Economy
Nigeria’s Economic Environment Still Tough—IMF
By Dipo Olowookere
The International Monetary Fund (IMF) has disclosed that economic environment in Nigeria is still very challenging “despite some signs of relief in the first half of 2017.”
The global financial institution made this disclosure at the conclusion of its visit to the West Africa’s biggest economy, which fell into recession last year.
From Thursday, July 20, 2017 to Monday, July 31, 2017, the IMF team led by its Senior Resident Representative and Mission Chief for Nigeria, Mr Amine Mati, “held productive discussions with senior government and central bank officials.”
During the visit, the team also met with members of parliament, representatives of the banking system, private sectors, civil society, and international development partners.
Mr Mati, while commenting on outcome of the visit, emphasised that the country’s “economic backdrop remains challenging, despite some signs of relief in the first half of 2017.”
According to him, “Economic activity contracted in the first quarter of the year by 0.6 percent, mainly as maintenance stoppages reduced oil production.”
However, following four quarters of negative growth, the non-oil economy grew by 0.6 percent (year-on-year), on the back of a rebound in manufacturing and continued strong performance in agriculture.
He said various indicators suggest an uptick in activity in the second quarter of the year. Helped by favourable base effects, headline inflation decreased to 16.1 percent in June 2017, but remains high despite tight liquidity conditions.
The IMF senior executive noted that, “Preliminary data for the first half of the year indicate significant revenue shortfalls, with the interest-payments to revenue ratio remaining high (40 percent at end-June) and projected to increase further under current policies.”
According to him, “High domestic bond yields and tight liquidity continue to crowd out private sector credit.”
“Given Nigeria’s low growth environment and the banking system’s exposure to the oil and gas sector, non-performing loans increased from 6 percent in 2015 to 15 percent in March 2017 (8 percent after excluding the four undercapitalized banks),” he said.
Mr Mati pointed out that, “Faced with these challenges, the government has started implementing a number of important measures.”
He described the Economic Recovery and Growth Plan (ERGP) as driving the diversification strategy, and security in the Niger Delta improved through strengthened engagement.
“The new Investor and Exporter FX window has provided impetus to portfolio inflows, helped increase reserves above $30 billion, and contributed to reducing the parallel market premium.
“Important steps have also been taken in implementing the power sector recovery plan, introducing a voluntary income and asset declaration program and moving forward the 60-day national action plan to improve the business environment. Progress is also ongoing within the oil and energy sector through implementation of a new funding mechanism for cash calls,” he observed.
“However, near-term vulnerabilities and risks to economic recovery and macroeconomic and financial stability remain elevated.
“At 0.8 percent, growth in 2017 will not be sufficient to make a dent in reducing unemployment and poverty.
“Concerns about delays in policy implementation, a reversal of favourable external market conditions, possible shortfalls in agricultural and oil production, additional fiscal pressures, continued market segmentation in a foreign exchange market that remains dependent on central bank interventions, and banking system fragilities represent the main risks to the outlook.
“Acting on an appropriate and coherent set of policies to enhance an economic recovery remains urgent. This includes implementing immediately specific priorities that will help achieve the goals of the ERGP.
“In the near term, a stronger push for front-loaded fiscal consolidation through a sustainable increase in non-oil revenues would be needed to create space for infrastructure spending, social protection, and private sector credit.
“This should be simultaneously accompanied by a monetary policy that avoids direct financing of the government and is kept sufficiently tight, a unified and market-based exchange rate, and rapid implementation of structural reforms.
Pursuing these policies would help reduce macroeconomic vulnerabilities and create an environment for a diversified private-sector led economy,” Mr Mati said.
Concluding, he thanked the Nigerian authorities and “all those with whom they met for the productive discussions, excellent cooperation, and warm hospitality.”
By Adedapo Adesanya
The Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele, yesterday clarified that the federal government is not increasing taxes but making efforts to raise the tax net.
Mr Oyedele made this remark on Thursday while receiving a delegation from the Chartered Institute of Taxation of Nigeria (CITN) at his office in Abuja.
He hailed the institute for introducing a National Tax Awareness Day and for supporting the current tax reforms of the federal government.
