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FG Must Address ‘Pressure Points’ in Economy, FSDH Says

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  • FG Must Address ‘Pressure Points’ in Economy, FSDH Says

Following the conclusion of the presidential election, analysts at FSDH Merchant Bank Limited believe there are pressure points in the economy that the federal government must quickly address to stimulate broad-based and inclusive growth.

According to the Lagos-based financial institution, the Nigerian economy has not been expanding enough to lift its citizens out of poverty.

Owing to this, the bank in a report stressed the need for the economy to expand faster than it is at the moment.

Providing insights on the report, the Head of Research and Strategy at FSDH Merchant Bank Limited, Mr. Ayodele Akinwunmi, listed the economic pressure points to include weak disposable income in the country; high unemployment rate; weak infrastructure development in the economy that may not support the growth ambition of the federal government; economic depression in the real estate sector; fragile foreign exchange market and weak revenue generation for the federal government, which has led to large fiscal deficits.

Akinwunmi listed policy option to address the economic challenges to include the removal of all administrative delays in obtaining licences and approvals.

This, he stated includes titles to landed properties for building and agricultural purposes.

He urged the federal government to support the provision of long-term mortgage loans at concessionary terms for workers, in order to activate economic activities in the real estate sector in Nigeria

Furthermore, he recommended investment in data generation in the solid mineral sector.

“Government can sell the data to potential investors interested in the sector. This will reduce the risk inherent in this untapped sector of the Nigerian economy

“Urgent restructuring, deliberate and consistent investments in the nation’s educational system to enable it provide relevant trainings that are needed in the modern digital age.

“We observed critical skill gap in the nation’s educational system, particularly in the public schools at all levels. The sector can create more jobs for teachers and administrators and can also attract foreign investments and save foreign exchange earnings.

“There is the need for human capacity building in business management and leadership. This must not be left to business schools, which are only affordable to a few people

“Establishment of well-funded technical training centres in all local government areas in the country in conjunction with private sector operators,” he added.

In addition, Akinwunmi called for investment in infrastructure (through partnership with the private sector) that would reduce risks involved in agriculture and agro-allied industries.

He also advised the government to reduce import duties on imported manufactured cars. This, according to Akinwunmi, would help avoid high cost associated with brand new cars in the country so that Nigerians are not pushed to buy fairly used vehicles with their associated negative environmental impacts.

“While we understand the need for the government to use the import duties to encourage investments in the local auto industry, a graduated import duty policy for a few years, say five years, will be appropriate

“Investments in affordable public healthcare system to increase productivity of workers, reduce brain-drain and reduce foreign medical tourism with its associated drain on foreign exchange earnings

“Adjustment of the electricity tariff to reflect current costs in the economy and to enable the sector attracts investments and guarantee efficient metering system

“The removal of the ‘subsidy’ on the Premium Motor Spirit (PMS) to free up more resources to critical sectors of the Nigerian economy and to drive competition among the operators and attract investment in the sector,” he added.

According to him, the Central Bank of Nigeria (CBN) needs to maintain its tight monetary policy stance to ensure price stability.

In addition, he said the CBN may also consider the removal of its multiple exchange rate system.

Continuing, the FSDH report projected that February 2019 inflation rate would drop marginally to 11.31 per cent, from 11.37 per cent in January, even as it anticipated that inflation to remain in double digits.

“The external reserve dropped consistently in the month of February. However, we observed that the external reserves have been rising since the beginning of March largely driven by portfolio investment. The current position of external reserves continues to provide short-term stability for the value of the naira.

“Capital importation via Foreign Portfolio Investors (FPI) in the Investors’ and Exporters’ Foreign Exchange Window (I&E window) increased for the second consecutive month in February 2019. This provided support for the foreign exchange rate

“The medium-term stability in the foreign exchange market will depend on the country’s foreign exchange receipts from both crude oil and non-oil products. Appropriate policies, some of which we have mentioned above, to attract Foreign Direct Investment (FDIs) into Nigeria, will be necessary to guarantee medium-term to long-term stability in the foreign exchange market,” it added.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Boosting Nigeria’s Digital Future: STEM Education and AI Could Add $15 Billion to Economy by 2030

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If Nigeria can enhance its Science, Technology, Engineering, and Math (STEM) education and prepare its workforce for future opportunities in the digital space, the economy could expand by an additional $15 billion, a new report has revealed.

