Finance Minister Says Another Recession Imminent
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed has said Nigeria may slide into another economic recession in the third quarter.
The mister, who spoke at a five-day interactive session on the 2021-2023 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) held on Thursday in Abuja, said unless the economy achieved a strong growth performance in the third quarter, Nigeria will slide into another recession.
“Nigeria is exposed to spikes in risk aversion in the global capital market, which will put further pressure on the foreign exchange market as foreign portfolio investors exit the Nigerian market,” the minister said.
“Nigeria’s Q2 GDP growth is in all likelihood negative and unless we achieve a very strong Q3 2020 economic performance, the Nigerian economy is likely to lapse into a second recession in four years with significant adverse consequences.
“In response to the developments affecting the supply of foreign exchange to the economy, the Central Bank of Nigeria (CBN) adjusted the official exchange rate to N360, and more recently to N379.”
Ahmed further stated that the disruption in the global supply chain and logistics would also impact customs duty collections for the year.
She also explained that measures put in place to contain the spread of COVID-19 have impacted domestic economic activities, weighed on taxation and other government revenues.
“Consequently, the projections for customs duty, stamp duty, value-added tax, and company income tax revenues were recently reviewed downwards in the revised 2020 budget,” she said.
“Customs revenue has generally performed close to target over the last few years, exceeding target in 2019.
“There has been some improvement in company income tax and VAT remittances; we expect significant improvements in VAT collections with the new VAT rate of 7.5 per cent.”
The minister noted that actual revenue grew at an average rate of 61.4 percent in the last five years, adding that some reforms yielded positive results between 2018 and 2019.
“I believe we can do more to improve revenues, especially remittances from government-owned enterprises, possibly up to N1 trillion annually,” she added.
“Support of the national assembly, by ensuring coordinated oversight, will contribute to achieving targets.”
AfCFTA Must Be Backed by Legal Framework to Yield Desired Results -Lawan
For AfCFTA to Achieve Expected Results, it must be Backed With Legal Framework
Senate President, Ahmad Lawan, has said for the African Continental Free Trade Agreement (AfCFTA) to yield desired results, it must be backed by necessary legal frameworks, right policies and robust implementation.
The Senate President made the statement when the delegation from the African Continental Free Trade Area Secretariat led by Wamkele Keabetswe Mene visited him in Abuja.
Ahmad Lawan, who was represented by Prof Ajayi Boroffice, said Nigeria’s signed the AfCFTA agreement to benefit Africans and reduce the huge unemployment and underemployment facing the continent from South to West and East to North.
This high unemployment rate and underemployment rate, according to him, had led to the migration of some of Africa’s top brains and experts. He said the economies of African nations had been characterised by weak economic productivity, low efficiency and limited resources.
He described AfCFTA as “a step in the right direction for the growth of African economies, through limited restrictions, leading to the stimulation of trade, commerce, and industry”.
“In signing the AfCFTA, and depositing the instrument with the African Union Commission, our countries made a statement on the determination of our collective economic fate.
He, therefore, said the fate is now in our hands to deepen growth and development on the continent through requisite legal frameworks, right policies, and robust implementation.
“The initial momentum from the signing of the agreement needs to be continued, for a greater continental impact, to benefit Africans, both on the continent and outside it,” he said.
Inflation, Forex Scarcity Push Food Prices Up in August
Food Prices Rise in August Amid Surge in Inflation
Persistent increase in prices amid forex scarcity bolstered food prices in the month of August, according to the recent report from the National Bureau of Statistics (NBS).
In the report released on Tuesday, the bureau said the average price of 1kg of imported high-quality rice rose by 40.69 percent year-on-year in August.
On a monthly basis, this increased by 2.30 percent to N501.71 in August 2020, up from N490.44 in July 2020.
Nigeria’s consumer prices that measures prices of goods and services rose to 13.22 percent in August as forex scarcity amid economic uncertainties weighed on Africa’s largest economy.
The statistic office said the average price of 1kg of yam rose by 34.74 percent year-on-year and decreased on a monthly basis by -0.15 percent from N256.44 in July to N256.06 in August 2020.
Similarly, the price of 1kg of tomato expanded by 29.48 percent year-on-year while it decreased on a monthly basis by 4.65 percent from N301.01 posted in July 2020 to N289.86 in August 2020.
NBS stated that selected food price watch “reflected that the average price of one dozen of agric eggs medium size increased year-on-year by 3.70 per cent and month-on month by 1.02 per cent to N478.97 in August 2020 from N474.12 in July 2020 while the average price of piece of agric eggs medium size (price of one) increased year-on-year by 5.44 per cent and month-on month by 0.76 per cent to N42.78 in August 2020 from N42.45 in July 2020.”
The report also noted that the recent flood caused by the sudden release of water from Kainji Hydro Power Dam in Niger State wreaked havoc on the N60 billion sugar investment project in the state.
According to Latif Busari, the Executive Secretary, National Sugar Development Council (NSDC), who spoke in Abuja, said the destruction was a huge setback for the flour mills industry and the entire nation as it would affect the 4,500 metric tons of sugarcane daily processing projected by the company and the one million tones of sugar production agreed with major sugar producers recently.
Busari, however, said the flood, which affected N60 billion investment, was not natural, but man-made from Kainji Dam.
FG Reduces Expenditure on JV Oil Assets by 62%
NNPC Lowers Spending on JV Oil Assets as Demand Drops
In a bid to reduce expenditure following a plunge in revenue generation, the federal government has cut down on spending on oil and gas assets currently being developed through a joint venture with private companies.
Federal Government lowered its expenses by 61.83 percent in the month of July, according to the latest report from the Nigerian National Petroleum Corporation.
The report showed NNPC, which has an obligation to make cash call payment for the development of the assets, only made $94.84 million or N34.14 billion cash call in July, down from $248.48 million or N89.45 billion in June.
The joint venture is managed by both the NNPC and private firms in proportion to their equity holdings and receives produced crude oil the same ratio.
This was largely due to the plunge in NNPC’s export receipt from $378.42 million in June to $122.44 million during the month under review.
“Of the export receipts, $67.45m was remitted to the Federation Account while $54.98m was remitted to fund the JV cost recovery for the month of July 2020 to guarantee current and future production,” it added.
In addition to the dollar allocation of $54.98 million to the JV cash call account, the naira portion of N14.35bn ($39.86m) was transferred to the account from domestic crude oil receipts in July, according to the NNPC.
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