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NLC Demands Review of Tax Policies

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  • NLC Demands Review of Tax Policies

The Nigerian Labour Congress (NLC) has asked the federal government to review its tax policies, noting that it currently favours wealthy Nigerians and corporate organisation over workers.

Speaking in Abuja at a gathering of labour union leaders over the weekend, the NLC president, Mr. Ayuba Wabba said that the government never fails to tax public and civil servants, whereas it overlooks high net-worth individuals and corporate organisations, who engage in illicit financial transactions to escape paying correct taxes.

“You will remember that last year, we led a campaign to the Ministry of Finance to advocate for tax justice and to stop illicit financial flows from Africa; because in the context of taxation in Nigeria, it is only workers that pay the correct tax, through Pay As You Earn (PAYE),” Wabba said.

He added: “In other climes, it is the high and the mighty that are supposed to pay tax to subsidise for the poor. But in Nigeria, it is the poor that is subsidising the rich. This is why we are demanding for tax justice. Resources can only be made available if people are able to pay their correct taxes.”

Wabba also noted that the Panama Papers leak has exposed the manner in which tax resources are being diverted away from the Nigerian state towards tax havens and urged the government to do something about it. “Part of our campaign this year is to halt illicit financial flows and also to demand for tax justice, where workers and citizens, especially the high and mighty, should pay the correct tax”, he said.

He added: “As an outcome of the NLC’s visit to the Ministry of Finance, some progress has been made; the federal government has set up a presidential committee to address illicit financial flows and also to ensure that issues of tax are appropriately addressed.”

South African Bankers Excited With LBS Training

South African Investment Bankers have lauded the Lagos Business School for hosting the International Executive Development Programme (IEDP) for the Banking Sector and Training Authority (BANKSETA), held in Lagos Nigeria.

The five-day programme which started on June 19, 2017, brought together high potential leaders from the investment banking sector in South Africa and immersed them into the best praticea of the Nigerian economy, culture and environment.

Thebe Mabiletsa, of Absa Capital, South Africa, commended the Lagos Business School for hosting them in Nigeria, an experience he said had broadened the delegation’s horizon on the uniqueness of the Nigerian economy and market.

He revealed that Nigerian businesses “have created a niche space in terms of their innovation and expertise which can make them partner favourably with South African banks as well as other banks on the continent.”

Lead Professor/Orchestrator, Duke University, Jared Bleak said that the key learning from the week-long programme was evident in the prospects for Nigerian banks becoming more international and how they could collaborate with other markets on the continent and even the rest of the world. “The internationalisation of Nigerian banks is happening, and even the South African groups here have learned from the economy and possibly thinking about partnerships,” he stated.

He commended the Lagos Business School for exposing the team to a fast emerging market on the African continent, as well as the warm reception.

A Senior Lecturer, Strategy, Finance and Risk Management, Lagos Business School, Dr. Franklin Ngwu remarked that it was a great feat helping the South African Investment bankers to understudy the Nigerian financial sector to see areas of opportunity, investment and collaboration with the two countries. “We have exposed them to both the formal and informal aspects of the economy and we envisage a possible cooperation and investment between the two economies,” he said.

CEO of the Nigerian Stock Exchange (NSE) Mr. Oscar Onyeama commended the Lagos Business School for the IEDP initiative, he stated that opportunities such as this affords the stock exchange an avenue to share relevant information which boosts confidence in the Nigerian capital markets and in turn the Nigerian economy.

Dean, Lagos Business School, Dr. Enase Okonedo expressed appreciation to all organisations that welcomed the LBS/IEDP-BANKSETA participants during their tour for showing support during the programme and wished the South African bankers a safe trip back home.

