- IMF Downgrades Nigeria Growth Forecast for 2017
The International Monetary Fund has cut its 2017 economic growth forecast for Nigeria.
The Washington-based lender said in its World Economic Outlook Report on Tuesday that Nigeria’s economy would contract by 1.7 per cent this year and expand 0.6 per cent in 2017, less than the 1.1 per cent the IMF had earlier predicted.
Giving its forecast for Africa’s two largest economies, the fund said the Gross Domestic Product in South Africa would probably expand by 0.8 per cent next year, compared with one per cent it predicted in July.
According to the IMF, low commodity prices, policy uncertainty and weak investor confidence weigh on output of the two economies.
The fall in global commodity prices has hindered economic growth of the continent’s biggest producers of oil and minerals such as platinum and gold, and led to a slump in foreign-currency earnings, according toReuters.
The IMF said that in Nigeria, electricity shortages and militant activities disrupting oil production had lowered output.
In South Africa, it said policy uncertainty was making adjustment to weaker terms of trade difficult.
The lender said, “Momentum in South Africa was flat, despite the improvements in the external environment. There will be only a modest recovery next year as the commodity and drought shocks dissipate and power supply improves.”
The Nigerian economy had contracted in the first half of the year and inflation accelerated to the highest rate in more than a decade.
Restrictive foreign exchange policies, which were dumped in June, hampered imports of manufacturing inputs and drove up consumer prices.
The cut in the growth forecast for next year reflects temporary disruptions to oil production, foreign-currency shortages due to a fall in crude receipts, lower power generation and weak investor confidence, according to the IMF.
On the global scene, the fund said economic growth would remain subdued this year following a slowdown in the United States and Britain’s vote to leave the European Union.
“Taken as a whole, the world economy has moved sideways,” the IMF’s Chief Economist and Economic Counsellor, Maurice Obstfeld, said.
“We have slightly marked down 2016 growth prospects for advanced economies while marking up those in the rest of the world,” he added.
The report highlighted the precarious nature of the recovery, eight years after the global financial crisis. It raised the spectre that persistent stagnation, particularly in advanced economies, could further fuel populist calls for restrictions on trade and immigration.
Obstfeld said such restrictions would hamper productivity, growth, and innovation.
“It is important to defend the prospects for increasing trade integration,’’ Obstfeld, said, adding that “turning back the clock on trade can only deepen and prolong the world economy’s current doldrums.”
Nigeria Records Trade Deficit of 8.9 Trillion in Nine Months
The National Bureau of Statistics (NBS) released a report that showed that Nigeria recorded a trade deficit of 8.9 Trillion Naira between January and September 2021.
A trade deficit occurs when a country’s imports exceed its exports over a period. Within the period, foreign trade was 35.09 Trillion Naira which comprised imports of 22 Trillion Naira and exports of 13.1 Trillion which led to an 8.9 Trillion trade deficit.
A breakdown of the data by quarters shows that trade stood at 9.76 Trillion Naira in the first quarter, which represented imports of 6.85 Trillion Naira and exports of 2.91 Trillion Naira, this resulted in a trade deficit of 3.94 Trillion during the period.
The data went on to show that the majority of the goods imported in the first quarter were from China (valued at 2 Trillion), the Netherlands (valued at 726.09 Billion) the United States (valued at 608.12 Billion), India (valued at 589.1 Billion), and Belgium (valued at 238.5 Billion) while the majority of exports were to India (valued at 488.1 Billion), Spain (valued at 287.2 Billion), China (190.1 Billion), the Netherlands (160.0 Billion) and France (133 Billion).
In the third quarter, Crude oil dominated exports with 78.47% of exports, this was followed by natural gas with 9.5%. Imports were mainly motor spirit with 12.91% of imports, Durum wheat with 3.87%, gas oil with 2.77%, and used vehicles with 2.27%.
