THE UNITY BANK DIGEST – NOVEMBER 10, 2021

Dear Subscriber,

Cooking gas – Luxury or necessity?

Sola in Agege abandoned his kerosene stove for a cleaner and more efficient gas cooker just a few years ago. Now the surging price of cooking gas, which has surged 191% to N10,200 from N3,500 in January, is making him have a rethink. He ponders on the stove he stowed away years back but realizes that kerosene prices have also risen steadily (25%) in the last year to N1,540 per gallon. The only other alternative is firewood (which would mean him cooking outside) but his landlord is unlikely to be enthused about it, while firewood prices have also been on the rise. Sola, it seems, is stuck with high cooking gas prices which is compounding his dilemma of higher food prices and an erosion of his purchasing power. Sola’s dilemma is emblematic of the common Nigerian’s situation.

FG to end subsidy payments by June 2022

The FG has decided to end fuel subsidy payments by the end of June 2022. While it means more revenue for the government to deploy to more productive schemes, it also means higher pump prices for petrol and less money in consumer wallets. The ripple effect on logistics costs and commodity prices is likely to trigger inflationary pressure which will further squeeze consumer real incomes. The pushback could also stoke instability.

OPEC+ sticks to output strategy, increases Nigeria’s production quota

As expected, OPEC+ stuck to its output expansion plan (400,000bpd every month) over worries of the possibility of a new wave of Covid-19. This is happening despite Biden’s request for an increase in global oil supply to ease surging prices (currently above $80pb) as gasoline prices have soared to over $3.8 per gallon. Nigeria got some respite as its oil output quota was revised upwards to 1.67mbpd, 15.17% higher than the current 1.45mbpd. Higher oil production, coupled with higher prices, will increase FAAC disbursements which would impact aggregate demand and consumer spending positively.

This edition of the Unity Bank Digest is packed with a mix of business and social news, hand-picked for you. Look out for the breakdown of business news such as the launch of the e-Naira, September inflation figures and social news such as the trending K-drama, Squid Games.

Enjoy your read!