The minister charged the institute to double its effort in public enlightenment, stressing that many Nigerians still view taxation as a means for the government to take money from citizens.
He reiterated that the priority of the government is not to increase tax rates but to broaden the tax base by ensuring that all eligible taxpayers meet their obligations.
“We are still not getting enough revenue from taxes.
“It is not about increasing taxes but making sure that those who are supposed to pay taxes. We want to promote fairness in tax administration,” he said.
Nigeria is challenged by the inability to generate adequate revenue from taxation despite ongoing reforms, stressing that a significant number of eligible taxpayers have yet to fulfil their civic obligations.
He said the challenge facing the country was not necessarily about raising tax rates but ensuring that individuals and businesses that ought to pay taxes do so in a fair and transparent system.
The minister also commended the institute for supporting the federal government’s tax reform agenda and promoting public understanding of taxation, but urged it to intensify its advocacy efforts, noting that many Nigerians still harbour misconceptions about taxation.
According to him, many citizens continue to view taxation merely as a tool for the government to take money from the people rather than as a critical instrument for national development.
“We are still not getting enough revenue from taxes. It is not about increasing taxes, but making sure that those who are supposed to pay taxes. We want to promote fairness in tax administration,” he added.
Mr Oyedele stressed that if Nigeria succeeds in building an efficient and equitable tax system, the impact on infrastructure, public services and economic development would be transformative, challenging the institute to introduce annual awards for the country’s most tax-compliant individuals and organisations as a means of encouraging voluntary compliance and recognising responsible taxpayers.
By Modupe Gbadeyanka
Nigeria’s First Lady, Mrs Oluremi Tinubu, has given Nigerians business advice that may not involve a lot of money to start.
Speaking with newsmen recently, the wife of President Bola Tinubu said businesses like akara (fried bean cake), kulikuli (a crunchy snack from roasted peanuts or groundnuts) and roasted corn can be set up without breaking the bank.
She disclosed that to support her husband’s Renewed Hope agenda, she has provided funding packages to traders and others to the tune of N3.5 billion.
“To start akara business doesn’t take a lot of money. To start roasting corn and kuli-kuli doesn’t take much. We didn’t give them a loan; we gave it to them as a grant,” she stated.
She further said, “We’ve encouraged Nigerians as best as we could, what is within our hands, I have given, and I keep giving. Those are the things we’ve done.”
“I remember giving for TB (tuberculosis) when I heard of many TB cases; I gave N2 billion, to breast cancer, I gave N1 billion, and to [tackle] malnutrition, I gave N500 million.
“These are the things we’ve been doing to assist the government. So, we’ve had impact in agriculture, social investment, education (as scholarship and ICT training) and others. We are still open to doing more,” she disclosed.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange rallied by 1.70 per cent on Thursday, June 25, after three price gainers overpowered the two price losers recorded at the close of business.
Consequently, the market capitalisation of the trading platform increased by N43.79 billion to N2.618 trillion from N2.574 trillion, and the NASD Security Index (NSI) improved by 72.96 points to close at 4,362.32 points, in contrast to Wednesday’s 4,289.36 points.
Yesterday, the price advancers were led by Nipco Plc, which chalked up N31.79 to close at N349.76 per unit versus the preceding day’s N317.97 per unit. Okitipupa Plc gained N18.00 to end at N298.00 per share versus the previous session’s N280.00 per share, and Central Securities Clearing System (CSCS) Plc went up by N7.11 to N86.79 per unit from N79.68 per unit.
On the flip side, Nitrox Industrial Gases Plc crumbled by 32 Kobo to close at N21.09 per share compared with the N21.41 per share it closed at midweek, and Food Concepts Plc depreciated by 25 Kobo to N2.51 per unit from N2.76 per unit.
During the session, the value of securities traded by investors went down by 86.7 per cent to N10.9 million from the preceding session’s N82.9 million, and the volume of securities dropped 84.9 per cent to 10.9 million units from the previous 82.9 million, while the number of deals grew by 84.2 per cent to 35 deals from 19 deals.
At the close of trades, Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units valued at N6.5 billion, and CSCS Plc with 68.4 million units exchanged for N4.7 billion.
GNI Plc was also the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
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