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Local Electronic Card Industry Will Save Nigeria About $100M Import Bill – PayPlus CEO

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Forex Weekly Outlook March 6 - 10

Nigeria may be saving about $100million annually with local manufacture of electronics card as bank cards alone gulp about $36 million.

This was disclosed by Bayo Adeokun, the Managing Director of Electronic Payplus Limited, one of the few electronic card manufacturing firms in sub-Sahara Africa.

Speaking to some media operatives last week at the backdrop of commencement of operations at its multimillion dollar new manufacturing installations, Adeokun stated: “Bank cards alone is about $36 million every year prior to our intervention. I have not done the cost of a SIM card; I have not done the cost of tax card by Lagos State government for instance and other states that are now coming up with that; I have not talked about the national ID card and I have not talked about the voter’s card. By the time you put everything together in terms of dollar, you will be talking about $100 million savings for the country.”

Calling on the Federal Government to take steps to protect investments in the card industry, he stated further: “In this period that remittances from abroad are going down, crude oil revenue is coming low and all of that the government really needs to make a lot of savings in terms of foreign reserves.”

He also harped on the employment value the industry adds to the economy saying, “Prior to this (commencement of its new production lines) Electronic Payplus had about 100 staff. Now, we are up to 150. So we are also generating employment. I mean, if you look at the nature of Nigeria, those 50 staff, each of them has a dependence, so we are talking of an additional 500 or more that we are catering for.”

Giving details of the company’s new production capacity, he said, “we can do any smart card. So the purpose is to extend it to every area of the economy. I showed you the national ID card downstairs we produce for Nigeria. So we are known to the government. Now, when the present administration came in they said there is no money to finance the production of that again. So they said they want to go into a digital ID card. We are also playing in that space because we have the license.

“We presently enrolled Nigerians in the diaspora. We do local enrollment that is currently ongoing as well. We have the license to produce that. We also are presently working with the Lagos State government because they want to roll out what is called a residency card which is also going to be a payment card. So we are going to service all the industries.

“We are also talking to telecommunication companies on the possibility of supplying their sim cards as well. Also are looking beyond Nigeria. We have customers all over Africa. All the banks in Gambia produce all their cards, for instance. We have customers in Ghana, Guinea, Cameroun, Uganda and Kenya.”

On the impact of the company’s new production facility upgrade, he said, “What we have done is 60 million production cards per annum capacity.

“But the idea is all about improved turn around that we can offer because, today if you give me an order of one million cards, I can deliver it within a week.

I can even deliver 250,000 per day to you. So we believe that that will be a game changer for us, and in addition, we are now able to scale up our capacity utilization as well as market share as quickly as possible.”

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Economy

Nigeria Records Trade Deficit of 8.9 Trillion in Nine Months

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Commodities Exchange

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.

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Economy

World Bank Calls on Nigeria to Impose Special Taxes on Alcohol and Tobacco

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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.

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Economy

Nigeria’s VAT Revenue Falls to N500 Billion in Q3 2021, Manufacturing Sector in the Lead

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Value added tax - Investors King

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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