Transcript: Nigeria’s pivot to solar power
This is an audio transcript of the FT News Briefing podcast episode: ‘Nigeria’s pivot to solar power’
Marc Filippino
Good morning from the Financial Times. Today is Thursday, October 2nd, and this is your FT News Briefing. An electric vehicle giant is starting to see some weakness. And the US government shutdown could have some interesting implications for the Federal Reserve. Plus, Nigeria produces a ton of oil, so a pivot to solar power would be a pretty big deal. I’m Marc Filippino, and here’s the news you need to start your day.
[MUSIC PLAYING]
BYD sales fell last month for the first time in more than a year and a half. The Chinese electric vehicle maker sold 5.5 per cent fewer cars compared to a year ago. That’s according to a Hong Kong stock exchange filing yesterday. BYD had been on a meteoric rise and became a major rival to Tesla, and the slowdown is thanks to lukewarm demand in China. Plus, the government forced BYD to hold off on aggressive price cuts. It had been using those to stay competitive. Analysts say the drop in sales will put more pressure on BYD to continue expanding outside China.
[MUSIC PLAYING]
The US government has shut down for the first time in nearly seven years. Democrats and Republicans failed to agree on a budget that would have extended the government’s spending through the end of November. And you may be wondering what effects it could have on the US economy, including the next steps by the US Federal Reserve. Elettra Ardissino is a reporter for the FT’s Monetary Policy Radar desk, and she’s been asking this question too. Hi Elettra.
Elettra Ardissino
Hi, Marc.
Marc Filippino
So let’s just set the scene. Why might someone’s first question be: what’s the Fed gonna do?
Elettra Ardissino
Well, I would say there’s plenty of reasons. The most immediate is because this is going to delay the release of critical economic statistics that the Fed would’ve been relying on to make its future rate decisions. We would’ve gotten a sense of how the US labour market is doing on Friday with the release of the employment report for September. Now, we’re not going to be getting that data anymore. It’s been postponed indefinitely. In addition to this, the Federal Reserve has also been in the spotlight over the past few weeks. At the end of August, Donald Trump said that he was intending to fire Governor Lisa Cook. Yesterday, we heard from the Supreme Court they have deferred a decision on the matter, which essentially means that Lisa Cook will not immediately be terminated. You know, many analysts had seen Trump’s attempts to get rid of Lisa Cook as a way for him to seize control of the institution, and the Supreme Court’s decision from yesterday thwarts his attempts to do so. So, lots going on with the Fed.
Marc Filippino
I wanna broaden out a little bit about what happens when the US government shuts down and what the possible impact on the broader economy might be, ’cause I think a lot of people are interested in that too.
Elettra Ardissino
Sure. So, I would say that generally, it’s been found that there are negative, temporary effects that stem from a shutdown, but it’s not permanent. And this is because a lot of the spending programs that rely on discretionary spending, that get suspended during a shutdown, are restarted. Once the shutdown is resolved, the longer it lasts, the more likely it is that there is a permanent effect. And then, this time it might be different because usually, workers get furloughed, but President Donald Trump has threatened to fire some federal workers this time. And so, if that happens, then they would be kind of leaving the workforce, and that would obviously have potentially longer-term negative economic effects.
Marc Filippino
So given that, what are we expecting the Fed to do with this information when it meets in a few weeks to decide on interest rates, because they cut last meeting, right?
Elettra Ardissino
Exactly. So I would say that in a base case scenario, the Fed sticks to its guns, and what it signalled at the September meeting is that it would keep cutting interest rates more quickly. It would try to get down to what’s called a neutral rate, which is the rate at which the economy is kind of neither stimulated nor restrained in order to give themselves room to kind of react to a weakening of the labour market decisively if they have to. The Fed is still probably going to do this. I would say that this shutdown probably raises the probability that they cut rates again, and this is because of the margin. Of course, it kind of slows down the economy, but mostly because they’ve signalled that that’s what they’re gonna do, and so they’ll probably just stick to what they’ve signalled.
Marc Filippino
OK. Elettra, what are you looking out for next? We didn’t get to talk about EJ Antoni, whom Trump nominated to lead the Bureau of Labor Statistics. Trump then pulled that nomination this week. Is that one of the things that could impact the way the Federal Reserve is thinking about the shutdown and interest rates?
