Analyst Corner

Do farmers throw Emefiele’s hat in the ring?

As the race to the 2023 general election intensifies, a number of politicians across party lines have declared their interest in contesting for the highest office in the land, with little or no reaction from Nigerians. However, news broke late Friday afternoon that set tongues wagging all weekend long; in Twitter spaces, Clubhouse rooms, WhatsApp groups and possibly, the very corridors of power in Aso Rock. Yet another person had allegedly picked up the pricey N100mn Presidential nomination form under the All Progressives Congress (APC). But this time, it was not a random politician, it was the Governor of the Central Bank of Nigeria (CBN) – Mr Godwin Emefiele. The man that has steered the economy of the nation since 2014.

The sitting CBN Governor’s intention to run for President throws up a number of concerns. First off, it contravenes the provision of the Public Service Rules, CBN Act, and the Constitution, calling to question the legality of his intentions. Secondly, running on the platform of the APC is as partisan as it gets. Given the sensitive office Emefiele occupies and the relevance of maintaining a non-partisan, independent Central Bank Governor, it should come as no surprise if (and when) the international community loses confidence in the institution that is the apex bank. As one commentator put it, “we are witnessing the erosion of institutional credibility in real-time”. Also, who is to say how long the Governor has nursed this ambition, who his backers are, and the steps he may (or may not) have taken to fortify himself with State resources to pursue his ambition?

All of these questions beg for answers. Answers that Godwin Emefiele fails to provide in his 163-word thread posted on Twitter Saturday afternoon. If anything, his thread raises even more questions.

We would stop here and await God’s divine intervention (as the CBN Governor himself has said) due over the next few days. Hopefully, the Almighty is still a non-partisan God.

Top headlines for the week

US Fed Raises Rates, Again!

The Fed hiked interest rates by 50 basis points on Wednesday, following a 25-basis point increase at its previous meeting. Investors in the financial markets anticipated the decision, but it does not diminish the fact that it was the Federal Reserve's first 50-bps rate hike in 22 years. Moreover, Fed Chair Jerome Powell hinted that monetary officials are not yet inclined to raise the aggressiveness of rate hikes.

We believe the most important takeaway from the meeting was that the Federal Reserve is committed to rapidly tightening monetary policy in the coming months to catch up with the inflation curve.

This week will see the release of the Consumer Price Index (CPI) and Producer Price Index (PPI) for April 2022. This will be the biggest headline in the coming week, as it will reveal if price increases have begun to level out after rising 1.2% m/m and 8.5% y/y, in March 2022.

OPEC+ Forges Ahead…

OPEC+ agreed to adhere to last year's plan to gradually release slightly more than 400,000 barrels per day of oil onto the market, maintaining the status quo. The OPEC+ policy meeting takes place against the backdrop of skyrocketing oil prices, which reached their highest level since 2008 in March at over $139 per barrel as a result of Russia's invasion of Ukraine, which worsened supply concerns that were already fueling the price increase. In June, the union chose to maintain its schedule by releasing an additional 432,000 bpd of oil onto the market.

The OPEC+ summit took place after the European Union proposed a phased ban on Russian oil as its strongest action so far in relation to the Ukraine conflict. The embargo will certainly push Russia to reroute flows to Asia and substantially limit output, while the EU will compete for the remaining available supplies, contributing to an increase in oil prices.

… Increases Nigeria’s Production Quota Despite Poor Performance

OPEC+ increased Nigeria's oil production quota for June 2022 from 1.735mbpd in May 2022 to 1.772mbpd, resulting in a 19,000-barrel oil difference. This development was necessitated by the limited supply of crude oil on the global market despite robust demand since the numerous sanctions imposed on Russia for invading Ukraine caused supply shortages. Despite the fact that Nigeria has not even come close to fulfilling its goal, it is good news for the government's crude oil production benchmark of 1.88mbpd for 2022. However, it appears unlikely to be attained in the near term as the country grapples with inherent challenges, such as an increase in oil theft and pipeline vandalism, among others. 

Did you know

That there are now just two countries in the whole world were Coca-Cola products cannot be bought or sold (at least, not officially). They are Cuba and North Korea (according to the BBC) as both countries remain under long-term US trade embargoes (since 1962 and 1950 respectively).

Box Office banger

This weekend, we’re watching both Doctor Strange in the Multiverse of Madness (from Marvel Studios), and Blood Sisters (from EbonyLife Studios). This writer has actually seen both movies (I just got back from the cinema a few hours ago), but he’d be kind enough to spare you the details (at the risk of dropping spoilers). As of Saturday morning, Doctor Strange had grossed $229mn globally (higher than its $200mn budget) and was on track to beat its worldwide $300mn opening projection.  This would mark the second-best box office debut of the Covid era after Spiderman: No Way Home‘s $582mn and ahead of The Batman‘s $251mn.

Quote of the week

“If you want to be happy, be.” – Leo Tolstoy