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Improved Macroeconomic Conditions Not Enough for Quick Growth

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  • Improved Macroeconomic Conditions Not Enough for Quick Growth – Osinbajo

Vice-President Yemi Osinbajo on Tuesday said that the current improvement in some of the macroeconomic conditions in the country was not enough to guarantee quicker rate of growth in the economy.

He said this at the opening session of the 59th edition of the Nigerian Economic Society’s annual conference held in Abuja.

The conference with the theme: ‘Optimising value chain in the agricultural sector in Nigeria’, was held in Abuja by the NES in partnership with the African Development Bank.

The VP explained that while the economy had returned to a growth trajectory since its exit from recession in 2016, the rate of growth was not enough to achieve the objectives of government in the area of job creation and poverty reduction.

He said the government was mindful of this, adding that the development had necessitated the need to intensify economic programmes to accelerate growth.

Osinbajo described the theme of the conference as timely as it aligned with the objective of the Federal Government to diversify the economy through the agricultural sector.

He said government’s strategy to reposition the agricultural sector, as contained in the Economic Recovery and Growth Plan, was to link the primary, secondary and tertiary sectors of the economy to the agricultural value chain.

He noted that while the economy had recorded five consecutive quarters of growth since its exit from recession, the government was making conscious efforts to make the rate of growth more inclusive.

This, he stated, was being done through targeted infrastructural and social investment programmes.

Represented at the event by his Special Adviser on Economic Matters, Dr Adeyemi Dipeolu, the Vice-President said, “The macroeconomic outcomes from the implementation of the ERGP are evident enough. Since the plan was adopted in response to the 2016 recession, the first objective was to restore growth and we have had five successive quarters of economic growth since then.

“Of course, the growth of 1.5 per cent in the second quarter of 2018 is not nearly enough, but now, the momentum is in the right direction. What is required is to accelerate the pace of growth.”

He added, “Also, the current account was in surplus at nearly $4.5bn earlier this year and despite appearances to the contrary, our debt to GDP ratio of 20 per cent is well within acceptable limits. Inflation has fallen to 11.23 per cent, which is below the upper threshold of 12 per cent set by the Central Bank of Nigeria at which the relationship between growth and inflation becomes negative.

“What these means is that there could at this stage be a positive relationship between growth and inflation.

“The point, though is that improved macroeconomic conditions by themselves are not enough to guarantee quicker growth. This will come from the primary, secondary and tertiary sectors of the economy, all of which are linked to the agricultural value chain.”

Osinbajo said the Federal Government was prioritising agriculture, describing it as a source of income to small-scale farmers.

According to him, the country can no longer continue to import food, as this puts a lot of pressure on the foreign exchange market.

For instance, he noted that Nigeria spent up to $2.41bn on the importation of rice alone between January 2012 and May 2015.

The President, NES, Prof Tamunopriye Agiobenebo, said the inability of the country to add value to its agricultural produce was a major cause of concern.

He stated that the conference would enable the association and other stakeholders in the agricultural sector to discuss how government policies was affecting the sector.

Other issues to be examined at the conference, according to him, are how the funding system and cost of funding affect the value chain optimisation in the agriculture sector as well as how governance structure and linkage affect value chain optimisation.

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.

Economy

Dangote Fertiliser Plant to Commence Shipment of Urea in March 2021

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Dangote to Sells Petrol in Naira, Plans to Commence Urea Shipment in March 2021

The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has said Dangote Fertiliser Plant will commence shipment of Urea in March 2021.

The CBN governor disclosed this during an inspection tour of the sites of Dangote Refinery, Petrochemicals Complex Fertiliser Plant and Subsea Gas Pipeline at Ibeju Lekki, Lagos on Saturday.

Emefiele further stated that Dangote Refinery would sell refined petroleum products in Naira when it starts production.

This he said would save the country from spending 41 percent of the nation’s foreign exchange on importation of petroleum products yearly.

Based on agreement and discussions with the Nigerian National Petroleum Corporation and the oil companies, the Dangote Refinery can buy its crude in naira, refine it, and produce it for Nigerians’ use in naira,” Mr Emefiele said.

That is the element where foreign exchange is saved for the country becomes very clear. We are also very optimistic that by refining this product here in Nigeria, all those costs associated with either demurrage from import, costs associated with freight will be totally eliminated.

Emefiele explained that this will make the price of Nigeria’s petroleum products affordable and cheaper in naira.

If we are lucky that what the refinery produces is more than we need locally you will see Nigerian businessmen buying small vessels to take them to our West African neighbours to sell to them in naira.

