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Reserve Bank of Australia Sees Faster Growth

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Australia’s central bank maintained its forecast of accelerating growth in response to easy policy, even as risks around key trading partner China cast a shadow over the regional economic outlook.

The Reserve Bank of Australia trimmed its inflation forecast for the year through June 2016 and its 2017 growth projections in a quarterly monetary policy statement Friday but it kept most of its estimates unchanged.

“A further increase in growth in household incomes and demand is anticipated, supported by rising employment, low interest rates and lower” gasoline prices, it said “The outlook for China’s growth is a significant uncertainty for the outlook for the Australian economy.”

Australia is benefiting from a depreciating local dollar that helps insulate the economy from shocks abroad and increases the competitiveness of local industries, whereas jurisdictions like Europe and Japan are struggling with their currencies. Local policy makers kept rates unchanged Tuesday for a ninth month as they gauge the impact of recent financial market turbulence on global and domestic growth.

The Australian dollar fell and was quoted at 71.87 U.S. cents at 11:32 a.m in Sydney after December retail sales were lower than anticipated.

The market upheaval in part reflects “concerns about the evolving balance of risks in China and the ability of the Chinese authorities to manage a challenging economic transition,” the central bank said today. “Any sharp slowing in economic activity or increase in financial stresses in China could spill over to other economies in the region.”

China Devaluation

China devalued its currency in August and then undertook an eight-day stretch of weaker yuan fixings through Jan. 7, roiling global financial markets and fueling concern it was favoring depreciation to revive the slowest growth in a quarter century.

China’s central bank has at the same time been burning through its currency reserves to support the yuan amid record capital outflows.

At the same time, Australia recorded its biggest quarter of employment growth on record at the end of last year and unemployment fell to 5.8 percent, even as the economy was on course to expand at a below-trend pace.

“It is possible that the strength in the labor market data contains information about the economy not apparent in the national accounts data,” the RBA said. “In part, employment growth appears to have reflected the relatively strong growth of output in the more labor-intensive sectors of the economy, such as household services.”

The RBA is trying to orchestrate a transition away from mining investment to other industries in the economy, using low rates and a weaker dollar as a tailwind for industries. In some areas this is working: rising house prices have fueled a residential construction boom and conditions for business are above average. Yet there is still no sign of an uptick in investment outside the mining industry it is seeking.

Unwinding Investment

Resource firms are about half way through the unwinding of investment programs, and reflecting lower global commodity prices, the central bank today lowered its forecast for the terms of trade, or the ratio of export prices to import prices, by about 4 percent compared with its November estimate.

Given inflation is low and the central bank expects little upturn, it reiterated that there may be “scope for easier policy, should that be appropriate to lend support to demand.”

While global central banks are struggling with disinflation or outright deflation that an open economy like Australia’s will be exposed to, one of the curiosities to date is the lack of pass through of higher import prices from a falling currency.

The RBA said today that based on history, the direct effect of the depreciation since early 2013 should add about half a percentage point to underlying inflation over each year of the forecast period. It indicated this time may be a bit different.

Competitive Pressures

“Heightened competitive pressures, including from new entrants into the Australian retail market, and greater efforts by retailers to reduce their costs and improve efficiency, are continued to limit the extent to which higher import prices are evident in final retail prices for some time,” the RBA said.

That’s a boon for consumers. The central bank also said its forecast for better household consumption and income growth — reflecting higher employment and the plunge in gasoline prices – – indicate the nation’s savings ratio is likely to decline less than previously expected.

The RBA said its liaison with retailers “suggests that trading conditions improved in the Christmas and post-Christmas sales period.”

Bloomberg

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Finance

FG to Earn N462 Billion from Electronic Money Transfer Levy in 2021 – World Bank

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Money Transfer - Investors King

The World Bank has said the Federal Government of Nigeria will earn an estimated N462 billion from electronic money transfer levy in 2021.

The leading multilateral financial institution disclosed in its ‘Resilience through Reforms’ report.

The Federal Government had introduced a levy on electronic money transfer in the Finance Act 2020 to take advantage of the growing electronic transfer in the country and up revenue generation.

The electronic money transfer levy is a single one-off charge of N50 on electronic fund transfer in any deposit money bank or financial institution on any type of account on sums of N10,000 or more.

Akpan Ekpo, the Chairman of the Foundation for Economic Research and Training, who spoke in a telephone interview voiced his concerns on the levy.

He said, “The levy is remitted to the government, which is fine. But I think the savers, the people who use the transfer channels, are over-levied. You pay maintenance fee, transfer fee, and I think if this level of levying continues, it will discourage people from using electronic channels.

“Personally, I think the EMT levy should be out of the Finance Act. There is too much burden on the citizens, although the government is making great money from it. Let us hope they use the money wisely, but it shouldn’t have been put there in the first place.

