the economy you are putting it to good use here in your state.

“And you know a good manager of resources when he is able to manage in the time of scarcity”

You Have Not Disappointed Me And Your People – Obasanjo To Udom At Flyover Inauguration

The former President urged the Akwa Ibom people to preserve the projects in the state and see it as an opportunity to better their lives, adding that such projects initiated and completed by the government ought to be protected against theft, vandalism for sustainable development and growth of the State.

“I heard the governor appealing to you that whatever infrastructure, whatever development is going on take care of them because they are part of the assets of the state and if they are destroyed or not taken care of properly, the State loses and every citizen of Akwa Ibom State is a loser in that sense.

Obasanjo called on the Akwa Ibom people to support Governor Udom Emmanuel on his succession plan in order to sustain his visions to move the state forward maintaining that his success as governor goes beyond the physical projects in the state.

“Your success does not lie only in what you have achieved physically in terms of development, socially in terms of where you have put the people of this State, your success also will be measured in your succession programme”.

Governor Udom Emmanuel expressed appreciation to God for the wisdom to actualize the project given the lean resources to the benefit of Akwa Ibom people, and called on youths to support government by protecting the facilities.

Governor Emmanuel pointed out that the inauguration of the flyover will create ease of commercial activities and reduce the rate of auto crash hitherto experienced along Ikot Oku Ikono.

“What we are celebrating is not excess wealth, it is a celebration of God’s wisdom, creativity of ideas in the face of scarcity and adversity.

“Let me thank all the communities this project has gone through for their support, you really stood by us during the project and I want to thank the youths, this is your asset you need to protect it.

“Thank you for acknowledging the fact that the kind of accident we use to have before now in this area today will be a thing of the past, there will be no more accident in this junction”, he declared.

Governor Emmanuel also approved the rehabilitation of adjourning roads used as diversion routes during the construction of the flyover and promised to provide three transformers to the communities to end blackout in the area.

“Let me say that the communities vehicles passed through like a bypass when we were doing the major construction certainly I promise you by next month we would have finished the design of the routes used as a diversion so that we can award and start immediate construction. The Traditional ruler here asked for transformers, I want to assure you, within the next one month we will give them those transformers immediately”, he assured.

The governor announced the inauguration of the next phase of projects in the state, as part of his promise to develop the state, “by September this year we will go into another phase where we will be commissioning dual carriageways, we will commission Uyo-Ikot Ekpene dual carriage, Etinan-Ndon Eyo dual carriage, and Eket Urban Remodeling”.

The Chief Executive Officer of the State however frowned at the disruption of projects in some Local Government Areas by youths, urging them to see the projects as means of stimulating the economy for the benefit of all.

Presenting an overview of the project, the Commissioner, Ministry of Works and Fire Service, Prof. Eno Ibanga said the project which was awarded to Julius Berger Plc in 2019 has been delivered as promised.

“This project was for delivery in two years and it has been delivered before two years, it is a construction of 1km length of the flyover with connections, and we have 16metres dual carriage with 8 meters each way that takes you from Uyo end towards Abak end”, he said.

In his remarks, the Regional Manager, Julius Berger Plc, Mr. Juergen Fischer described the project as beautification of Uyo which will address the traffic challenge experienced in the area.

He thanked Governor Udom for delivering on his promise and for having confidence in Julius Berger.

Africa Prudential Develops Cloud-Based Solution For Africa’s Hospitality Industry

Africa Prudential has demonstrated its digital capabilities, with the launch of “Aura by Transcorp Hotels”, an innovative commercial cloud-based product launched in the Nigerian market.

“Aura by Transcorp Hotels” is an online platform that curates accommodation, staycations, cuisines, and memorable lifestyle experiences. The platform was created for Transcorp Hotels, the hospitality subsidiary of Transcorp. It was launched on Thursday 8th of July in Abuja, by Nigeria’s Vice President, Professor Yemi Osinbajo, at the Transcorp Hilton Hotel Abuja.

Commenting on the launch, Dupe Olusola, CEO of Transcorp Hotels, said “we recognise that technology is enabling a wave of innovation, amid greater adoption of digital solutions by consumers and businesses. We are excited about the functionality of the Aura platform, created by the Africa Prudential team. It is an important aspect of our diversification strategy, as we seek to create a hospitality ecosystem across Africa and offer greater value to consumers and our industry.”

