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Nigeria’s Power Generation Plunges by 16.4%: Load Shedding Crisis Looms

Electricity Distribution Companies Grapple with Load Shedding as Power Generation Falls to Critical Levels; PSGN’s Acquisition of KEDCO Offers Hope for Improved Efficiency and Reliability.

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Power - Investors King

Nigeria’s electricity generation declined by 16.4% week-on-week to 3,501.20 megawatts (MW) from 4,187.6 MW recorded on Thursday last week.

The decline in power output can be attributed to various factors, including the dilapidated state of power plants and insufficient gas supply to thermal plants.

To better manage the distribution of the limited electricity, the Electricity Distribution Companies (DISCOs) have been compelled to resort to load shedding.

This measure aims to distribute the limited electricity available to consumers at different times, providing a temporary but imperfect solution to manage the shortfall.

In the midst of this challenging situation, the Nigerian Electricity Regulatory Commission (NERC) has received applications for rate review from eleven DISCOs.

These requests are founded on the necessity to consider changes in macroeconomic parameters and other factors impacting the companies’ quality of service, operational capabilities, and long-term sustainability.

Meanwhile, Powercom Smart Grid Nigeria (PSGN) has announced its acquisition of Kano Electricity Distribution Plc(KEDCO).

PSGN is a subsidiary of Powercom and specializes in delivering an “end-to end” Smart Grid/Smart Metering turnkey solution.

In a statement made available to the media, PSGN said the acquisition presents a significant opportunity for KEDCO to implement a comprehensive turnaround plan aimed at improving performance and efficiency.

It stated: “PSGN Turnaround Plan encompasses a strategic approach to address the challenges faced by KEDCO and transform it into a highly efficient and financially viable electricity distribution company supporting 5 million customers.

“The plan focuses on revenue enhancement, operational performance optimization, revenue collection, customer service, and overall system reliability.PSGN will supply KEDCO smart electricity endpoints including the full backbone infrastructure to manage the grid.

“The project is meant to upgrade the existing distribution grid into a modern platform, addressing services such as: Revenue Enhancement, Reduction of Energy Losses, Debt Recovery, Reduction of Outages, Grid Optimization, Asset Recording, Asset Protection, Peak Load Management; Workforce Automation, reducing operational expenditure and improving customer service. PSGN ‘turnkey’ solution includes the Vending Platform and a Control Room with GIS visualization for grid management.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

August 2023 Witnesses Highest Revenue Allocation of the Year – N1.1 Trillion Shared

The driving force behind this boost in revenue can be attributed to foreign exchange gains that have contributed significantly to the government’s income stream.

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Revenue - Investors King

The Federation Account Allocation Committee (FAAC) unveiled its allocation of N1.1 trillion to the three tiers of government for the month of August 2023, Investors King reports.

This substantial increase was detailed in a communiqué following the committee’s latest meeting. August allocation was the highest so far with an increase of N133.99 billion when compared to the N966.11 billion shared in July 2023.

The driving force behind this boost in revenue can be attributed to foreign exchange gains that have contributed significantly to the government’s income stream.

Breaking down the N1.1 trillion total distributable revenue, the statement reveals that it consists of distributable statutory revenue amounting to N357.4 billion, distributable Value Added Tax revenue totaling N321.94 billion, Electronic Money Transfer Levy revenue at N14.10 billion, Exchange Difference revenue of N229.57 billion, and an augmentation of NN177.09 billion.

Of this impressive sum, the Federal Government is set to receive N431.25 billion, while the State governments will be allocated N361.19 billion, and the local government Councils will obtain N266.54 billion.

However, it’s essential to note that the total revenue available for August stood at N1.48 trillion, marking a 14% or 0.26 trillion decrease from the preceding month’s figure of N1.74 trillion.

The FAAC communiqué further underscores that various deductions were made, including N58.76 billion for the cost of collection, N254.05 billion for total transfers and refunds, and N71 billion allocated to savings. Additionally, the Excess Crude Account maintained a balance of $473,754.57.

