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PwC: Nigeria’s Real GDP ’ll Recover Fully by 2019

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  • PwC: Nigeria’s Real GDP ’ll Recover Fully by 2019

Nigeria’s real Gross Domestic Product (GDP)will attain full recovery in two years, with growth moving closer to its long-term trend of 6.7 per cent, PricewaterhouseCoopers (PwC Nigeria Limited) has projected.

The firm in its routine economic alert titled: “Nigeria’s Q2’17 GDP: From Recession to Recovery” released at the weekend, said latest GDP figures released by the National Bureau of Statistics (NBS) indicate that Nigeria’s economy has exited recession.

PwC in the report by its Partner & Chief Economist Dr. Andrew S Nevin and Economist Adedayo Akinbiyi said in Q2 2017, Nigeria’s economy returned to positive growth as real GDP grew 0.5 per cent year-on-year(y/y) after successive declines for five quarters.

The report noted that this recovery was supported by a strong rebound in the oil sector (8.8 per cent of GDP), which expanded by 1.6 per cent y/y (–15.6 per cent y/y in Q1 2017).

The firm also said the non-oil sector on the other hand was boosted by a strengthening of the broader manufacturing sector, reflecting impact of improved foreign exchange liquidity.

“We note that the Q1 2017 real GDP growth was revised down to -0.9 per cent y/y (previous: -0.5 per cent y/y); a revision necessitated by lower than estimated oil production figures for March 2017, which dragged oil output lower,” PwC said.

The report also provided an analysed key insights from the latest GDP figures as it affects selected sectors and also made projections for the future.

It said, for instance, that agriculture decelerated on grain scarcity, expanding at a slower pace for the fifth consecutive quarter, recording a growth of 3.0 per cent y/y in Q2 2017 (Q1’1 7 : 3.4 per cent and Q2 2016: 4.5 per cent).

According to PwC, “This trend has been driven mainly by weaker output in the livestock and fishing sub-sectors, resulting from the scarcity of grains.

“In addition, we suspect the second quarter resurgence in insecurity in the North East might have negatively impacted crop production activities.

“This explains the trend in food inflation, which spiked to a seven-year high of 20.3 per cent y/y in July 2017.”

Similarly, manufacturing expanded at a slower pacefor the second consecutive quarter. Real growth increased by 0.6 per cent y/y in Q2 2017, relative to -3.3 per cent y/y a year earlier.

Relative to Q1 2017, however, growth slowed from 1.3 per cent y/y, a reflection of the performance of sector heavy weights, food, beverage and tobacco and cement, which accounted for 54.0 per cent of manufacturing GDP.

“Whilst the broader sector appears to have benefitted from the improved availability of forex, we suspect the price increases implemented across most consumer companies in the course of the year might have impacted volumes.

“Nonetheless, quarterly data (Q2 2017:1.0 per cent q/q vs Q1 2017: -5.0 per cent q/q) suggests the consumer recovery remains underway, albeit fragile,” the firm said.

PwC said its 2017 GDP forecast remained unchanged at 0.7 per cent y/y. “To attain this growth forecast, we estimate that real GDP will expand by 1.8 per cent y/y in Q3 2017 and 1.1 per cent y/y in Q4 2017,” it stated.

The firm said “This is plausible, given our expectation of a strong harvest season and sustained FX liquidity, which should support a broad-based economic recovery.”

It, however, added that risks to its forecast include a decline in oil price and production, and policy disruptions, which could hamper investment flows to the economy.

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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Economy

Seplat Petroleum Pays US$564.165 Million to Federal Government in 2020

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Seplat Petroleum, an indigenous Nigerian upstream exploration and production company, announced it paid a total sum of US$564.165 million to the Federal Government in 2020.

In the report on payments made available to the Nigerian Stock Exchange and seen by Investors King, Seplat Petroleum paid US$389.576 million to the Nigerian National Petroleum Corporation (NNPC) as production entitlement in 2020.

Production entitlement is the government’s share of production in the period under review from projects operated by Seplat.

This comprises crude oil and gas attributable to the Nigerian government by virtue of its participation as an equity holder in projects within its sovereign jurisdiction (Nigeria).

Also, Seplat paid US$130.009 million to the Department of Petroleum Resources in 2020. A breakdown of the amount showed US$111.633 million was paid as royalties while US$18.376 million was paid as fees.

Similarly, US$579,361 was paid as a fee to the Nigeria Export Supervision Scheme.

The energy company made another payment of US$17.935 million in fee for 2020.

While the Nigerian Content Development and Monitoring Board received US$4.826 million in fee from Seplat in 2020.

Seplat paid US$21.239 million in taxes to the Federal Inland Revenue Service in 2020.