Africa Prudential Develops Cloud-Based Solution For Africa’s Hospitality Industry

The launch of Aura is the latest milestone in Africa Prudentia’sl digital technology strategy and builds on the successes of other cloud-based solutions created by the company. Obong Idiong, CEO of Africa Prudential said “Aura is significant in our journey, as a digital technology company. We have come a long way since we launched our innovation lab three years ago. This platform is the latest evidence of the capacity that we have built, and we look forward to delivering further innovative solutions, that will improve the business experience of consumers and corporates.”

Africa Prudential has created a series of other cloud-based solutions, including EasyCoop that enables traditional cooperatives to easily provide member services online. Other solutions include GreenPole, an enterprise register management software, and EasyMall, an online shopping platform.

Aura is an e-commerce platform that enables vendors to offer a range of hospitality services, while consumers are able to pay for the advertised services immediately on the same platform, in local currency. It is available on the Google Play Store and Apple Store.

 

Airtel Nigeria Renews Mobile Operating Licence

Airtel Nigeria has renewed its mobile operating licence for another 10 years, promising to build inclusive communities as part of its corporate social investments.

Speaking in Lagos during the media launch of ‘Airtel Touching Lives 6’, chief executive officer, Airtel Nigeria, Segun Ogunsanya, said the company is committed to empowering and uplifting vulnerable people, building communities and creating value for all its stakeholders.

Announcing the sixth edition of its flagship CSR intervention, ‘Airtel Touching Lives 6’, he said a strong sense of purpose is driving Airtel Nigeria’s relentless focus on sustainable initiatives that can positively impact the various communities where it operates in.

Airtel Nigeria Renews Mobile Operating Licence

According to him, “In 2001, Airtel procured its operating license in Nigeria and in 2021 it has renewed the same operating license for another 10-year-period. While it is possible to procure and renew an operating license, you can only earn a social license.

“A social license is the love, loyalty, friendship and affection you get from the communities where you operate as well as from your different stakeholders. While Airtel has renewed its operating license to provide telecommunications services, it is committed to its purpose of empowering and uplifting people and making a positive and lasting impact in the lives of its stakeholders, thereby earning its social licence.

“To realise this vision, the Airtel Touching Lives initiative was created to offer relief and hope to the underprivileged and downtrodden and also inspire the strong and the wealthy to support the vulnerable and the poor.”

NOVA Merchant Bank Shareholders Approve N800m Dividend

Nova Merchant Bank shareholders have approved N800 million dividend payout for the full financial year ended December 31, 2020.

The shareholders gave the approval during the bank’s fourth Annual General Meeting held recently in Lagos.

They also commended the board and management of the bank for its impressive performance over the years.

Speaking during the programme, Phillips Oduoza, chairman, NOVA Merchant Bank, noted that the bank reported significant improvement in all its key financial parameters in the year under consideration.

Phillips Oduoza, chairman, NOVA Merchant Bank-Brand Spur Nigeria
Phillips Oduoza, chairman, NOVA Merchant Bank-Brand Spur Nigeria

He said the bank has continued its growth trajectory notwithstanding the current challenging macro-economic environment.

Specifically, the bank declared a profit after tax of N3.49 billion in 2020, an increase of 112 per cent compared to N1.65 billion recorded in December 2019.

Its gross earnings also rose significantly by 130 per cent while profit before tax increased by 135 per cent from N1.5 billion in 2019 to N3.52 billion in the year under consideration.

Oduoza explained that in the face of the challenges in the macro-economic landscape, the bank was able to turn in very impressive results in the period under consideration.

He said: “On behalf of the board and the shareholders, I will like to express my gratitude to the management and staff for sustaining the Bank’s growth trajectory and delivering sterling results in such difficult times.”

Nath Ude, bank’s managing director/CEO, said the bank took advantage of the opportunities presented by the challenging environment.

“The bank was able to provide seamless services to our customers during the lockdown period while maintaining the necessary Covid-19 protocols. The accelerated adoption of digital channels by customers further demonstrates the appropriateness of our business model and digital banking focus.

To this end, we will ensure we remain ahead of changing trends to deliver value to all our stakeholders. We will continue to explore opportunities to partner with fintechs to further deepen our capabilities in this area,” he stated.