Some of the activities included visits to the International Centre for Commerce (ICC) Balogun Market, Lagos; NIKE Art Gallery; SLOT Systems Limited; Computer Village, and interactive sessions with Afri Invest, Ecobank and Fintech CEOs (Konga, Venture Garden, Interswitch etc.) Also included in the activities was a visit to the Nigerian Stock Exchange (NSE), where they got an expose into the Nigerian economy, the capital markets and participated in the activities of ringing the closing bell on the NSE trading floor. The participants were given adequate exposure to the Nigerian economy, culture and environment.

Banking Sector Education and Training Authority (BANKSETA) is a South African statutory body interested in promoting knowledge and skill acquisition in the financial sector

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

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African Economy Set for Steady Growth: 4% Projected for 2025

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Experts are forecasting a robust growth trajectory of 4% for the continent in 2025.

This optimistic projection was highlighted during the ongoing Afreximbank annual meetings, incorporating the Africaribbean Trade and Investment Forum, held recently in Nassau, The Bahamas.

Yemi Kale, Group Chief Economist and Managing Director of Research and International Cooperation at Afreximbank, presented the 2024 African Trade Report and Economic Outlook, saying the African Continental Free Trade Area (AfCFTA) is significant in driving economic integration and growth.

The projected growth rate of 4% for 2025 reflects a steady recovery path for Africa, building on the expected 3.5% growth anticipated for 2024.

This positive outlook comes at a crucial time when African economies are navigating challenges posed by global economic dynamics, including inflationary pressures and supply chain disruptions.

Kale underscored the resilience of intra-African trade, which expanded by 3.2% in 2023 despite a 6.3% overall contraction in Africa’s trade volumes.

This resilience is a testament to the AfCFTA’s potential to bolster regional trade ties and reduce dependency on external markets.

The Afreximbank report also delved into macroeconomic environments, trade patterns, and sovereign debt sustainability dynamics, providing policymakers and business leaders with actionable insights to navigate complexities in global markets effectively.

Nomusa Dube-Ncube, Premier of Kwazulu-Natal, highlighted Africa’s modest share of global GDP and manufacturing output, emphasizing the untapped potential within intra-African trade.

She noted that while Africa currently accounts for only 3% of world trade, intra-regional trade is steadily increasing, indicating a growing economic ecosystem within the continent.

Pamela Coke-Hamilton, Executive Director of the International Trade Centre (ITC), echoed the sentiment, advocating for enhanced trade between Africa and the Caribbean.

The ITC projects trade in goods and services between these regions to reach $1 billion by 2028, underscoring the mutually beneficial opportunities for economic expansion.

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Nigeria Sees 95% Surge in Food Imports Despite Emergency on Food Production

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Nigeria’s food import bill has surged to a five-year high in the first quarter of 2024, despite the federal government declaring a state of emergency on food production.

Data from the National Bureau of Statistics (NBS) reveals a 95.28 percent increase in food imports to N920.54 billion from January to March, compared to N471.39 billion in the same period last year.

This alarming rise comes amid soaring food inflation, which hit a record 40.5 percent in April, reflecting a 15.92 percent year-on-year increase.

The sharp inflation has left many Nigerians struggling to afford a balanced diet, exacerbating the food security crisis in Africa’s most populous nation.

In March, President Bola Ahmed Tinubu emphasized the government’s commitment to self-sufficiency in food production, stating that Nigeria would not rely on imports to stabilize prices.

“We will not allow the importation of food but rather turn the lack in the country into abundance,” Tinubu declared. However, the latest import figures suggest that this goal remains elusive.

The NBS Foreign Trade Statistics report highlights that the value of food imports via maritime, air, and land routes surged 29.4 percent from N711.4 billion in the fourth quarter of 2023.

Major agricultural goods imported included durum wheat from Canada and Lithuania, valued at N130.26 billion and N98.63 billion, respectively. Frozen blue whitings from the Netherlands accounted for N16.67 billion.

Wheat imports alone constituted N519.75 billion of the total food import bill. The average cost of wheat imports, a significant driver of the food import value, increased by 33 percent compared to the previous quarter’s value of N391.01 billion.