“It is a law now; there is nothing that can be done about it. But I hope it is used wisely, and they would be transparent about how the money is being used.”

Akpan said the EMT levy would discourage individuals outside the formal banking net.

He said, “With the EMT levy, more people are discouraged from using the banks and its services. A lot of Nigerians sell in rural areas, and are outside the financial system net.

“With the EMT, more people are further excluded. There really was no need to introduce the EMT; it will discourage those who are not already in the formal banking sector from even coming into it. It is likely to further deepen the financial exclusion of many Nigerians.”

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Banking Sector

Hope PSBANK Collaborates With FG To Create 100 Jobs In Each Local Government

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Hope PSBank- Investors King

Hope Payment Service Bank, a subsidiary of Unified Payment Services Limited and Nigeria’s premier digital bank is collaborating with the Federal Government through the Ministry of Labour and Productivity to create jobs for no fewer than 77,400 people across the country.

The employment opportunity is part of the exit strategy of the Federal Government’s Special Public Works Programme being executed alongside the bank by empowering 100 Nigerians in each of the 774 local governments.

Speaking at the official kick-off of the collaboration, the Managing Director, Hope Payment Service Bank, Mr. Ayotunde Kuponiyi noted that the digital bank serves as an enabling platform that would interface with 77,400 beneficiaries selected from the Special Works Programme of the FG to exit them into self-employment.

Kuponiyi stressed that the focus of the collaboration is geared towards empowering beneficiaries through the agency banking platform in carrying out financial services such as account opening, bills payments, fund transfer, cash in/cash for Nigerians while they earn commission in return with just the use of their smartphones.

According to him, this initiative comes at no cost to the beneficiaries as they can use their phones to carry out agency banking activities for which they earn commissions on each activity carried out. “Once on board, these beneficiaries will become HOPE PSBANK agents. They will undergo training on the various activities by the bank at no cost to them”, he added.

“We are very excited about this collaboration with the Ministry, which is in line with the thrust of the social objectives of Hope Payment Service Bank – poverty reduction through financial inclusion and diffusion of digital financial services”, he said.

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Insurance

Airtel Partners AXA Mansard, Unveils Mobile Health Insurance via USSD

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Airtel Nigeria and AXA Mansard, have entered a strategic partnership to deepen access, participation and enrolment in health insurance for more Nigerians.

The partnership by Airtel and AXA Mansard is in response to the Federal Government’s goal, through the National Health Insurance Scheme, to provide easy access to healthcare for all Nigerians by leveraging on the USSD channel, an easy-to-use and interactive platform.

By dialing the shortcode, *987*7#, Airtel customers can now conveniently enroll for affordable and robust health insurance plans from AXA Mansard, with access to over 1,000 hospitals nationwide for quality healthcare services.

Commenting on Airtel’s partnership with AXA Mansard on the Mobile Health Insurance, the Head Mobile Financial Services, Airtel Nigeria, Muyiwa Ebitanmi, said the mobile health insurance initiative demonstrates Airtel’s commitment to providing innovative and relevant solutions that will empower more Nigerians to conveniently access best-in-class health insurance value offerings.

“Airtel Nigeria is always exploring innovative ways and platforms that will make life easier, more meaningful and more enjoyable for Nigerians. With this initiative, we are not just delivering bespoke health insurance services to the doorstep of more people, we are also leading a quiet revolution that will drive and deepen health insurance inclusion by removing the many barriers that have hitherto excluded many well-meaning Nigerians from participating in the sector.”

Speaking about the Mobile Health Insurance initiative, the Head, Emerging Customers and Digital Partnerships Group at AXA Mansard, Mr. Alfred Egbai, stated that “our research has shown the value and importance of having a health insurance plan to the public especially for the emerging customers in the country, but for many reasons, the uptake of insurance products has been low”.

He continued, “In order to mitigate these challenges and satisfy the health needs of the retail consumer whilst also encouraging the uptake of health insurance in the country, we have partnered with Airtel Nigeria to provide a solution that gives users a convenient way to purchase and manage their AXA Mansard micro-insurance plans.”

Malaria Cover, Inpatient, Outpatient, Specialist medical consultations, Immunizations, Family planning, Ambulance services, Dental care and more are some of the covers provided in the AXA Mansard Health plans.

“The challenges to the implementation of health insurance schemes hitherto include a low level of awareness, affordability, ineffective distribution systems and inefficient payment models.

“The partnership between Airtel Nigeria and AXA Mansard is aimed at solving these challenges and assisting Nigerians to access a viable Health Insurance Scheme,” he said

Airtel Nigeria, as a socially responsible organization, will continue to partner with industry leaders to bring products and services that will touch the lives of its subscribers in very positive ways.

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