- Deliver Lagos-Ibadan Rail in Two Weeks, FG Orders Contractor
The Federal Government on Thursday gave marching orders to the contractor handling the Lagos-Ibadan rail line to deliver the Iju (Lagos) to Agbado (Ogun) section of the project within the next two weeks.
It stated that although there had been a considerable improvement on the project, it was important to get the Iju-Agbado section ready this month as commercial activities were more pronounced on the specified location.
This came as the renowned economist and Chief Executive of Financial Derivatives Company, Bismarck Rewane, stated that the Lagos-Ibadan rail project would reduce inflationary pressures when completed.
The Minister of Transportation, Rotimi Amaechi, directed officials of the China Civil Engineering Construction Company to speed up work on the Iju-Agbado section of the project and get it ready for test-run in two weeks.
Amaechi said, “Getting to Abeokuta, you will see that there’s an improvement but the problem they have now is the civil work between Agbado and Iju which is critical to me because I don’t think passengers will go to Agbado to join the train.
“I believe that the closer we are to Lagos, the better for the rail and that is why I had to tell them to tell me what they will do about this before the next two weeks, although there’s a huge improvement up to this point. I want them to speed up the construction from Iju to Agbado.”
On why the contractor had yet to bring in more equipment to hasten the pace of work, the minister stated that the excuse given by the firm was that the equipment was not off-the-shelf machines that could be moved easily to Nigeria from abroad.
He also stated that the project would reduce congestion at the Lagos sea port.
Amaechi said, “Part of the solution to the congestion around Lagos sea port is an efficient rail line. You can argue that the narrow gauge is there but it is not efficient. But the moment you fix this then those goods will be transferred to the rail and then the logjam will disappear.
“The moment we do the section from Iju to the seaport, then most of those goods, especially the ones going to Ibadan will be on the rail lines.”
When asked whether the government was being pressured by Nigerians to complete the rail project, Amaechi replied, “Of course, and it is also because of the speed, for it takes you about 30 minutes by rail from Lagos to Ibadan as against over one hour by road. And this is subsidised.”
Explaining some of the impacts of the project on the economy, Rewane said, “This is a massive project that will have a multiplier effect when completed and will reduce logistics and distribution cost, which are the major areas of inflationary pressures in Nigeria. So I think we should give them time to complete it because it will increase productivity and reduce cost.
“It will reduce inflationary pressures because the cost of moving goods from point A to B will be reduced since you are not coming by road. So that is a good way to reduce the pressure and inflation is one of the core economic concerns for Nigeria. Therefore, anything that can reduce inflation is good for the country.”
Nigeria Records Trade Deficit of 8.9 Trillion in Nine Months
The National Bureau of Statistics (NBS) released a report that showed that Nigeria recorded a trade deficit of 8.9 Trillion Naira between January and September 2021.
A trade deficit occurs when a country’s imports exceed its exports over a period. Within the period, foreign trade was 35.09 Trillion Naira which comprised imports of 22 Trillion Naira and exports of 13.1 Trillion which led to an 8.9 Trillion trade deficit.
A breakdown of the data by quarters shows that trade stood at 9.76 Trillion Naira in the first quarter, which represented imports of 6.85 Trillion Naira and exports of 2.91 Trillion Naira, this resulted in a trade deficit of 3.94 Trillion during the period.
The data went on to show that the majority of the goods imported in the first quarter were from China (valued at 2 Trillion), the Netherlands (valued at 726.09 Billion) the United States (valued at 608.12 Billion), India (valued at 589.1 Billion), and Belgium (valued at 238.5 Billion) while the majority of exports were to India (valued at 488.1 Billion), Spain (valued at 287.2 Billion), China (190.1 Billion), the Netherlands (160.0 Billion) and France (133 Billion).
In the third quarter, Crude oil dominated exports with 78.47% of exports, this was followed by natural gas with 9.5%. Imports were mainly motor spirit with 12.91% of imports, Durum wheat with 3.87%, gas oil with 2.77%, and used vehicles with 2.27%.