Therefore, Seplat Petroleum paid a total sum of US$564.165 million to the Federal Government in the 2020 financial year. See the details below.

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FIRS Sets N5.9 Trillion Revenue Target for 2021

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FIRS to Generate N5.9 Trillion Revenue  in 2021

Mohammed Nami, the Chairman of Federal Inland Revenue Service, FIRS, on Friday said the agency is projecting total revenue of N5.9 trillion for the 2021 fiscal year.

Nami stated this while meeting with the House of Representatives Committee on Finance led by Hon. James Falake on the Service’s 2021 budget defence of its proposed Revenue and Expenditure Estimates.

According to the Chairman, N4.26 trillion and N1.64 trillion were expected to come from non-oil and oil components, respectively.

However, Nami put the cost of collecting the projected revenue at N289.25 billion or 7 percent of the proposed total revenue for the year, higher than the N180.76 billion spent in 2020 to fund the three operational expenditure heads for the year.

He said: “Out of the proposed expenditure of N289.25 billion across the three expenditure heads, the sum of N147.08 billion and N94.97 billion are to be expended on Personnel and Overhead Costs against 2020 budgeted sum of N97.36 billion and N43.64 billion respectively. Also, the sum of N47.19 billion is estimated to be expended on capital items against the budgeted sum of N27.80 billion in 2020. The sum is to cater for on-going and new projects for effective revenue drive.

Speaking on while the agency failed to meet its 2020 target, Nami said “There’s lockdown effect on businesses, implementation directive also for us to study, research best practices on tax administration which involves travelling to overseas and we also have to expand offices and create offices more at rural areas to get closer to the taxpayers, we pay rent for those offices and this could be the reason why all these things went up.

“And if you have more staff surely, their salary will go up, taxes that you’re going to pay on their behalf will go up, the National Housing Fund contribution, PENCOM contribution will go up. Those promoted you have to implement a new salary regime for them. There’s also the issue of inflation and exchange rate differential”, he said.

 

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Gov Emmanuel Attracts $1.4b Fertilizer Plant to Akwa Ibom

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The Governor of Akwa Ibom State, Mr. Udom Emmanuel has signed an agreement for the citing of a multi billion fertilizer plant in his State.

Governor Emmanuel was part of a Nigerian delegation led by the Minister of State for Petroleum Resources, Chief Timipre Sylva, that visited Morocco to set out the next steps of the $1.4 Bln fertilizer production plant project launched in June 2018.

The agreement between the OCP Africa, the Nigerian Sovereign Investment Authority and the Akwa Ibom State Government will birth one of the biggest investments in the fertilizer production industry worldwide.

The signing ceremony took place at the Mohammed VI Polytechnic University (UMP6).

Mr. Emmanuel signed one of the agreements of the partnership, which covers a memorandum of understanding between OCP Africa, the Akwa Ibom State in Nigeria and the NSIA on land acquisition, administrative facilitation, and common agricultural development projects in the Akwa Ibom State.

Speaking while signing the agreement, Governor Emmanuel said, “Our state is receptive to investments and we are prepared to offer the necessary support to make the project a reality.

“With a site that is suitably located to enable operational logistics and an abundance of gas resources, all that is left is for the parties to accelerate the project development process”, Mr. Udom said.

The agreement reached between the Nigerian Government and the OCP further links OCP, Mobil Producing Nigeria (MPN), the NNPC, the Gas Aggregation Company Nigeria (GACN), and the NSIA.

The two partners agreed to strengthen further their solid partnership leveraging Nigerian gas and the Moroccan phosphate.

This project will lead to a multipurpose industrial platform in Nigeria, which will use Nigerian gas and Moroccan phosphate to produce 750,000 tons of ammonia and 1 million tons of phosphate fertilizers annually by 2025.

The visit of the Nigerian delegation to Morocco takes place within the frame of the partnership sealed between OCP Group and the Nigerian Government to support and develop Nigeria’s agriculture industry.

Following the success of the first phase of Nigeria‘s Presidential Fertilizer Initiative (PFI) and the progress of the fertilizer production plant project launched in 2018 by OCP and NSIA, the Moroccan phosphates group and the Nigerian government delegation have agreed on the next steps of their joint project which is rapidly taking shape.

Several cooperation agreements were inked on Tuesday at the Mohammed VI Polytechnic University (UM6P) by OCP Africa and the Nigerian delegation. Through these deals, OCP reaffirms its unwavering support of agricultural development initiatives in Nigeria including PFI.

OCP Africa and the NSIA have agreed, inter alia, to set up a joint venture which will oversee the development of the industrial platform that will produce ammonia and fertilizers in Nigeria.

The OCP has also pledged to supply Nigerian famers with quality fertilizers adapted to the needs of their soil at competitive prices and produced locally.

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