Ude explained that going forward, NOVA will focus on entrenching the right structures and creating an agile and solution-minded team capable of driving the vision and mission of the group.

Date Shows COVID-19 Leads To Major Backsliding On Childhood Vaccinations

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23 million children missed out on basic vaccines through routine immunization services in 2020 – 3.7 million more than in 2019 – according to official data published today by WHO and UNICEF.

This latest set of comprehensive worldwide childhood immunization figures, the first official figures to reflect global service disruptions due to COVID-19, show a majority of countries last year experienced drops in childhood vaccination rates.

Concerningly, most of these – up to 17 million children – likely did not receive a single vaccine during the year, widening already immense inequities in vaccine access. Most of these children live in communities affected by conflict, in under-served remote places, or in informal or slum settings where they face multiple deprivations including limited access to basic health and key social services.

“Even as countries clamour to get their hands on COVID-19 vaccines, we have gone backwards on other vaccinations, leaving children at risk from devastating but preventable diseases like measles, polio or meningitis,” said Dr Tedros Adhanom Ghebreyesus, WHO Director-General. “Multiple disease outbreaks would be catastrophic for communities and health systems already battling COVID-19, making it more urgent than ever to invest in childhood vaccination and ensure every child is reached.”

In all regions, rising numbers of children miss vital first vaccine doses in 2020; millions more miss later vaccines.

Disruptions in immunization services were widespread in 2020, with the WHO Southeast Asian and Eastern Mediterranean Regions most affected.  As access to health services and immunization outreach were curtailed, the number of children not receiving even their very first vaccinations increased in all regions. As compared with 2019, 3.5 million more children missed their first dose of diphtheria, tetanus and pertussis vaccine (DTP-1) while 3 million more children missed their first measles dose.

Date Shows COVID-19 Leads To Major Backsliding On Childhood Vaccinations

Date Shows COVID-19 Leads To Major Backsliding On Childhood Vaccinations-Brand Spur Nigeria
Date Shows COVID-19 Leads To Major Backsliding On Childhood Vaccinations-Brand Spur Nigeria

“This evidence should be a clear warning – the COVID-19 pandemic and related disruptions cost us valuable ground we cannot afford to lose – and the consequences will be paid in the lives and wellbeing of the most vulnerable,” said Henrietta Fore, UNICEF Executive Director. “Even before the pandemic, there were worrying signs that we were beginning to lose ground in the fight to immunize children against preventable child illness, including with the widespread measles outbreaks two years ago.

The pandemic has made a bad situation worse. With the equitable distribution of COVID-19 vaccines at the forefront of everyone’s minds, we must remember that vaccine distribution has always been inequitable, but it does not have to be.”

Table 1: Countries with the greatest increase in children not receiving the first dose of diphtheria-tetanus-pertussis combined vaccine (DTP-1)

2019 2020
India 1’403’000 3’038’000
Pakistan 567’000 968’000
Indonesia 472’000 797’000
Philippines 450’000 557’000
Mexico 348000 454’000
Mozambique 97’000 186’000
Angola 399’000 482’000
United Republic of Tanzania 183’000 249’000
Argentina 97’000 156’000
Venezuela (Bolivarian Republic of) 75’000 134’000
Mali 136’000 193’000

The data shows that middle-income countries now account for an increasing share of unprotected children – that is, children missing out on at least some vaccine doses. India is experiencing a particularly large drop, with DTP-3 coverage falling from 91 per cent to 85 per cent.

Fuelled by funding shortfalls, vaccine misinformation, instability and other factors, a troubling picture is also emerging in WHO’s Region of the Americas, where vaccination coverage continues to fall. Just 82 per cent of children are fully vaccinated with DTP, down from 91 per cent in 2016.

Countries risk resurgence of measles, other vaccine-preventable diseases

Even prior to the COVID-19 pandemic, global childhood vaccination rates against diphtheria, tetanus, pertussis, measles and polio had stalled for several years at around 86 per cent. This rate is well below the 95 per cent recommended by WHO to protect against measles –often the first disease to resurge when children are not reached with vaccines – and insufficient to stop other vaccine-preventable diseases.

With many resources and personnel diverted to support the COVID-19 response, there have been significant disruptions to immunization service provision in many parts of the world. In some countries, clinics have been closed or hours reduced, while people may have been reluctant to seek healthcare because of fear of transmission or have experienced challenges reaching services due to lockdown measures and transportation disruptions.

