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Budget Funding Our Biggest Challenge – FIRS



Evaluation of Public Accountability and Tax Culture among Tax Payers in Nigeria
  • Budget Funding Our Biggest Challenge

The biggest challenge that the Federal Inland Revenue Service (FIRS) is currently grappling with is funding of the 2016 budget and subsequent ones.

Its chairman, Tunde Fowler who spoke in Abuja yesterday while responding to questions from reporters after the opening ceremony of the meeting on “Transfer Pricing in the Economic Community of West African States (ECOWAS), said the Federal Government has had a recourse to funding its budgets from taxation by ensuring that all corporations operating and making profit within the country pay the appropriate tax when due.

The forum had: Protecting the Tax Base and Building a Strong Investment Climate Across the Region as its theme.

Fowler urged all citizens whether in the state or local government to pay their right tax and levy, and assured that the FIRS would ensure optimal expenditure of the fund.

He said: “The biggest challenge for FIRS this year is to fund our current and future budgets. But at the same time, being the largest economy, some people might say the second after the evaluation of the exchange rate .

“However, we have to rely on taxation to fund our budget and subsequent budgets; and we have to ensure that all organisations operating within Nigeria, making profit within Nigeria pay the taxes that are due to Nigeria.

“I think it is a collective drive. All of us in Nigeria, whether you are paying federal tax or state tax or local government levy, we just have to pay the right amount of taxes while we as administrators we do the best we can do with it.”

Explaining the topic “transfer pricing”, Fowler said it meant to make profit in one location and declare it in another place where there is lower tax rate to deny the country where the income was generated the accruable tax benefits.

He said:”What they are talking about is transfer pricing, because when profits are made in one location but declared in another location usually where the tax rate is lower.

“So, let’s give a simple example. You might have companies- multi-nationals operating in Nigeria and declaring the profit in another country where the tax rate is lower. So, where the income is made or the interest is generated from does not benefit from the taxation.”

The FIRS chairman said the challenges of price transfer has caused Organisation for Economic Cooperation and Development (OECD) $250 billion loss of taxation of which the West African sub-African region lost about $9million in the circumstance.

He said: “It is a problem all over the world. Like I said earlier the OECD last year gave a figure of $250 billion loss in taxation. One of the speakers from ECOWAS (Economic Community of West African States) said within the West African sub-region, we are looking at between $3million and $9million. If you convert that, you can imagine what it can do for any African country.

“This forum has two focuses. One is to improve the level of tax administration, to exchange ideas and ensure hat the tax administration within the sub-region have to do with these issues. We have treaties whereby you will not be taxed in two different countries. This has nothing to do with double taxation. “


Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq,, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Goldman Sachs Urges Bold Rate Hike as Naira Weakens and Inflation Soars



Central Bank of Nigeria (CBN)

As Nigeria grapples with soaring inflation and a faltering naira, Goldman Sachs is calling for a substantial increase in interest rates to stabilize the economy and restore investor confidence.

The global investment bank’s recommendation comes ahead of the Central Bank of Nigeria’s (CBN) key monetary policy decision, set to be announced on Tuesday.

Goldman Sachs economists, including Andrew Matheny, argue that incremental rate adjustments will not be sufficient to address the country’s deepening economic challenges.

“Another 50 or 100 basis points is certainly not going to move the needle in the eyes of an investor,” Matheny stated. “Nigeria needs a bold, decisive move to curb inflation and regain investor trust.”

The CBN, under the leadership of Governor Olayemi Cardoso, is anticipated to raise interest rates by 75 basis points to 27% in its upcoming meeting.

This would mark a continuation of the aggressive tightening campaign that began in May 2022, which has seen rates increase by 14.75 percentage points.

Despite this, inflation has remained stubbornly high, highlighting the need for more substantial measures.

The current economic landscape is marked by severe challenges. The naira’s depreciation has led to higher import costs, fueling inflation and eroding consumer purchasing power.

The CBN has attempted to ease the currency’s scarcity by selling dollars to local foreign exchange bureaus, but these efforts have yet to stabilize the naira significantly.

“Developments since the last meeting have definitely been hawkish,” noted Matheny. “The naira has weakened further, exacerbating inflationary pressures. The CBN’s policy needs to reflect this reality more aggressively.”

In response to the persistent inflation and naira weakness, analysts are urging the central bank to implement a more coherent strategy to manage the currency and inflation.