A renowned economist, Pat Utomi said the country’s huge appetite for imports was because of insufficient domestic production which is driven by worsening insecurity and stringent government regulations. He went on to say that although there were interventions introduced by the Government and the Central Bank of Nigeria to reduce imports and increase exports, the initiatives are fraught with inconsistencies and corrupt practices that prevent any real impact.
He went on to say that it was scandalous that Nigeria’s top imports were food products and motor spirits as those are products the country should be exporting because Nigeria is a food-producing nation and has oil in abundance.
World Bank Calls on Nigeria to Impose Special Taxes on Alcohol and Tobacco
The World Bank Group has made a call to the Federal Government of Nigeria, urging the government to impose special taxes on alcohol, cigarettes and beverages that are highly sweetened in order to improve primary healthcare conditions in the country.
Shubham Chaudhuri, who is the Country Director for Nigeria in the World Bank Group, said that an improvement in healthcare in Nigeria will come by taxing the things that are “killing us.” He said that the economic rationale for the action is quite strong if lives are to be saved and a healthier Nigeria achieved.
Chaudhuri made the call on Friday, at a special National Council on Health meeting which was organized by the Federal Ministry of Health in Abuja. Chaudhuri stated that placing special taxes on tobacco, sweetened beverages and alcohol would reduce the health risks which come with their consumption and expand the fiscal space for universal health coverage after COVID 19.
The country director also said that investing in stronger health systems for all would make significant contributions to the fight against inequality and the rising poverty situation in the country. He went on to add that increasing health tax would provide an extra advantage of reducing healthcare cost in the future, by hindering the growth of the diseases which are caused by tobacco, alcohol and sugar-sweetened beverages.
The representative of the WHO in Nigeria, Dr Walter Mulombo said that he could confirm the large health needs of Nigerians, as well as the efforts being made to meet those needs. He said this was based on the fact that he had been to over half of Nigeria’s states in less than two years of being in the country.
Mulombo then noted that although the coronavirus exposed weaknesses in the global economy (not excluding health), it could be considered as a unique opportunity for a thorough examination of existing resources and mechanisms to prepare for a more resilient future.
Nigeria’s VAT Revenue Falls to N500 Billion in Q3 2021, Manufacturing Sector in the Lead
In the third quarter of 2021, Nigeria generated a total sum of N500.49 billion as value-added tax which represents a 2.3% decline when compared to the N512.25 billion recorded in the second quarter of the year.
This is as seen in the VAT report which was recently released by the National Bureau of Statistics (NBS). The report revealed that the manufacturing sector was in the lead as it remitted a total of N91.2 billion, representing about 30% of the total local non-import value added taxes in that period.
In spite of the quarter-on-quarter decline of VAT collections in the reviewed period, it grew by a further 17.8% when compared to N424.7 billion generated in the same period of the previous year. The report also shows that an amount of N1.5 trillion has been generated from value added taxes from January 2021 to September 2021.
That is 40.2% higher than the N1.08 trillion recorded in the same period of 2020, and 72.3% higher than what was recorded in the same period of 2019.
To break it down, the Value Added Tax collected in the first, second and third quarter of 2021 was recorded at N496.39 billion, N512.25 billion and N500.49 billion respectively. It is higher than the corresponding figures of 2020, which sat at N324.58 billion, N327.20 billion and N424.71 billion for the first, second and third quarters respectively.
In the third quarter of 2021, the Manufacturing activity accounted for the largest share of total revenue collected across sectors, with a huge 30.87% (N91.2 billion) coming from that sector. The Information & Communication sector came in second with 20.05% (N53.9 billion) contributed, while the Mining & Quarrying sector came in third with 9.62% (N28.4 billion).
Nigeria has continued to ramp up its efforts to increase revenue from non-oil sectors by increasing its tax collection rates, which has recorded largely significant growth since the federal government increased the VAT rate from 5% to 7.5% in the 2019 Finance Act, which was signed and made effective in 2020.
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