- Nigeria Risks Fresh Politics-induced Economic Crisis
With the invasion of the National Assembly complex yesterday by men of the Department of State Services (DSS), the political environment may have triggered caution signals about investing in the country. The development, which investors perceived as akin to dismantling of democratic institutions, affected equities transactions yesterday at the bourse, worsening the stock market’s long running negative trend.
Specifically, while the stock market recorded marginal depreciation of N7 billion to N13.315 trillion on Monday from N13.322 trillion last Friday, it reacted sharply yesterday as the news of the invasion of the National Assembly filtered in, pushing the decline by N54 billion, from N13.315 trillion on Monday to N13.261 trillion.
This same mode, which took its toll on the economy in the period preceding 2015 elections, facilitated huge capital flight by both foreign and local investors, estimated in billions of dollars, with concomitant effect on the exchange rate.
A research analyst in a subsidiary of one of Nigeria’s big banks said aggravating the already weak economy would be worse than the recession that the country just exited. According to him, the ugly situation would have taken off but for the steady crude oil price and production. Renowned economist, Bismarck Rewane, said he was sure that from now onwards, the prices of equities would not come back to normal until the elections are over and the prices of the stocks begin to regain.
“Everybody knows that it is a four-year cycle. The investors have already discounted the politically-tensed situations in their risk premium. What would really affect the market more is the international interest rate, like that of the United States,” he said.
But an analyst, Egie Akpata, told The Guardian that the market confidence had been low for long due to economic issues, stressing that the current political stand-off could only worsen it.
“But I cannot estimate how far bad it can go. Of course, the stock market is small compared to the bond market, it will always take the hit. The stock market is the most sensitive, losing about N2 billion daily, against N7 billion daily gains sometime in the past. Clearly, something is not right.
“The foreign investors know that our elections are messy and credibility is not just a consideration and they have been leaving before now.”Dr. Olalekan Obademi said the invasion was a recipe for divestments and cautious approach, as the “political climate now is not facing a specific direction.”
“There is a lot of uncertainty about the country and 2019. Any serious investor is likely to hold back investments until the direction, in terms of governance, is clear. There is so much apprehension now about the elections and daily outlook is not helping the situation.
“The perception is that democracy is under threat and especially, Nigerians are apprehensive. Investments and investors are averse to uncertainty. In fact, any perceived dictatorship in an environment automatically switches players to cautious mode.”
Meanwhile, in another round of intervention, the Central Bank of Nigeria (CBN) has injected $210million into the inter-bank foreign exchange market to ensure the availability of forex and also meet customers’ requests in various segments.
At the trading yesterday, the CBN offered $100 million to authorised dealers in the wholesale segment of the market, while the Small and Medium Enterprises (SMEs) segment received $55 million. Customers requiring foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA), among others, were allocated $55 million.
The bank’s Acting Director, Corporate Communications Department (CCD), Mr. Isaac Okorafor, confirmed the figures and reassured the public that the CBN would continue to intervene in the interbank foreign exchange market in line with its quest to sustain liquidity and maintain stability. He added that the steps taken so far by the apex bank in the management of forex had paid off, as reflected by reduction in the country’s import bills and accretion to its foreign reserves.
The naira exchange rate remained stable in the market, exchanging at an average of N360/$1 in the BDC segment.
FIRS Sets N5.9 Trillion Revenue Target for 2021
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.
Gov Emmanuel Attracts $1.4b Fertilizer Plant to Akwa Ibom
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.
ICPC Says Nigeria Loses $10bn to Illicit Financial Flows
The Independent Corrupt Practices and Other Related Offences Commission (ICPC) says Nigeria accounts for 20 per cent or 10 billion dollars (N3.8 trillion) of the estimated 50 billion dollars that Africa loses to Illicit Financial Flows (IFFs).
Chairman of ICPC, Prof. Bolaji Owasanoye, said this during a virtual meeting to review a report on IFFs in relation to tax, Mrs Azuka Ogugua, spokesperson for ICPC, said in a statement released in Abuja on Friday.
The ICPC Chairman said, “the African Union Illicit Financial Flow Report estimated that Africa is losing nearly 50 billion dollars through profit shifting by multinational corporations and about 20 per cent of this figure is from Nigeria alone.”
The ICPC boss explained that taxes played “very strategic role in the nation’s political economy.”
He said the objective of the meeting was to improve on the awareness on IFFs, especially in the areas of taxation.
The ICPC boss added that the meeting would give participants the opportunity to openly discuss how to effectively use the instrumentality of taxation to curb IFFs through risk-based approach.
“Risk-based approach, that is: monitoring and audit; due process in tax collection; structured tax amnesty framework skewed in public interest; data privacy; timely resolution of audits and payment of tax refunds and intelligence sharing among revenue generating, regulatory and law enforcement agencies,” he said.
Owasanoye also stated that for the contemporary tax man to remain relevant, he must build his capacity in areas of technology management, solution architects and an astute relationship manager.
The Executive Chairman of Federal Inland Revenue Service (FIRS) Mr Muhammad Nani, expressed concerns that IFFs posed a serious threat to the Nigerian economy as the act robbed the nation of resources that were needed for development.
Nani declared that tackling IFFs would expand the country’s tax base and improve revenue generation, which was required for development.
He consequently pushed for policy reforms that would make it difficult for “capital flights” from occurring so that the country would be placed on the path of growth.
Other discussants at the event identified weak regulatory framework, opacity of financial system and lack of capacity amongst others as some of the factors that fuelled IFFs.
The discussants emphasised the need for capacity building of relevant stakeholders as one of the ways to stamp out illicit financial flows.
They commended ICPC for leveraging its corruption prevention mandate to open a new vista in IFFs discourse in Nigeria. (NAN)
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