The report, issued by consultancy Public First on Thursday, also indicated that Nigeria reaped an estimated $1.8 billion in economic benefits from Google’s tools and services in 2023.

Presenting the report in Lagos State, the Nigeria Digital Opportunity study highlighted the financial value contributed to the nation’s economy through services such as Google Search, Ads, Google Play, YouTube, and Google Cloud.

These services have played a significant role in boosting the productivity of Nigerian businesses, content creators, and workers.

It is no secret that a large number of young Nigerians have become tech-savvy, with many venturing into the thriving world of technology and content creation on social media platforms.

According to Google, its digital skills programs and career certificates are key drivers of Nigeria’s digital transformation, with over 1.5 million young Nigerians acquiring new digital skills in 2023.

Google’s Director for West Africa, Olumide Balogun, expressed the company’s satisfaction with the positive impact that digital technology is having on Nigeria’s economy.

He emphasized that the findings highlight the importance of continued investment in digital skills and infrastructure to unlock the full potential of Nigeria’s growing digital economy.

Balogun noted that with rapid digital advancements, particularly in areas such as cloud computing, connectivity, and artificial intelligence (AI), Nigeria is well-positioned to solidify its standing as a leading digital economy in Africa.

He advised the country to strengthen its technology policies, stating that Nigeria’s economic future will largely depend on its ability to harness technology. Balogun added that Google remains committed to supporting Nigeria’s journey through strategic investments and partnerships.

The report underscored the significant role digital technology plays in Nigeria’s economy, with Balogun noting that for every $1 invested in digital technology, the country generates over $8 in economic value.

Meanwhile, Google has called on Nigerian policymakers to prioritize STEM education to maximize the economic benefits of technology.

The report also projected that AI could contribute $15 billion to Nigeria’s economy by 2030.

Balogun highlighted Google’s efforts in promoting responsible AI development, noting that in 2021, the company committed $1 billion to support Africa’s digital economy.

He added that this initiative included the 2022 landing of the Equiano fiber-optic cable in Nigeria, which is expected to boost internet penetration by seven percent by 2025, significantly enhancing internet access and reliability.

Google also recommended that Nigerian policymakers adopt cloud-first strategies and strengthen the country’s digital infrastructure to harness the full potential of AI, while emphasizing the need for improved STEM education to prepare the workforce for future opportunities.

Amy Price, Director and Head of Technology Policy at Public First, praised Nigeria as a digital leader in Africa. She emphasized that tech investment will serve as a catalyst for further growth and development across the nation.

Price further highlighted the critical role AI will play in shaping Nigeria’s future economy, with the report estimating that AI could add $15 billion to the country’s GDP by 2030. She stressed that the nation must focus on building strong digital infrastructure and investing in STEM education to prepare its workforce for the jobs of tomorrow.

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Lawmakers to Deliberate on Nigerian Tax Reform Bills, Change of FIRS to NIRS

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Value added tax - Investors King

The National Assembly is set to begin deliberations after receiving President Bola Tinubu’s communication seeking consideration and passage of the proposed Fiscal Policy and Tax Reform Bill to align with ongoing financial reforms of the Federal Government and enhance efficiency in tax compliance.

In addition to the Senate, the House of Representatives received four bills forwarded by the President. They include the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Establishment Bill and the Joint Revenue Board Establishment Bill.

The Nigeria Revenue Service (Establishment) Bill seeks to repeal the Federal Inland Revenue Service (Establishment) Act, No. 13, 2007, and establishes the Nigeria Revenue Service, to assess, collect, and account for revenue accruable to the government of the federation.

The Transmission of Fiscal Policy and Tax Reform Bills to the National Assembly is The Nigeria Tax Bill, which seeks to provide a consolidated fiscal framework for taxation in Nigeria.

The Nigeria Tax Administration Bill seeks to provide a clear and concise legal framework for the fair, consistent and efficient administration of all the tax laws to facilitate ease of tax compliance, reduce tax disputes and optimize revenue.

