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Real Estate and Construction Boom: A Steady Pillar of Nigeria’s Economic Growth Amidst Challenging Times

Private Sector Drives Growth Despite Soaring Interest Rates and Inflation




Nigeria’s real estate and construction sectors have emerged as resilient pillars of economic growth, contributing a staggering N93.14tn to the country’s Gross Domestic Product (GDP).

Despite facing headwinds of rising interest rates and tightening financial conditions, both sectors have demonstrated remarkable growth, proving their significance in job creation and economic prosperity.

According to an in-depth analysis of the GDP report released by the National Bureau of Statistics between 2019 and 2022, the real estate and construction industries have been able to secure loans totaling N21.89tn from deposit money banks. This influx of credit facilities has facilitated infrastructural activities and fueled substantial investments, propelling these sectors to new heights.

However, the recent increase in the benchmark interest rate by the Central Bank of Nigeria to 18.5 percent in May 2023 has raised concerns among industry experts. The move was part of a strategy to curb inflation and mop up liquidity, but it has led to higher interest rates on loans, potentially impacting housing development negatively.

Toye Eniola, the Executive Secretary of the Association of Housing Corporation of Nigeria, said “Higher interest rates on loans would hamper housing development.”

He pointed out that development loans require patient funds, and obtaining loans at above 20 percent could deter lucrative projects and lead to a surge in abandoned constructions.

The International Monetary Fund (IMF) echoed these concerns, warning that tightening financial conditions, including interest rate hikes, might impact commercial property prices and reduce investments in the sector. Such stringent conditions could also indirectly slow economic activity and reduce demand for commercial properties, including shops, restaurants, and industrial buildings.

Despite these challenges, the real estate and construction sectors have shown resilience and substantial growth. Between January 2019 and December 2022, borrowing by real estate firms surged by an impressive 44.4 percent from N15.16tn to N21.89tn.

Moreover, infrastructural activities in the housing and construction sector witnessed a remarkable growth rate of 59.6 per cent during the same period, surging from N18.13tn in 2019 to N28.94tn in 2022.

This exponential growth showcases the potential of these sectors to drive economic expansion and create job opportunities, further underlining the importance of supporting private investors and providing them with a conducive environment to thrive.

Aliyu Wamakko, Chairman of the Real Estate Developer Association of Nigeria, emphasized that “the private sector must be given a platform and a level playing ground for them to perform” to harness the full potential of the real estate and construction industries. He highlighted the substantial job creation potential in these sectors and called for more opportunities to be given to the private sector to support the country’s economic growth.

While challenges persist, the resilience and significant contributions of the real estate and construction sectors remain undeniable. As Nigeria navigates through the complexities of economic growth, ensuring an enabling environment for these industries is crucial for sustained prosperity and progress.

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

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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.



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



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



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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