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150 Wealthy Nigerians Face Asset, Tax Probe

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  • 150 Wealthy Nigerians Face Asset, Tax Probe

The Federal Government has engaged Kroll, a United Kingdom-based forensic and assets-tracing firm, and some other foreign firms to trace the assets of very wealthy Nigerians at home and abroad.

The names of 150 very wealthy Nigerians are on the list for the first batch of the exercise, which is expected to last for some months.

The Minister of Finance, Mrs. Kemi Adeosun, confirmed at a press briefing in Lagos on Thursday that the government had engaged some foreign firms to trace the local and foreign assets of some high net worth Nigerians.

She, however, refused to give the names of the other foreign firms the Federal Government had engaged for the exercise nor names of the wealthy Nigerians whose assets are being traced.

Adeosun said the objective of the exercise was to match the lifestyle of the wealthy individuals with the amount of tax they were paying to the Federal Government.

According to her, the government is building the profile of people to encourage them to pay the right taxes before wielding the big stick in terms of prosecution at the end of the nine-month window given for the payment of all outstanding taxes under the newly introduced Voluntary Asset and Income Declaration Scheme

She said, “How much we recover from their purses is not as important as getting people into the tax net and paying the right taxes. Majority of people who are paying taxes at the moment are the Pay As You Earn; most of the people whose taxes are being deducted at source. But the people who are evading taxes are either the people who own their businesses or the high net worth individuals.

“And ordinarily, they are supposed to pay the biggest share of the tax revenue. What is happening now is that the lower-end people are carrying more of the burden, which is unfair. Everybody has to carry their fair share according to their level of income. That is how progressive taxes work all over the world.

“Remember that tax is one of the instruments the government uses to redistribute income; to take from the rich to support the poor. That is very fundamental. Not only do we recover money from the people, it (VAIDS) is meant to ensure that people pay the right taxes going forward.”

She added, “The firms that we are using to trace assets internationally are working alongside the projects that we have locally.

“And that project puts together records of property ownership, foreign exchange allocations, company ownership from the Corporate Affairs Commission, and even private jet registration so that we can build profiles of people so that we have an idea of how much tax should this person be paying according to his or her lifestyle.

“And then we compare it with how much tax they are actually paying, and that is giving us a lot of information that hopefully will encourage people to come forward to do the right thing.”

According to the minister, the Federal Government is looking at realising about $1bn from the VAIDS.

Speaking earlier at an interactive session for executives and business owners on the VAIDS hosted by PwC Nigeria, Adeosun said while most developing countries had tax to Gross Domestic Product ratios above 20 per cent, Nigeria had a low of six per cent.

In a bid to address this anomaly, she said the Federal Ministry of Finance had set up the VAIDS in collaboration with all 36 states of the federation.

Specifically, it is expected to increase Nigeria’s tax to GDP ratio from the current six per cent to between 10 per cent and 15 per cent, broaden the national tax base, curb tax evasion and discourage illicit financial flows.

The Executive Chairman, the Lagos Inland Revenue Service, Mr. Ayo Subair said, “We have seen the positive impact taxpayers’ money can make at the state level in terms of social services, administration of government and infrastructure development.”

According to the Head of Tax, PwC Nigeria, Mr. Taiwo Oyedele, paying taxes is not particularly easy anywhere in the world for anyone who has expended time, energy and other resources to earn the income.

However, he said, “It is necessary for there to be an organised society for the benefit of all. We organised this session to discuss the background, design and structure of the VAIDS, key objectives, legal framework and the step-by-step process for declaration, remediation and resolution.”

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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Economy

Nigeria’s Growth Forecast Lowered to 3% for 2025, Higher than Most Emerging Markets

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IMF global - Investors King

The International Monetary Fund (IMF) has projected a 3% growth rate for Nigeria in 2025, slightly down from the 3.1% forecasted for 2024.

Despite this slight decline, Nigeria’s projected growth remains higher than that of many emerging markets as detailed in the IMF’s latest World Economic Outlook released on Tuesday.

In comparison, South Africa’s economy is expected to grow by 1.2% in 2025, up from 0.9% this year. Brazil’s growth is projected at 2.4% from 2.1% in 2024, and Mexico’s growth forecast stands at 1.6% for 2025, down from 2.2% in 2024.

However, India is anticipated to see a robust growth of 6.5% in 2025, although this is slightly lower than the 7% forecast for 2024.

The IMF’s projections come as Nigeria undertakes significant monetary reforms. The Central Bank of Nigeria has been working on clearing the foreign exchange backlog, and the federal government recently removed petrol subsidies.

These reforms aim to stabilize the economy, but the country continues to grapple with high inflation and increasing poverty levels, which pose challenges to sustained economic growth.

Sub-Saharan Africa as a whole is expected to see an improvement in growth, with projections of 4.1% in 2025, up from 3.7% in 2024. This regional outlook indicates a modest recovery as economies adjust to global economic conditions.

The IMF report underscores the need for cautious monetary policy. It recommends that central banks in emerging markets avoid easing their monetary stances too early to manage inflation risks and sustain economic growth.

In cases where inflation risks have materialized, central banks are advised to remain open to further tightening of monetary policy.

“Central banks should refrain from easing too early and should be prepared for further tightening if necessary,” the report stated. “Where inflation data encouragingly signal a durable return to price stability, monetary policy easing should proceed gradually to allow for necessary fiscal consolidation.”

