- Nigerians Fear Weaker Economy From Rising Inflation – CBN report
Respondents in a survey carried out by the Central Bank of Nigeria’s Statistics Department in the fourth quarter of 2018, showed that more Nigerians were sceptical of the country having a weaker economy from rising inflation.
The CBN said the Inflation Attitudes Survey was conducted between November 24 – December 7, 2018 from a sample size of 1,770 households, randomly selected from 207 enumeration areas across the country, with a response rate of 99.2 per cent.
The report stated, “Respondents were asked what would become of the Nigerian economy if prices started to rise faster than they do now. The survey result showed that 44 per cent of the respondents believed that the economy would end up weaker, 14.2 per cent stated that it would be stronger, 18.3 per cent of the respondents believed it would make a little difference, while 22.8 per cent did not know.”
According to the report, the responses opined considerable support for price stability, as majority (44 per cent) agreed that the economy will end up weaker.
It said the results were consistent with the notion that inflation constrained economic growth.
When asked how prices had changed over the past 12 months, respondents gave a median answer of 3.8 per cent.
Of the total respondents, 23.9 per cent thought prices had gone down or not changed, 53.7 per cent felt that prices had risen by at least three per cent, while 17 per cent felt that prices inched up by more than one per cent, but less than three per cent.
Those that had no idea were 5.3 per cent, according to the report.
It report read in part, “The median expectation of price changes over the next 12 months was that prices will inch up by 2.3 per cent. From the total responses, 48.2 per cent of the respondents expected prices to rise by at least three per cent over the next 12 months, 14.3 per cent expected prices to increase by more than one per cent, but less than three per cent.
“However, 30.9 per cent of the respondents were optimistic that prices over the next 12 months will either go down or remain the same.”
On interest rates, it stated that the percentage of respondent households that felt that interest rates had risen in the last 12 months declined by 0.7 points to 28.6 points in the current quarter when compared to 29.3 points attained in Q3, 2018.
On the other hand, nine per cent of respondents believed that interest rates had fallen, 16.8 per cent of the respondents were of the opinion that the rates stayed about the same in the last 12 months, while 45.6 per cent of the households had no idea.
The result revealed that more households had no idea on the direction of interest rate in the past 12 months. On the expected change in interest rates on bank loans and savings over the next 12 months, some respondents (23 per cent) were of the view that the rates would rise, while 17.4 per cent believed that the rates would fall.
However, more respondents (59.6 per cent) of the respondents either expected no change or had no idea.
Furthermore, respondents were asked whether it would be best for the Nigerian economy if interest rates increased or decreased. The results showed that 33 per cent indicated that it would be best for the Nigerian economy if interest rates fell, while 11.1 per cent opted for higher interest rates.
Those that thought that it would make no difference accounted for 12.7 per cent, while 40.2 per cent had no idea.
The responses revealed that while many of the respondents favoured lower interest rates for the Nigerian economy, many more had no idea whether it should rise or fall.
On interest rate-inflation nexus, the report showed that 35.2 per cent thought a rise in interest rates would make prices in the street rise slowly in the short term, as against 11.5 per cent that disagreed.
In the medium term, 33.6 per cent agreed that a rise in interest rates would make prices in the street rise slowly, 12.8 per cent disagreed.
Respondents were asked to choose between raising interest rates in order to keep inflation down and keeping interest rates down to allow prices to rise.
Responding, 21.5 per cent preferred interest rates to rise in order to keep inflation down compared to 25.4 per cent that said they would prefer prices to rise faster, while 50.9 per cent had no idea.
“These responses suggest that given a trade-off, more of the respondents will prefer higher interest rates to higher inflation, which is suggestive of the respondent households’ support for the bank’s price stability objective,” the report added.
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.
Nigeria’s Economy to Close 2021 at 2.5% Growth Rate
The Lagos Chamber of Commerce and Industry (LCCI) has predicted that the Nigerian economy will close its growth rate for the year at 2.5%.
This was said by the President of the LCCI, Toki Mabogunje at the 133rd Annual General Meeting (AGM) of the chamber in Lagos on Thursday, as reported by the News Agency of Nigeria.
The LCCI leader advised that Nigeria’s monetary and fiscal aspects of the economy should encourage policies that enhance growth and build confidence which would invigorate private capital flows to the economy to achieve the growth. She also encouraged a medium-term recovery plan which is anchored on local productivity, attracting private investment, developing physical and soft infrastructure, and ease of business.
Mabogunje disclosed that Nigeria’s inflation would be maintained at its double digit level within the short to medium term, due to food supply shocks, foreign exchange illiquidity, higher energy cost, social unrest in the Northern region, possible removal of fuel subsidy, and insecurity. She stated that these structural factors will keep on mounting pressure on domestic consumer prices.
She also added that in spite of the non-oil economy’s growth by 5.4%, insecurity problems in some areas of the country may lead to shrinking in production and a disruption of the supply chain. She states that the important drivers of the non-oil sector growth were finance and insurance holding 23.2%, transport and storage 20.6%, trade carrying 11.9% and telecommunications 10.9%.
Others include manufacturing, construction, real estate and agriculture with 4.3%, 4.1%, 2.3% and 1.2% respectively throughout the year.
Speaking on the decision of the Central Bank of Nigeria’s Monetary Policy Committee’s decision to retain policy parameters, she mentioned that although the apex bank has been keen to extend credit to the real economy as a way of supporting it, it is a fact that the provision of credit recently has proven ineffective in improving output growth and stabilizing consumer prices.
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