16th January 2024
Nigeria’s Inflation Crisis
Nigeria's inflation rate hit a 27-year high in December, reaching 28.92% year on year, with food prices soaring. The prolonged surge, marking the 12th consecutive monthly increase, intensifies the cost-of-living crisis and urges the central bank to consider interest rate hikes. Food inflation, a significant part of Nigeria's inflation basket, rose to 33.93% in December. Factors such as higher fuel prices and a weakened naira contribute to the inflationary pressures. Analysts predict further increases, with inflation potentially exceeding 30% by Q1 2024. The Central Bank may face the necessity of a 400 basis points rate hike.
Ivory Coast Pioneers Eurobond
Ivory Coast is set to issue a eurobond, becoming the first sub-Saharan African country to do so in almost two years. President Alassane Ouattara announced the move, emphasizing plans for economic transformation, increased investments in sectors like digital technology and transport, and the exploration of recent oil and gas discoveries. While the size of the bond was not disclosed, Ivory Coast is anticipated to be among the fastest-growing economies in the region in 2024. The move comes as sub-Saharan African nations face challenges accessing international debt markets due to rising US interest rates.
Nigeria Aims for Tax Revenue Boost
Nigeria aims for a 57% boost in revenue to $20.3 billion in 2024, with the Federal Inland Revenue Service focusing on tax system reforms. Plans include improving efficiency, tax compliance, and reallocating resources from oil to non-oil sectors. The government seeks to increase revenue by targeting wealthy citizens, cutting corporate taxes, and introducing electronic invoicing for value-added tax. The initiative is part of President Bola Tinubu's reform program to spur growth and alleviate poverty, addressing Nigeria's reliance on borrowing for public spending amid low tax revenue.
More Nigeria Refinery Updates
Nigeria National Petroleum Co. is seeking private management for its recently renovated Port Harcourt refinery, the nation's largest. The move aims to improve reliability, meet fuel supply needs, and enhance energy security. The 210,000-barrel-per-day facility was refurbished for $1.5 billion and follows a report suggesting outsourcing to address inefficiencies in state-owned refineries, which operated at below 30% capacity from 2010 to 2020. Meanwhile, Oil prices dipped as the Middle East conflict showed limited impact on crude output, prompting profit-taking after last week's 2% gains. Brent crude settled at $78.15, down 0.2%, while U.S. WTI crude was at $72.50, a 0.3% decline. Tankers avoided the Red Sea after U.S. and UK strikes on Houthi targets in Yemen. The conflict has disrupted LNG tankers, indirectly tightening the market. Libya protests may shut more oil facilities, and U.S. and Canada face production cuts due to extreme cold.