“These are alarming numbers, suggesting the pandemic is unravelling years of progress in routine immunization and exposing millions of children to deadly, preventable diseases”, said Dr Seth Berkley, CEO of Gavi, the Vaccine Alliance. “This is a wake-up call – we cannot allow a legacy of COVID-19 to be the resurgence of measles, polio and other killers. We all need to work together to help countries both defeat COVID-19, by ensuring global, equitable access to vaccines, and get routine immunization programmes back on track. The future health and wellbeing of millions of children and their communities across the globe depends on it.”

Concerns are not just for outbreak-prone diseases. Already at low rates, vaccinations against human papillomavirus (HPV) – which protect girls against cervical cancer later in life – have been highly affected by school closures. As a result, across countries that have introduced HPV vaccine to date, approximately 1.6 million more girls missed out in 2020. Globally only 13 per cent of girls were vaccinated against HPV, falling from 15 per cent in 2019.

Agencies call for urgent recovery and investment in routine immunization

As countries work to recover lost ground due to COVID-19 related disruptions, UNICEF, WHO and partners like Gavi, the Vaccine Alliance are supporting efforts to strengthen immunization systems by:

  • Restoring services and vaccination campaigns so countries can safely deliver routine immunization programmes during the COVID-19 pandemic;
  • Helping health workers and community leaders communicate actively with caregivers to explain the importance of vaccinations;
  • Rectifying gaps in immunization coverage, including identifying communities and people who have been missed during the pandemic.
  • Ensuring that COVID-19 vaccine delivery is independently planned for and financed and that it occurs alongside, and not at the cost of childhood vaccination services.
  • Implementing country plans to prevent and respond to outbreaks of vaccine-preventable diseases, and strengthen immunization systems as part of the COVID-19 recovery effort

The agencies are working with countries and partners to deliver the ambitious targets of the global Immunization Agenda 2030, which aims to achieve 90% coverage for essential childhood vaccines; halve the number of entirely unvaccinated, or ‘zero dose’ children, and increase the uptake of newer lifesaving vaccines such as rotavirus or pneumococcus in low and middle-income countries.

NIPC Lauds Marcelle Ruth Cancer & Specialist Care Facility in Lagos (PICS)

Calls for more support to investors in the sector

Nigerian Investment Promotion Commission (NIPC) has described the impact of Marcelle Ruth Cancer Centre & Specialist Hospital (MRCC&SH), Lagos to be beyond the financial value of the investment in the country.

Executive Secretary/ CEO, NIPC, Ms Yewande Sadiku made this known while on a visit to MRCC in Lagos, on Monday. She further called for an increase in support from Federal, State and Local governments to investments like Marcelle Ruth.

NIPC Marcelle Ruth Cancer & Specialist Care
L-R: Emeka Offor, Director Strategic Communications, NIPC; Dr Modupe Elebute-Odunsi, CEO & Co-Founder, MRCC&SH; Ms Yewande Sadiku, Exec. Secretary/CEO, NIPC | www.brandspurng.com

NIPC Marcelle Ruth Cancer & Specialist Care

“For me, it is the improvement in the quality of life of the Nigerians that will be treated in this facility,” she said. “It is the value of receiving the best quality care, the type that you can get anywhere in the world, but close to home, family and familiar comforts which experts tell us should greatly aid healing.”

NIPC Marcelle Ruth Cancer & Specialist Care

Dr Modupe Elebute-Odunsi, CEO and Co-Founder, MRCC and a Nigerian diaspora who returned to invest in the country, stated that since the inception of their facility about 7 months ago, they have received around 500 patients already. “Clearly for a majority of these patients, they would not ordinarily have been able to access the comprehensive diagnostics and treatment options for the cancers that they have,” she said.

NIPC Marcelle Ruth Cancer & Specialist Care NIPC Marcelle Ruth Cancer & Specialist Care

In a virtual media interview in May this year (with the NIPC media team) Dr Elebute-Odunsi stated that the facility is more than a cancer centre. “We also provide what we call Concierge Healthcare; a complete wellness check that is carried out in under 3 hours at our hospital due to the proximity of the 3 buildings that our facilities occupy,” she said.

