Where's your head at?

CBN is confused as hell about the country’s economic future

Sep 20, 2024

Happy Friday, Big Brains! I’m just here to gloat so indulge me. I feel like I’m better than everybody because I’ve started drinking more water and taking French lessons on DuoLingo, all in one week! If you have japa plans, now is probably the time to be like me (or should I say moi?)

- Margaret

Word count: ~ 1,000
Reading time ~3 mins

Let’s get into today’s edition:

CBN faces interest rate dilemma following fuel hike
President Tinubu forms team to tackle Maiduguri flooding effect and Lagdo dam risks
Canada makes major changes to foreign worker eligibility and cuts student visas by 10%

The Big Deal

CBN faces interest rate dilemma following fuel hike

The weather has been quite confusing lately. You never know whether to carry an umbrella or not. But you know who’s more confused? The Central Bank of Nigeria (CBN) and their Monetary Policy Committee! (MPC)

The confusion our finance bros are facing is caused by none other than the oil bros. So on Monday, the Nigerian National Petroleum Company (NNPC) Limited increased petrol prices by 11%, making it the second price hike in two weeks. This means that in the space of two weeks, the price of a litre of petrol in Nigeria has risen from ₦617 to between ₦950 and ₦1,019, showing an increase of over 50%.

If you’re a TBD OG (as you should be), you’ll know that the response of the CBN governor, Yemi Cardoso, to everything Monetary Policy Rate (MPR) related has been “raise am, raise am!” so now that petrol prices have risen twice in two weeks alone, the committee is likely going to have a tough time deciding whether to keep the benchmark interest rate the same or increase it because of the recent rise in petrol prices.

After inflation dropped for the second month in a row to 32.15% in August 2024, some finance experts predicted that the committee might lower interest rates to boost the economy. But the same experts have predicted that the recent rise in petrol prices has created a new problem, leaving the MPC unsure about what to do next.

Why is this a big deal?

We dug our heads into the financial jargon so you wouldn’t have to. MPC is in a dilemma now because there are two likely outcomes of the next MPC meeting.

Typically, having two reductions in inflation would attract a decrease in interest rates but it’s tricky to determine what the outcome of the meeting would be following the fuel hike. But we can try to paint a picture of the outcome. Reduced inflation might open up the possibility of lowering interest rates to help the economy grow. On the other hand, rising petrol prices could lead to more inflation, which might stall the benefits of lowering rates.

Either way, lenders across the country are not dropping their rates anytime soon. In June, CBN reported that consumer credit surged by 12%, reaching around ₦3.9 billion in January 2024. This simply means that Nigerians are borrowing now more than ever. Unfortunately, the MPR hikes have also forced lenders to increase their rates. 21-year-old Biodun told The Big Daily that she’s struggling to pay back the 30% interest rate a digital lending app she borrowed her school fees from slapped on the amount borrowed.

The MPC will meet next week, from September 23 to 24, 2024. But here’s some friendly advice, don't get your hopes up—you might not be pleased with the outcome.

President Tinubu forms team to tackle Maiduguri flooding effect and Lagdo dam risks

Pause whatever you’re doing right now because we have a winner for the collabo challenge (you need more screen time if this reference flew over your head).

Two promises and one disaster later, President Tinubu has finally put some action to his words.

The president has sent a team of experts to control the effects of flooding in Borno. The government also announced that experts will regularly test the water and pinpoint sources of harmful chemicals to prevent waterborne diseases in the state.

We hope we’re not speaking too soon when we say that the Tinubu-led administration is finally ready to do something about flooding effects and prevention. This is coming days after Cameroon announced that it will be opening its Lagdo dam. Lagdo is a reservoir in the Northern Province of Cameroon.

The Lagdo dam is no stranger to causing floods and tragedy in Nigeria. In 2022, water released from Lagdo Dam led to severe flooding in Nigeria, resulting in 603 deaths, displacing 1.4 million people, injuring 2,400, and damaging 82,035 homes and 332,327 hectares of farmland.

This year, states like Adamawa, Taraba, Kogi, Nasarawa, Benue, Anambra, Bayelsa, Delta, Edo, Cross River and Rivers states are likely to be at the receiving end of the effects of this dam opening. But our able FG (are we reaching?) has announced plans to build five buffer dams along the Niger and Benue rivers to help reduce the risk of having a repeat of the tragedy caused by the dam in 2022.

Here’s the thing though; the release of water from this dam had already started since Wednesday so we’re not sure how effective these intended buffer dams will be, plus the nagging fact that the announcement by FG was closely followed with a warning to Nigerians living in floodplains to move temporarily (without providing them alternative shelters, mind you)

For the sake of the lives that could be lost if this dam opening isn’t properly managed, we really hope we’re not speaking too soon when we say that the Tinubu-led administration is finally ready to do something about flooding effects and prevention.

Canada makes major changes to foreign worker eligibility and cuts student visas by 10%

“If all the strongest soldiers of God got into a fistfight, who would win?” Nigerian japa aspirants for sure! These guys have been fighting for their lives – if it’s not the economy, its the anti-japa policies.

The Canadian government is rolling out some immigration changes for 2025 to help keep its system in check and boost its economy. The country is cutting international student permits by 10%, lowering the target from 485,000 to 437,000. It will also reduce the number of temporary residents in Canada from 6.5% to 5% of the total population.

Minister of Immigration Marc Miller pointed out that not everyone who wants to come to Canada can. The “chosen” japa aspirants will be the best according to Canadian standards. The battle of the chosen will also extend to Master’s and doctoral students who will now be required to fight for a spot in the 12% of the study permit allocation by including a letter with their study permit applications.

On the work side, permits will only be available for spouses of master’s degree students in programs lasting at least 16 months and for spouses of foreign workers in important job sectors. Also, starting November 1, 2024, international students applying for the Post-Graduation Work Permit will need to show they can speak either French or English, ensuring those who stay can contribute to the economy. C’est la vie, innit?

The Big Picks

Gunshots As EFCC Operatives Attempt To Arrest Yahaya Bello: Gunfire erupted Wednesday night as operatives from the Economic and Financial Crimes Commission (EFCC) tried to arrest former Kogi State Governor Yahaya Bello at the Kogi State Governor’s lodge in the Asokoro District of the Federal Capital Territory (FCT).

FG Eyes $1.5bn Revenue From Halal by 2027: Vice President Kashim Shettima announced that Nigeria is embracing the Halal economy and aims to contribute $1.5 billion to the country's GDP by 2027 through this initiative.

E-CMR To Eliminate Stopping Of Vehicles To Check Papers: The Electronic Central Motor Registry (E-CMR) initiative from the Nigeria Police Force will allow motorists to avoid being stopped on the road for vehicle information checks.

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