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IMF Says Very Low Revenue Remains Nigeria’s Fiscal Issue

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Low Revenue is Nigeria’s Issue Not 29 Percent Debt Profile

The International Monetary Fund has once again said Nigeria’s fiscal challenge is its weak revenue generation and not the nation’s rising debt profile.

The Fund said the low revenue has led to the nation’s low debt-servicing ability, weighed on funding for critical sectors and crippled development of infrastructures.

At about 29 percent debt to Gross Domestic Product, Nigeria has one of the lowest debt profile when compared with emerging and developing nations of 53 percent.

However, the economy remained behind in terms of infrastructure, standard of living, healthcare, job creation and education.

Jesmin Rahman, Chief and Senior Resident Representative for Nigeria, IMF disclosed this during a webinar hosted by the Nigerian Economic Summit Group, Fiscal Policy Roundtable and Tax Investment and Competitiveness Policy Commission.

She said, “The first vulnerability comes from having very low level of fiscal revenues. Total revenue at seven per cent of GDP is less than half of sub-Saharan Africa’s average and far lower than the average in oil exporting countries.

“It is also lower than the minimum threshold of 12 per cent, which is considered necessary for governments to provide an enabling and growth-enhancing role. Interest payments take up a large share of revenues, leaving little resources for everything else.”

“When we do our in-depth analysis, public debt is projected to reach about 37 per cent of GDP this year and remains roughly around that level in the medium term.

“We do various stress scenarios in our debt sustainability analysis and in all of those scenarios, public debt does not go beyond 50 per cent of GDP.

“So, I will not say that public debt is having a crisis or that public debt is extremely high. It is really a revenue issue; very low and volatile revenue is what poses a lot of fiscal risks and there are sizable financing risks in the next 12 months.”

Rahman urged the Federal Government to lower risk perception so that borrowing costs could drop.

She further stated that Nigeria needs to improve revenue generation to augment oil income. She suggested that policies should be made to make the number of registered voters commensurate with the percentage of active tax payers, which she described as low.

Rahman added, “Taxes are contracts between the government and citizens, where payment is in return for services. As such, the perception of public institutions, services and accountability are very important.

“Worldwide and in sub-Saharan Africa, countries that rank the highest in controlling corruption and (having) good governance are also the ones with higher tax morale and collection. Fiscal transparency and accountability are very important.”

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

Nigeria’s Real Estate Sector Shrinks by 8.06% in the Third Quarter -NBS

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Economic uncertainty plunged Nigeria’s real estate sector by 8.06 percent in the third quarter of the year, according to the National Bureau of Statistics (NBS).

Nigeria’s statistics office said “In nominal terms, real estate services recorded a growth rate of –8.06 per cent in the third quarter of 2020, indicating a decline of –11.78 per cent points compared to the growth rate at the same period in 2019, and by 9.12 per cent points when compared to the preceding quarter.

“Quarter-on-quarter, the sector growth rate was 18.92 per cent.

“Real GDP growth recorded in the sector in Q3 2020 stood at -13.40 per cent, lower than the growth recorded in third quarter of 2019 by –11.09 per cent points, but higher relative to Q2 2020 by 8.59 per cent points.

“Quarter-on-quarter, the sector grew by 17.15 per cent in the third quarter of 2020.

“It contributed 5.58 per cent to real GDP in Q3, 2020, lower than the 6.21 per cent it recorded in the corresponding quarter of 2019.”

Nigeria’s economy contracted by 2.48 percent in the first nine months following a 6.10 percent and 3.62 percent contraction in the second and third quarters respectively.

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Economy

Nigeria Requires N400 Billion Annually to Maintain Federal Roads -Senator Bassey

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The Chairman of the Senate Committee on road maintenance, Senator Gersome Bassey, on Friday said Nigeria requires about N400 billion annually to maintain federal roads across the country.

The Senator, therefore, described the N38 billion budgeted for road repairs in the 2021 proposed Budget as grossly inadequate. According to him, nothing meaningful could be achieved by the Federal Roads Maintenance Agency (FERMA) with such an amount.

He said, “For the 35 kilometres federal roads in the country to be motorable at all times, the sum of N400bn is required on yearly basis for maintenance.”

Bassey “What the committee submitted to the Appropriation Committee in the 2021 fiscal year is the N38bn proposed for it by the executive which cannot cover up to one quarter of the entire length of deplorable roads in the country.

“Unfortunately, despite having the power of appropriation, we cannot as a committee jerk up the sum since we are not in a position to carry out the estimation of work to be done on each of the specific portion of the road.

“Doing that without proposals to that effect from the executive, may lead to project insertion or padding as often alleged in the media.”

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Economy

Scarcity of Day-Old-Chicks Cripple Poultry Farmers in Akwa Ibom

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Despite billions of Naira spent on Akwa Prime Hatchery and Poultry Limited by the Executive Governor of Akwa Ibom State, Udom Emmanuel, poultry farmers in the state said they had to order day-old-chicks from outside the state as the 200,000 capacity poultry farm developed specifically to make day-old-chicks and other poultry products available at affordable prices is almost empty at the moment.

The farmers expressed frustration over many challenges they face in the course of bringing day-old-chicks from outside the state. Usually, Ibadan, Enugu and sometimes as far as Kaduna, while the hatchery built and inaugurated in 2016 remains idle.

Mr Ekot Akpan, one of the poultry farmers who spoke with the pressmen said the state had not had it this bad.

Akpan said: “For the 12 years that I have been in poultry farming, this is the first time that poultry farmers have been so harshly affected by both economic and non-economic factors. And, quite unfortunately, nobody is available to offer any explanation.

“Farmers have been left at the whims and caprice of owners of the means of production.

“There seems to be no government regulation of the poultry industry. How, do you explain a situation where you wake up suddenly and the price of a day old chick is selling for N600, a bag of feed goes as high as N6,000.

“And, in a state that government claims to be pursuing agriculture as one of his cardinal programmes.

“For instance, in 2016, the state government said it has constructed an hatchery, and the intention according the government was to ensure availability of day old chicks at affordable price to farmers, but, quite, unfortunately, that effort has not yielded any tangible result.

“Farmers are still getting their day old chicks from Ibadan, Kaduna, and Enugu. So, the question now is where is the hatchery?

“One would have expected that farmers would be buying old chicks at humane prices, but, from all indications they acclaimed hatchery is a ruse. So, which one is the Akwa Prime Hatchery producing,” he said.

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