Marcelle Ruth Cancer Centre & Specialist Hospital is a one-stop centre for the comprehensive treatment of cancer and specialist conditions. The facilities at the hospital include an imaging centre with CT, mammogram, X-Ray machines, an 8-bed chemotherapy suite, a radiotherapy centre, a pharmacy, amongst others. “It is our desire to contribute to the healthcare system in the country and bring back home that international experience that we have been blessed to be exposed to,” said Dr Elebute-Odunsi.

Airtel Hails Runners, Participants at Ijebu International Half Marathon

…Commends Ogun State for support to sport development

Leading telecommunications services provider, Airtel Nigeria, has extended its felicitation to all the local and international runners, participants and key stakeholders at the inaugural edition of the Ijebu international Half Marathon, a 3-in-1 race featuring a 21km half marathon and scheduled to hold on Saturday, 17th July 2021.

Speaking during a world press conference to announce the flag-off of the race, on Friday, July 16th in Ijebu Ode, the Chief Executive Officer and Managing Director of Airtel Nigeria, Segun Ogunsanya, who was represented by the company’s Regional Operating Director, West Region, Oladipo Jolaosho, commended the organizers of the event, Nilayo Sports Management and the Ogun State government for their respective roles in creating credible and inspiring platforms for youth and sports development.

Ijebu International Half Marathon
L-R: Mr. Oladipo Jolaosho, Regional Operations Director, West Region, Airtel Nigeria; Mr. Tunde Odulaja, Chairman, Organizing Committee, Airtel Ijebu Heritage Half Marathon 2021; Dr. Oluwadare Kehinde, Honorable Commissioner for Youth and Sport, Ogun State and Hon. Bukola Olopade, Managing Director/Chief Executive Officer Nilayo Sports Management Company at the Airtel Ijebu Heritage Half Marathon 2021 Press Conference in Ijebu-Ode, Ogun State on Friday, July 16, 2021. | www.brandspurng.com

“Airtel felicitates with all the international participants, runners, athletes and observers as well as Ijebus and other Nigerians as they come out en masse – whether rain or sunshine – to participate and complete the 21km international half marathon. We commend the local governments across Ijebu as well as the State Government for creating a peaceful and enabling environment and for hosting this world-class athletics event at this time.

“A marathon is never an easy race as it requires physical stamina, mental strength and a good dose of motivation to engage in. Although there can only be one winner, it is always a thing of pride to show up in a marathon and start the race – it is even more special if you can finish the race and of course, the greatest honour is when you win the race. Regardless of your position during the race, we say, well done and kudos,” Ogunsanya said.

The Airtel CEO also urged the marathon participants to leverage on the expansive and reliable Airtel 4G network to share updates and their successes during and after the race.

Bigi Sponsored Marathon Frenzy Grips Ijebu- Ode, As Preparation Is In Full Gear-Brand Spur Nigeria
Bigi Sponsored Marathon Frenzy Grips Ijebu- Ode, As Preparation Is In Full Gear-Brand Spur Nigeria

“I will also like to use this opportunity to inform you that our 4G network is live in Ijebu Ode. As you join in the race, please be assured that Airtel is with you. Through your smartphones and devices, you can literally ask others to join you in the race and also share your pictures and videos in real-time. Airtel has got you covered and we currently have the largest and most reliable 4G network in Nigeria,” he said.

Also speaking during the press conference, the Technical Director of the Ijebu Half Marathon, Mr. Yusuph Alli, noted that the latest technology has been deployed to ensure a flawless event.

“We have deployed spy cameras across the marathon routes and every runner will be wearing two chips – this will ensure that the integrity of the race is of global standards. The world athletics federation has approved the floor plan for the race and every participant that completes the race will get a medal,” he said.

The Ijebu International Half Marathon was motivated by Ijebu Heritage Club. The club is an outstanding community of Ijebu Ode sons and daughters who thought it wise to have an international marathon in Ijebu land.

Headline inflation moderates for the 3rd consecutive month

Earlier today, the National Bureau of Statistics (NBS) released the inflation figures for Jun-2021. Notably, the headline inflation rate rose by 17.75% y/y, lower than our forecast of 17.86% and the consensus forecast of 17.85%. This is 18bps lower than the rate recorded for the month of May (17.93%), implying that prices continued to rise in June but at a slightly slower pace.