A renowned economist, Pat Utomi said the country’s huge appetite for imports was because of insufficient domestic production which is driven by worsening insecurity and stringent government regulations. He went on to say that although there were interventions introduced by the Government and the Central Bank of Nigeria to reduce imports and increase exports, the initiatives are fraught with inconsistencies and corrupt practices that prevent any real impact.
He went on to say that it was scandalous that Nigeria’s top imports were food products and motor spirits as those are products the country should be exporting because Nigeria is a food-producing nation and has oil in abundance.
World Bank Calls on Nigeria to Impose Special Taxes on Alcohol and Tobacco
The World Bank Group has made a call to the Federal Government of Nigeria, urging the government to impose special taxes on alcohol, cigarettes and beverages that are highly sweetened in order to improve primary healthcare conditions in the country.
Shubham Chaudhuri, who is the Country Director for Nigeria in the World Bank Group, said that an improvement in healthcare in Nigeria will come by taxing the things that are “killing us.” He said that the economic rationale for the action is quite strong if lives are to be saved and a healthier Nigeria achieved.
Chaudhuri made the call on Friday, at a special National Council on Health meeting which was organized by the Federal Ministry of Health in Abuja. Chaudhuri stated that placing special taxes on tobacco, sweetened beverages and alcohol would reduce the health risks which come with their consumption and expand the fiscal space for universal health coverage after COVID 19.
The country director also said that investing in stronger health systems for all would make significant contributions to the fight against inequality and the rising poverty situation in the country. He went on to add that increasing health tax would provide an extra advantage of reducing healthcare cost in the future, by hindering the growth of the diseases which are caused by tobacco, alcohol and sugar-sweetened beverages.
The representative of the WHO in Nigeria, Dr Walter Mulombo said that he could confirm the large health needs of Nigerians, as well as the efforts being made to meet those needs. He said this was based on the fact that he had been to over half of Nigeria’s states in less than two years of being in the country.
Mulombo then noted that although the coronavirus exposed weaknesses in the global economy (not excluding health), it could be considered as a unique opportunity for a thorough examination of existing resources and mechanisms to prepare for a more resilient future.
Nigeria’s VAT Revenue Falls to N500 Billion in Q3 2021, Manufacturing Sector in the Lead
In the third quarter of 2021, Nigeria generated a total sum of N500.49 billion as value-added tax which represents a 2.3% decline when compared to the N512.25 billion recorded in the second quarter of the year.
This is as seen in the VAT report which was recently released by the National Bureau of Statistics (NBS). The report revealed that the manufacturing sector was in the lead as it remitted a total of N91.2 billion, representing about 30% of the total local non-import value added taxes in that period.
In spite of the quarter-on-quarter decline of VAT collections in the reviewed period, it grew by a further 17.8% when compared to N424.7 billion generated in the same period of the previous year. The report also shows that an amount of N1.5 trillion has been generated from value added taxes from January 2021 to September 2021.
That is 40.2% higher than the N1.08 trillion recorded in the same period of 2020, and 72.3% higher than what was recorded in the same period of 2019.
To break it down, the Value Added Tax collected in the first, second and third quarter of 2021 was recorded at N496.39 billion, N512.25 billion and N500.49 billion respectively. It is higher than the corresponding figures of 2020, which sat at N324.58 billion, N327.20 billion and N424.71 billion for the first, second and third quarters respectively.
In the third quarter of 2021, the Manufacturing activity accounted for the largest share of total revenue collected across sectors, with a huge 30.87% (N91.2 billion) coming from that sector. The Information & Communication sector came in second with 20.05% (N53.9 billion) contributed, while the Mining & Quarrying sector came in third with 9.62% (N28.4 billion).
Nigeria has continued to ramp up its efforts to increase revenue from non-oil sectors by increasing its tax collection rates, which has recorded largely significant growth since the federal government increased the VAT rate from 5% to 7.5% in the 2019 Finance Act, which was signed and made effective in 2020.
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