James Marshall of Promeritum Investment Management LLP suggested that the CBN should actively participate in the foreign exchange market to mitigate the naira’s volatility and restore market confidence.

“The central bank needs to be a more consistent and active participant in the forex market,” Marshall said. “A clear strategy to address the naira’s weakness is crucial for stabilizing the economy.”

The CBN’s decision will come as the country faces a critical period. With inflation expected to slow due to favorable comparisons with the previous year and new measures to reduce food costs, including a temporary import duty waiver on wheat and corn, there is hope that the economic situation may improve.

However, analysts anticipate that the CBN will need to implement one final rate hike to solidify inflation’s slowdown and restore positive real rates.

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Currency Drop Spurs Discount Dilemma in Cairo’s Markets



Egyptian pound

Under Cairo’s scorching sun, the bustling streets reveal an unexpected twist in dramatic price drops on big-ticket items like cars and appliances.

Following March’s significant currency devaluation, prices for these goods have plunged, leaving consumers hesitant to make purchases amid hopes for even better deals.

Mohamed Yassin, a furniture store vendor, said “People just inquire about prices. They’re afraid to buy in case prices drop further.” This cautious consumer behavior is posing challenges for Egypt’s consumer-driven economy.

In March, Egyptian authorities devalued the pound by nearly 40% to stabilize an economy teetering on the edge. While such moves often lead to inflation spikes, Egypt’s case has been unusual.

Unlike other nations like Nigeria or Argentina, where costs soared post-devaluation, Egypt is witnessing falling prices for high-value items.

Previously inflated prices were driven by a black market in foreign currency, where importers secured dollars at exorbitant rates, passing costs onto consumers.

Now, with the pound stabilizing and foreign currency more accessible, retailers are struggling to sell inventory at pre-devaluation prices.

Despite price reductions, the overall consumer market remains sluggish. The automotive sector has seen a near 75% drop in sales compared to pre-crisis levels.

Major brands like Hyundai and Volkswagen have slashed prices by about a quarter, yet buyers remain cautious.

The economic strain is not limited to luxury items. Everyday expenses continue to rise, albeit more slowly, with anticipated hikes in electricity and fuel prices adding to the pressure.

Experts highlight a period of adjustment as both consumers and traders navigate the volatile exchange-rate environment. Mohamed Abu Basha, head of research at EFG Hermes, explains, “The market is taking time to absorb recent fluctuations.”

Meanwhile, businesses face declining sales, impacting their ability to manage operating costs. Yassin’s store has offered discounts of up to 50% yet remains quiet. “We’ve tried everything, but everyone is waiting,” he laments.

The devaluation has spurred a shift in economic dynamics. Inflation has eased, but the pace varies across sectors. Clothing and transportation costs are up, while food prices fluctuate.

With the phasing out of fuel subsidies and potential electricity price increases, Egyptians are bracing for further financial strain. The recent 300% rise in subsidized bread prices adds another layer of concern.

The situation underscores the balancing act between maintaining consumer confidence and attracting foreign investment.

Economists suggest potential stimulus measures, such as lowering interest rates or increasing public spending, to boost demand.

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MPC Meeting on July 22-23 to Tackle Inflation as Rates Set to Rise Again



Interbank rate

The Monetary Policy Committee (MPC) is set to convene on July 22-23, 2024, amid soaring inflation and economic challenges in Nigeria.

Led by Olayemi Cardoso, the committee has already increased interest rates three times this year, raising them by 750 basis points to 26.25 percent.

Nigeria’s annual inflation rate climbed to 34.19 percent in June, driven by rising food prices. Despite these pressures, the Central Bank of Nigeria (CBN) projects that inflation will moderate to around 21.40 percent by year-end.

Market analysts expect a further rate hike as the committee seeks to rein in inflation. Nabila Mohammed from Chapel Hill Denham anticipates a 50–75 basis point increase.

Similarly, Coronation Research forecasts a potential rise of 50 to 100 basis points, given the recent uptick in inflation.

The food inflation rate reached 40.87 percent in June, exacerbated by security issues in key agricultural regions.

Essential commodities such as millet, garri, and yams have seen significant price hikes, impacting household budgets and savings.

As the MPC meets, the National Bureau of Statistics is set to release data on selected food prices for June, providing further insights into the inflationary trends affecting Nigerians.

The upcoming MPC meeting will be crucial in determining the trajectory of Nigeria’s monetary policy as the government grapples with economic instability.

The focus remains on balancing inflation control with economic growth to ensure stability in Africa’s largest economy.

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