The IMF also highlighted the importance of avoiding fiscal slippages, noting that fiscal policies may need to be significantly tighter than previously anticipated in some countries to ensure economic stability.

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Economy

Nigeria’s Inflation Rises to 34.19% in June Amid Rising Costs

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Food Inflation - Investors King

Nigeria’s headline inflation rate surged to 34.19% in June 2024, a significant increase from the 33.95% recorded in May.

This rise highlights the continuing pressures on the nation’s economy as the cost of living continues to climb.

On a year-on-year basis, the June 2024 inflation rate was 11.40 percentage points higher than the 22.79% recorded in June 2023.

This substantial increase shows the persistent challenges faced by consumers and businesses alike in coping with escalating prices.

The month-on-month inflation rate for June 2024 was 2.31%, slightly up from 2.14% in May 2024. This indicates that the pace at which prices are rising continues to accelerate, compounding the economic strain on households and enterprises.

A closer examination of the divisional contributions to the inflation index reveals that food and non-alcoholic beverages were the primary drivers, contributing 17.71% to the year-on-year increase.

Housing, water, electricity, gas, and other fuels followed, adding 5.72% to the inflationary pressures.

Other significant contributors included clothing and footwear (2.62%), transport (2.23%), and furnishings, household equipment, and maintenance (1.72%).

Sectors such as education, health, and miscellaneous goods and services also played notable roles, contributing 1.35%, 1.03%, and 0.57% respectively.

The rural and urban inflation rates also exhibited marked increases. Urban inflation reached 36.55% in June 2024, a rise of 12.23 percentage points from the 24.33% recorded in June 2023.

On a month-on-month basis, urban inflation was 2.46% in June, slightly higher than the 2.35% in May 2024. The twelve-month average for urban inflation stood at 32.08%, up 9.70 percentage points from June 2023’s 22.38%.

Rural inflation was similarly impacted, with a year-on-year rate of 32.09% in June 2024, an increase of 10.71 percentage points from June 2023’s 21.37%.

The month-on-month rural inflation rate rose to 2.17% in June, up from 1.94% in May 2024. The twelve-month average for rural inflation reached 28.15%, compared to 20.76% in June 2023.

The rising inflation rates pose significant challenges for the Central Bank of Nigeria (CBN) as it grapples with balancing monetary policy to rein in inflation while supporting economic growth.

The ongoing pressures from high food prices and energy costs necessitate urgent policy interventions to stabilize the economy and protect the purchasing power of Nigerians.

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Economy

Inflation to Climb Again in June, but at a Reduced Pace, Predicts Meristem

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Nigeria's Inflation Rate - Investors King

As Nigeria awaits the release of the National Bureau of Statistics’ report on June 2024 inflation, economic analysts project that while inflation will continue its upward trajectory, the pace of increase will moderate.

This comes after inflation rose to a 28-year high of 33.95% in May, up from 33.69% in April.

Meristem, a leading financial services company, has forecasted that June’s headline inflation will rise to 34.01%, a slight increase from May’s figure.

The firm attributes this persistent inflationary pressure to ongoing structural challenges in agriculture, high transportation costs, and the continuous depreciation of the naira.

Experts have highlighted several factors contributing to the inflationary trend. Insecurity in food-producing regions and high transportation costs have disrupted supply chains, while the depreciation of the naira has increased importation costs.

In May, food inflation grew at a slower pace, reaching 40.66%, but challenges in the agricultural sector, such as the infestation of tomato leaves, have led to higher prices for staples like tomatoes and yams.

Meristem predicts that food inflation will persist in June, driven by these lingering challenges. Increased demand during the Eid-el-Kabir celebration and rising importation costs are also expected to keep food prices elevated.

Core inflation, which excludes volatile items like food and energy, was at 27.04% in May. Meristem projects it to rise to 27.30% in June.

The firm notes that higher transportation costs and the depreciation of the naira will continue to push core inflation up.

However, they also anticipate a month-on-month moderation in the core index due to a relatively stable naira exchange rate during June, compared to a more significant depreciation in May.

Cowry Assets Management Limited has projected an even higher headline inflation figure of 34.25% for June, citing similar concerns.

The firm notes that over the past year, food prices in Nigeria have soared due to supply chain disruptions, currency depreciation, and climate change impacts on agriculture.

This has made basic staples increasingly unaffordable for many Nigerians, stretching household budgets.

As inflation continues to rise, analysts believe the Central Bank of Nigeria (CBN) will likely hike the benchmark lending rate again.

The CBN’s Monetary Policy Committee (MPC) has raised the Monetary Policy Rate (MPR) by 650 basis points this year, bringing it to 26.25% as of May 2024.

At a recent BusinessDay CEO Forum, CBN Governor Dr. Olayemi Cardoso emphasized the MPC’s commitment to tackling inflation, stating that while the country needs growth, controlling inflation is paramount.

“The MPC is not oblivious to the fact that the country does need growth. If these hikes hadn’t been done at the time, the naira would have almost tipped over, so it helped to stabilize the naira. Interest rates are not set by the CBN governor but by the MPC committee composed of independent-minded people. These are people not given to emotion but to data. The MPC clarified that the major issue is taming inflation, and they would do what is necessary to tame it,” Cardoso said.

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