Meanwhile, the Joint Revenue Board (Establishment) Bill aims to establish the Joint Revenue Board, the Tax Appeal Tribunal and the Office of the Tax Ombudsman for the harmonization, coordination and settlement of disputes arising from revenue administration in Nigeria.

This comes after President Tinubu during his speech on Nigeria’s 64th Independence Anniversary on Tuesday (October 1) said some Economic Stabilisation Bills would be transmitted to the National Assembly.

“We are moving ahead with our fiscal policy reforms. To stimulate our productive capacity and create more jobs and prosperity, the Federal Executive Council approved the Economic Stabilisation Bills, which will now be transmitted to the National Assembly.

“These transformative bills will make our business environment more friendly, stimulate investment and reduce the tax burden on businesses and workers once they are passed into law,” he said.

Recently, the Chairman of the Presidential Taskforce on Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, said the Withholding Tax Regulations 2024 has been gazetted.

“I do have some good news, the good news is that the withholding tax regulation has now been gazetted. So, the only reason it hasn’t been published today is because it is public holiday, so first thing tomorrow you will see a copy of the gazette and that provides a lot of relief not just for manufacturers but also every other business in terms of taking away some of the burdens of funding their working capital,” Mr Oyedele said.

Nigeria has been seeking to harmonise its tax base as it has a tax-to-gross domestic product (GDP) ratio of 10.8 percent; comparatively, the average tax-to-GDP ratio for Africa is about 18 percent.

 

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Nigerians Can Now Check Food Prices Live on Mobile App, Says BOI

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food storage

The Bank of Industry (BOI) has launched a mobile app for Nigerians to check live food prices in the country.

The web version, Pricesense.ng helps users check the wholesale and retail prices of food items such as rice, beans, tomato, maize and others in different states across the country.

According to BOI, the states available for checking of the prices are Borno, Plateau, Rivers, Oyo, FCT, Lagos, Enugu and Kano.

It noted that the app provides for analytics of food prices across brand type, quantity and at different dates of the year.

One of the challenges currently assailing Nigerians is food.

However, prices of food vary from state to state. Hence, the decision of BOI to come up with the app so that Nigerians would be abreast of the current prices of food in states and take necessary steps that would better suit their conditions.

Aside from food insecurity, food prices have been on the rise since the inception of President Bola Tinubu’s administration.

As at June 2024, food inflation crossed 40 percent while many poor Nigerians languish in acute hunger.

There are many factors responsible for the food shortage and inflation of prices.

Some of them are lack of fertile policies by the Federal and State Governments, disruption in regular weather patterns, insecurity in food-producing regions and high cost of farm inputs such as fertilisers among others.

The Federal Competition and Consumer Protection Commission (FCCPC) had accused traders of price gouging leading to the high cost of staple foods in the country.

The FCCPC boss, Mr. Tunji Bello, stated that some traders forming cartels in markets across the country are responsible for the sharp rise in food prices.

While the commission acknowledged that factors like the exchange rate and the increase in petrol prices have made previous prices unsustainable, it criticized the disproportionate price hikes, which Mr. Bello attributed to cartels seeking to exploit consumers.

The commission this year had closed some supermarkets it accused of unethical market practices with respect to prices of goods. Furthermore, the commission had earlier ordered traders across the country to crash prices of goods and services within one month or face its actions.

Also, some notable traditional rulers in the country, especially in the South West, had accused some leaders of traders of forcing others to sell at fixed prices.

These monarchs including the Ooni of Ife, Oba Enitan Ogunwusi and late Owa Obokun of Ijesaland, Oba Gabriel Adekunle Aromolaran had banned market union associations in their domains from fixing prices of food items for traders and neither should they force them from joining associations.

However, some international development organisations like the World Bank, International Rescue Committee (IRC) and the Food and Agricultural Organisation (FA0) had predicted record number of food insecure people in the country for 2024.

In particular, the World Bank noted that around seven states in the country would witness severe hunger while the FAO noted that up to 32 million Nigerians in 2024 would be food insecure with women and children mostly affected.

Efforts by the federal government to quell the crisis include the approval of duty-free food imports for 150 days and distribution of grains to all 36 states of the federation.

Furthermore, the federal government has also begun the sale of rice at a discount price of N40,000 per 50kg bag.

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