“This will increase our volume in naira and help to push it into the Economic Community of West African States as a currency,” Mr Emefiele said.

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UK Budget 2021: Will Sunak’s Budget Run Into Unintended Consequences?

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Rishi Sunak’s Budget will encourage higher earners to consider their “international financial options” and will drive businesses away from the UK, warns the CEO of one of the world’s largest independent financial advisory and fintech organizations.

The warning from Nigel Green, chief executive and founder of deVere Group, comes as the Chancellor delivered his 2021 Budget in the House of Commons, his second since he took on the role.

Mr Green says: “The Chancellor has got an extraordinarily difficult hand to play as he tries to stem the economic damage caused by the pandemic, support jobs and businesses and, crucially, rebuild the public finances.

“Whilst Mr Sunak is being hailed a hero for the continued and unprecedented levels of support, it should also be remembered that he is – in a stealth move – dragging more people firmly into the tax net.

“He is raising taxes under the radar.

“Yes, there is no income tax rise. However, he is freezing personal tax thresholds, meaning as incomes rise and thresholds don’t, he is able to raise money by fiscal drag.”

Earlier this week, the deVere CEO noted: “Those most impacted by this stealth move will be looking at the financial planning options available to them, including international options, in order to grow and protect their wealth.”

Rishi Sunak also confirmed that corporation tax will increase to 25% from 2023, up from the current level of 19%.

Of this tax hike, Mr Green goes on to say: “Lower corporation tax helps job and wealth-creating business to survive and thrive. It also helps attract business to move and invest in the country.

“Instead of increasing taxes, Mr Sunak should have relentlessly focussed on growth and stimulus policies for businesses.  This would have been of greater help to firms, the economy, jobs and, ultimately, the Treasury’s coffers.”

He adds: “Again, this corporation tax hike is likely to serve as a prompt for businesses to consider their overseas financial options.”

The deVere CEO concludes: “The Chancellor had to perform a tough juggling act.  But stealthily dragging more people into the tax net and raising corporation tax might have negative, unintended consequences for the Treasury’s bottom line.”

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Electricity Consumers Get 611,231 Meters Under MAP Scheme

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Electricity Consumers Get 611,231 Meters Under MAP Scheme

A total of 611,231 meters have been deployed as at January 31, 2021 under the Meter Asset Provider initiative since its full operation despite the COVID-19 pandemic and other extraneous factors, the Nigerian Electricity Regulatory Commission has said.

NERC disclosed this in a consultation paper on the review of the MAP Regulations.

The proposed review of the MAP scheme is coming nearly four months after the Federal Government launched a new initiative called National Mass Metering Programme aimed at distributing six million meters to consumers free of charge.

“The existence of a huge metering gap and the need to ensure successful implementation of the MYTO 2020 Service-Based Tariff resulted in the approval of the NMMP, a policy of the Federal Government anchored on the provision of long-term low interest financing to the Discos,” NERC said.

The commission had in March 2018 approved the MAP Regulations with the aim of fast-tracking the closure of the metering gap in the sector through the engagement of third-party investors (called meter asset providers) for the financing, procurement, supply, installation and maintenance of meters.

It set a target of providing meters to all customers within three years, and directed the Discos and the approved MAPs to commence the rollout of meters not later than May 1, 2019.

But in February 2020, NERC said several constraints, including changes in fiscal policy and the limited availability of long-term funding, had led to limited success in meter rollout.

NERC, in the consultation paper, highlighted three proposed options for metering implementation going forward.

The first option is to allow the implementation of both the NMMP and MAP metering frameworks to run concurrently; the second is to continue with the current MAP framework with meters procured under the NMMP supplied only through MAPs (by being off-takers from the local manufacturers/assemblers).

The third option is to wind down the MAP framework and allow the Discos to procure meters directly from local manufacturers/assemblers (or as procured by the World Bank), and enter into new contracts for the installation and maintenance of such meters.

“Customers who choose not to wait to receive meters based on the deployment schedule of the NMMP shall continue to have the option of making upfront payments for meters which will be installed within a maximum period of 10 working days,” NERC said.

The regulator said such customers would be refunded by the Discos through energy credits, adding that there would be no option for meter acquisition through the payment of a monthly meter service charge.

“Where meters have already been deployed under the meter service charge option, Discos shall make one-off repayment to affected customers and associated MAPs. Such meters shall be recognised in the rate base of the Discos,” it added.

NERC urged stakeholders to provide comments, objections, and representations on the proposed amendments within 21 days of the publication of the consultation paper.

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