The rising importation of wheat reflects its popularity among Nigerian consumers amid skyrocketing prices of close substitutes like garri and rice.

Overall, Nigeria’s total imports for Q1 2024 amounted to N12.64 trillion, representing a 39.65 percent increase from N9.05 trillion in Q4 2023 and a 95.53 percent rise from N6.47 trillion in Q1 2023. Food imports accounted for 7.3 percent of total imports during the period under review.

The bulk of Nigeria’s imports came from Asia, China, Europe, America, and Africa. Mineral fuels topped the import category with N4.44 trillion, representing 35.09 percent of total imports.

Machinery and transport equipment followed with N3.17 trillion, contributing 25.08 percent, and chemicals and related products at N1.79 trillion, making up 14.13 percent of total imports.

Despite the federal government’s initiatives to boost local food production and reduce dependency on imports, the latest data underscores the persistent challenges facing Nigeria’s agricultural sector.

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Ethiopia Boosts Spending by 21%, Eyes IMF Program for Economic Relief

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Ethiopia has announced a 21% increase in its 2025 budget, marking the first budget since defaulting on a Eurobond payment and committing to economic reform discussions with the International Monetary Fund (IMF).

The nation’s Finance Minister, Ahmed Shide, revealed the new budget details to lawmakers on Tuesday, outlining plans to spend 971.2 billion birr ($16.9 billion) in the fiscal year starting July 2024.

The increased budget reflects Ethiopia’s commitment to addressing its economic challenges head-on. Despite the heightened expenditure, the fiscal deficit is projected to remain stable at 2.1% of gross domestic product (GDP), unchanged from the current fiscal year.

Financing the Deficit

Minister Shide outlined a plan to cover the 358.5 billion-birr deficit through a combination of local and foreign borrowing.

The domestic borrowing component will be managed via government treasury bills and medium-term bonds. Shide emphasized that until substantial external donor support is secured, Ethiopia will continue to rely heavily on its domestic markets to finance budget deficits.

“While the government has secured some external financing from the World Bank and the European Union, negotiating an IMF program will be crucial to alleviate pressure on local banks and secure overall debt relief,” said Giulia Filocca, a senior analyst at Standard & Poor’s for sovereign and international public finance ratings.

IMF Program and Economic Reforms

An agreement with the IMF is seen as a pivotal step for Ethiopia. The nation failed to remit a $33 million coupon payment for its $1 billion bond in December 2023, leading to agreements with some creditors, including the Paris Club, to suspend debt repayments.

In exchange, Ethiopia is expected to reach a staff-level agreement with the IMF, which will likely include economic reforms such as devaluing the birr currency.

“Our expectation is that an IMF program will be signed this year, but the timeline remains unclear due to ongoing political developments and challenges over foreign-exchange reforms,” added Filocca.

Budget Highlights

The new budget includes 451.3 billion birr for recurrent spending, 283.2 billion birr for capital expenditure, and 236.7 billion birr allocated for regional subsidies.

The government projects income of 612.7 billion birr, with tax revenue expected to contribute 502 billion birr and non-tax income 61.6 billion birr. Sector budget support is anticipated to bring in 7.3 billion birr, with aid and grants expected to add 41.8 billion birr.

Economic Outlook

Ethiopia’s economy is forecasted to expand by 8.4% in the coming fiscal year, up from an expected 7.9% growth rate in the current period. The budget increase is designed to support this growth trajectory by enhancing public investment and stimulating economic activity.

“Our partnership with the IMF and other international financial institutions will be key to ensuring Ethiopia’s economic resilience and sustainable growth,” Minister Shide concluded. “We are committed to implementing the necessary reforms to secure a brighter economic future for our country.”

As Ethiopia navigates its economic challenges, the government’s proactive approach to increasing spending and engaging with the IMF reflects a strategic effort to restore fiscal stability and drive long-term economic development.

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