On a m/m basis, the headline inflation rate ticked upwards by 1.06% m/m (vs. 1.01% in May-2021). Also, we observed price increase across all components of the index. Specifically, the highest increases were recorded in food prices.

Nigeria Headline Inflation Rate Trajectory

Headline inflation
Sources: NBS, United Capital Research

On a segmented basis, food inflation printed at 21.83% y/y for June-2021 compared to 22.29% in May-2021, a 44ps decline. On a m/m basis, the Food sub-index increased by 1.11% in June 2021 from 1.05% in May-2021, up by 6bps. The moderation in food prices was driven by a low base for the Food sub-index as food prices remain elevated due to prevailing supply-side challenges.

The core inflation sub-index drifted downward to 13.09%, reflecting a 7bps decrease from May 2021’s 13.15%. Similarly, on a m/m basis, core inflation weakened by 43bps in June-2021 to 0.81% compared to 1.24% in May-2021.

Notably, the NBS report showed the key drivers of core inflation were increasing costs of clothing and footwear (Garment, Shoes, Clothing materials etc.), healthcare (Pharmaceutical product, Medical services, etc.) and transport costs (Air transport, Road transport, Motor and Vehicle spare parts).

Clearly, core inflation continues to face lingering pressures from transport cost (a pass-through impact of higher crude prices) and imported consumption (due to naira devaluation).

Inflation Outlook

Looking ahead, we reiterate that the high base impact of H2-2020 will drive sustained moderation in headline inflation in H2-2021, outweighing current price pressures (insecurity in food-producing states, logistics bottlenecks in supply chain, elevated energy prices and impact of naira devaluation).
For Jul-2021, we project m/m inflation will print at 1.10% and consequently forecast headline inflation to drift lower by 17bps, settling at 17.58%.
In the medium term, downside risks include the resumption of removal of fuel subsidy after the six month truce period as well as the expected review in electricity tariffs to reflect current economic realities.

November Headline Inflation Rate Accelerates to 14.89% amid Sustained Rise in Food Index Brandspurng

On the policy impact of today’s release, we note that the probability of a rate hike at next week’s Monetary Policy Committee (MPC) meeting is muted as the persistent disinflation supports a wait-and-see stance, especially given the fragile state of economic recovery.
In the financial markets, we expect the sustained downtrend to support the narrative of a short-term downward shift in yields.

Headline Inflation Rate Eases to 17.75% in June 2021 on Core Inflation…

Freshly released June Inflation report from the National Bureau of Statistics (NBS) showed a sustained downtrend in headline inflation as it eased further to 17.75% in June (lower than 17.93% recorded in May).

The third consecutive slower inflation was driven by the base effect of higher inflation recorded in June 2020 and a moderating gallop in the food index to 21.83% (from 22.83% in March). We saw a rise in the prices of bread, tea & cocoa, milk, bread, cereals, meat, fat and vegetables amongst others.

Meanwhile, the imported food index rose by 17.04% (from 16.98%) as Naira further depreciated against the greenback at the BDC and Parallel markets. Amid demand pressure on the foreign currency, two months moving average foreign exchange rates at the BDC and Parallel markets rose m-o-m by 1.73% and 1.68% to N488.85/USD and N493.59/USD in June 2021.

Inflation Rate to rise by 13.49% YoY in September - Analyst
Photo by Ima Enoch on

However, core inflation declined to 13.09% (from 13.15% in May) driven by a fall in the price of pharmaceutical products, shoes and other footwear, fuels and lubricants for transport services, furniture and finishing amongst others.

On a month-to-month basis, headline inflation expanded to 1.06% (from 1.01%) amid increases in food inflation rate to 1.11% (from 1.05%) despite the beginning of the harvest season.

On the flip side, the core inflation rate moderated to 0.81% (from 1.24%) amid a slower rise in clothing and footwear cost (+0.34%), transport (+0.09%) and water, electricity, gas and other fuel costs (+0.03%).

Notably, urban and rural annual inflation rates moderated to 18.35% (from 18.51%) and 17.16% (from 17.36%) respectively in May.

Outlook:

We expect to see further ease on inflation rate y-o-y given the base effect. However, we expect the m-o-m food inflation rate to rise further amid lower harvest – engendered by worsening insecurity –, and continued pressure on the exchange rate.