The statement elaborated, “Gross statutory revenue of N891.934 billion was received for the month of August 2023. This was lower than the N1,150.424 billion received in July 2023 by N258.490 billion. The gross revenue available from the Value Added Tax was N345.727 billion. This was higher than the N298.789 billion available in July 2023 by N46.938 billion.”

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Economy

Zambia’s Finance Minister Faces Dual Challenge in Upcoming Budget Address

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Zambian economy

As Zambia’s Finance Minister, Situmbeko Musokotwane, prepares to present the nation’s budget, he finds himself at a pivotal crossroads.

The second-largest copper producer in Africa is grappling with two pressing concerns: debt sustainability and soaring living costs.

Debt Restructuring Dilemma: Musokotwane’s foremost challenge is finalizing the $6.3 billion debt-restructuring deal with official creditors, led by China and France.

Delays have hindered disbursements from the International Monetary Fund (IMF) and left private creditors in limbo.

To reassure investors, a memorandum of understanding with the official creditor committee is urgently needed.

President Hakainde Hichilema emphasizes the importance of sealing these transactions to signal closure on this tumultuous chapter.

Plummeting Tax Revenue: The key copper-mining industry, which accounts for 70% of Zambia’s export earnings, is in turmoil.

First-half mining company taxes and mineral royalty collections have nosedived, adding to economic woes.

This, in turn, has depreciated the local currency, exacerbating imported inflation, particularly in fuel prices.

Rising Food Inflation: Musokotwane faces mounting political pressure to combat soaring living costs, with annual inflation reaching an 18-month high of 12%. Corn meal prices, a staple in Zambia, have surged by a staggering 67% in the past year.

Neighboring countries’ demand for corn has led to smuggling and further price spikes, raising concerns about food security.

Currency Woes: The kwacha’s value has been a barometer for the nation’s economic health. It depreciated by 16% since June 22, the worst performance among African currencies, reflecting the ongoing debt-restructuring uncertainty.

In his budget address, Musokotwane faces the daunting task of striking a balance between debt management, economic stability, and alleviating the burden on Zambia’s citizens.

The international community will keenly watch to see if his fiscal measures can steer the nation toward a path of recovery and prosperity.

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Economy

IMF Urges Sub-Saharan African Nations to Eliminate Tax Exemptions for Fiscal Health

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IMF global - Investors King

Sub-Saharan African countries have been advised by the International Monetary Fund (IMF) to tackle their fiscal deficits by focusing on eliminating tax exemptions and bolstering domestic revenue rather than resorting to fiscal expenditure cuts, which could hamper economic growth.

The IMF conveyed this recommendation in a paper titled ‘How to avoid a debt crisis in Sub-Saharan Africa.’

The IMF’s paper emphasizes that Sub-Saharan African nations should reconsider their overreliance on expenditure cuts as a primary means of reducing fiscal deficits. Instead, they should place greater emphasis on revenue-generating measures such as eliminating tax exemptions and modernizing tax filing and payment systems.

According to the IMF, mobilizing domestic revenue is a more growth-friendly approach, particularly in countries with low initial tax levels.

The paper highlights success stories in The Gambia, Rwanda, Senegal, and Uganda, where substantial revenue increases were achieved through a combination of revenue administration and tax policy reforms.

The IMF also pointed out that enhancing the participation of women in the labor force could significantly boost Gross Domestic Product (GDP) in developing countries.

The IMF estimates that raising the rate of female labor force participation by 5.9 percentage points, which aligns with the average reduction in the participation gap observed in the top 5% of countries during 2014-19, could potentially increase GDP by approximately 8% in emerging and developing economies.

In a world grappling with the weakest medium-term growth outlook in over three decades, bridging the gender gap in labor force participation emerges as a vital reform that policymakers can implement to stimulate economic revival.

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