Elettra Ardissino
So, I would say, definitely looking out for how negotiations progress and how quickly this looks like it will be resolved. One other important thing is the future of the BLS and who will become its next chief. As you mentioned, EJ Antoni has been pulled from consideration. It’s not clear who will be the next nominee. That is going to be important, and I would say, obviously, the shutdown kind of amplifies the chaos that is happening right now at that very important statistical agency. That will impact the Federal Reserve.
Marc Filippino
Elettra Ardissino is a reporter for the FT’s Monetary Policy Radar desk. Thanks, Elettra.
Elettra Ardissino
Thank you.
[MUSIC PLAYING]
Marc Filippino
Argentina’s financial markets are shaky again. Remember we told you last week that they had stabilised after the US floated giving the country a $20bn currency swap line. But details on that bailout have been pretty scarce, and investors are getting nervous. The US has its hands full with the government shutdown. Treasury officials have not said when details of the bailout might materialise. The peso plunged more than 6 per cent on Tuesday before the central bank intervened, but that only provided temporary relief. The peso slid again yesterday. Now during all this market turmoil, Argentina announced that President Javier Milei would meet US President Donald Trump on October 14th, which is around two weeks before the country’s midterm elections.
[MUSIC PLAYING]
Nigeria is Africa’s largest petrostate, but oil hasn’t provided a reliable source of energy for its people. That’s because most of the country’s oil is exported. But now the arrival of standalone mini-grids powered by solar energy is offering hope for real change in Nigeria and elsewhere. Attracta Mooney writes about climate for the FT, and she’s been looking into this. She joins me now. Hi, Attracta.
Attracta Mooney
Hello.
Marc Filippino
All right, so give us an idea of just how difficult it has been for Nigerians to access a reliable power supply.
Attracta Mooney
I suppose the first place to start with this is that most of the developing world does suffer power cuts or has intermittent power, and Nigeria is no exception. I think the average in the country is that, you know, most households that are on the grid receive about seven hours of electricity daily, but there’s a huge chunk of Nigerians who aren’t on the grid. There’s about 85mn people who don’t have access to the grid. So access to regular power is really sparse across the country.
Marc Filippino
Yeah, I mentioned these mini-grids earlier. How can they help?
Attracta Mooney
Well so for years, Nigerians have kind of circumvented the lack of power from a grid with generators, but these generators have become more expensive and they’re quite polluting, right? You use fossil fuels to generate the power from them. And so I think the first thing that’s happened is that the rich people in Nigeria, most of them are starting to put solar panels on their houses, and then for poorer people, that’s not necessarily an easy option. So what we’re starting to see is development banks like the World Bank and also philanthropic organisations working with private developers to create so-called mini-grids. And these are where you get solar panels and you often build them alongside batteries, and then you create that as like a little mini-grid for a smaller area so that a small area can get more regular power.
Marc Filippino
How could this be a game-changer in terms of the country’s economic development? I mentioned that, you know, Nigeria is struggling because of the lack of power that it’s getting.
Attracta Mooney
So, our colleague Aanu went out to visit some of these mini-grids and talked to quite a few people there. And, you know, he spoke to a woman who had a shop selling cold drinks. And once power went down, she couldn’t keep the drinks cool any longer, which meant she couldn’t operate her business. And all of these kind of small businesses not being able to operate has a huge economic impact. And so, the idea would be that if you can keep these businesses, whether it’s farming or small businesses operating regularly, then that should help drive economic growth, and that should have a good impact overall on the country.
Marc Filippino
Now Attracta, from what you’re telling me, it sounds like solar power and in particular mini-grids, promising start, but what else needs to happen for this to take off, not just in Nigeria, but other places with shaky power supply?
Attracta Mooney
So, one of the kind of challenges with this is that mini-grids provide power or solar panels provide power for either a single house or, you know, a community. But to create very strong economic growth, you need bigger grids. And a similar situation is playing out around the world. We basically need like hundreds and hundreds and hundreds of millions, if not billions, be invested in grids globally. So like the build out of grids is really complicated. You need to build it over a large chunks of land and it’s just very costly. So if you want to get power to the people fast, then a mini-grid is a very quick solution. You can build it really quickly. Whereas building out transmission grid, a proper grid across the country will take years.
Marc Filippino
Attracta Mooney is the FT’s climate correspondent. Thanks so much, Attracta.
Attracta Mooney
Thanks very much, Marc.
Marc Filippino
You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.