UK Investors Likely to Look Elsewhere as Economy Shrinks by 20.4%
A growing number of UK and global investors are likely to move their assets overseas as Britain enters its worst recession in history, affirms the boss of one of the world’s largest independent financial advisory and fintech organisations.
The observation from Nigel Green, founder and chief executive of deVere Group, which has $12bn under advisement, comes as it is revealed that the UK economy suffered its biggest drop on record between April and June as coronavirus lockdown measures pushed the country officially into recession.
The economy contracted by 20.4% compared with the first three months of the year.
Mr Green notes: “As was expected, Britain is now officially in recession. It’s the deepest recession in UK history and the deepest of any G7 country.
“Whilst the economy grew 8.7% in June, which beat economic estimates, and confirms a recovery is now underway, the real test will be after the summer when there are no more national lockdown-easing measures to lift the economic spirits, more local restrictions are likely to be imposed and as significant programmes such as the furlough scheme which has protected jobs come to a halt.
“All of this creates ever more uncertainty in the UK economy.”
He continues: “UK and global investors will be becoming increasingly nervous of this worrying situation and can be expected to take precautionary measures to insulate themselves against a potential fall in the value of UK-based financial assets.
“A growing number inevitably and quite sensibly are likely to be looking to grow and safeguard their wealth by moving assets overseas through various established international financial solutions.
“The pace of this trend, I believe, will increase over the next few months as the issues intensify.”
The deVere CEO goes on to add that the confirmation of a recession “may be a good excuse to start that much-needed rebalancing in favour of global stocks, bonds, currencies and perhaps property.”
The weak economy also further boosts the chances of tax hikes and relief cuts in the UK November Budget.
“It is highly likely taxes will rise and reliefs be cut. Possible targets for hikes could include income tax for higher earners, capital gains tax, inheritance tax, and VAT.
“In addition, new wealth taxes may be brought in, which was something the Prime Minister was considering before the pandemic hit,” notes Mr Green.
These potential changes in the Budget can be expected to prompt those overseas with financial ties to the country, to look into the international options available to them.
He concludes: “Now could be a good time to revise your financial planning strategies to ensure you’re best-positioned to be able to grow and protect your wealth.”
Bloomberg Says Nigeria, Congo Are Hotspots for Hunger
Bloomberg Experts Have Said Nigeria and Congo Are Emerging as Hotspots for Hunger
The Democratic Republic of Congo is emerging as the country with the world’s largest food crisis in terms of absolute numbers.
About 21.8 million people in the nation are acutely food insecure, new figures from the United Nations’ Food & Agriculture Organization show. The staggering figure underscores how the fallout from the pandemic is driving up hunger in countries that were already gripped by crisis.
In addition to the Congo, the worst deteriorations in acute hunger in recent months have taken place in Burkina Faso — which has witnessed a nearly 300% uptick in the overall number of people experiencing acute hunger since the start of 2020 — as well as Nigeria, Somalia and the Sudan, the FAO said.
In Nigeria, working the land can be a dangerous occupation because of longstanding religious and ethnic tensions and, more recently, organized crime. That’s as farmers already were having to contend with flooding or drought. It’s all now hitting agriculture just when the country needs it most. The pandemic has triggered a surge in food prices in a nation that imports more than a tenth of its food supply.
With 200 million people, Nigeria is the most populous country in the world’s most food-insecure continent. Producing food at home matters more as importers struggle to access dollars to pay for shipments from overseas after an oil price crash sapped foreign-currency reserves. “We are heading toward famine and starvation,” Niger state Governor Abubakar Sani Bello warned in April.
The challenges come as the world is forecast for a sharp rise in food insecurity because of Covid-19’s impact. As many as 132 million more people globally may fall into the grip of hunger this year, including in many places that used to have relative stability.
NNPC Posts N20.365 Billion Trading Surplus in July
NNPC Declares N20.365 Billion Trading Surplus for July
The Nigerian National Petroleum Corporation (NNPC) posted an increase in trading surplus to N20.36 billion in the month of July, up from the N2.12 billion surplus achieved in June 2020.
Dr. Kennie Obateru, the Group General Manager, Group Public Affairs Division, disclosed this while explaining the details of the figures captured in the July 2020 NNPC Monthly Financial and Operations Report (MFOR).
He said the 858 percent overall upswell in performance was largely due to the 178 percent rise in the surplus posted by the Nigerian Petroleum Development Company (NPDC), NNPC’s flagship upstream entity.
Obateru further stated that the impressive performance was as a result of the continuous improvement in global crude oil demand for the third consecutive month.
This, he said boosted the corporation’s performance through the 739 percent increase in profit posted by the Integrated Data Services Limited (IDSL) and a 51 percent growth recorded by Duke Oil Incorporated, both NNPC companies.
Nigerians to Pay N417.09bn in 4 Months for Electricity Consumption
Electricity Consumers to Pay N419.09bn in 4 Months
Following the recent increase in electricity tariffs, the 11 distribution companies in the country are allowed to collect a total of N417.09bn from their customers from September to December.
The Discos had early this month announced what they called ‘new service reflective tariff’, which took effect from September 1, with the tariffs being charged residential consumers receiving a minimum of 12 hours of power supply rising by over 70 per cent.
The amounts recoverable by the Discos through the allowed end-user tariffs range from 61 per cent to 90 per cent of the total revenue required, according to the Nigerian Electricity Regulatory Commission.
The tariff shortfall, which is the difference between the Discos’ revenue requirement and the amounts they are allowed to recover from their customers by the regulator, will be funded by the Federal Government.
The media had reported that the Federal Government would fund a tariff shortfall of N104.5bn that will be recorded by the Discos in the four-month period, according to the Nigerian Electricity Regulatory Commission.
Ikeja Disco is allowed to recover N66.52bn (90 per cent of its total revenue requirement) from September to December, a NERC document showed.
Eko Disco is allowed to recover N48.46bn (86 per cent); Kano Disco, N34.13bn (84 per cent); Abuja Disco, N49.16bn (83 per cent); and Enugu Disco, N38.81bn (82 per cent).
The amounts recoverable by Kaduna Disco is N35.22bn (82 per cent: Ibadan Disco, N54.61bn (78 per cent); Benin Disco, N34.94bn (74 per cent); and Yola Disco, N13.34bn (71 per cent).
Port Harcourt and Jos Discos are allowed to recover N23.63bn (68 per cent) and N18.27bn (61 per cent) respectively.
NERC said the Power Sector Recovery Plan provided for a gradual transition to cost-reflective tariffs with safeguards for the less privileged in the society, adding that full cost-reflective tariffs would be charged by July 2021.
“The Federal Government, under the PSRP Financing Plan, has committed to fund the revenue gap arising from the difference between cost-reflective tariffs determined by the commission and the actual end-user tariffs during the transition to cost-reflective tariffs,” it added.
According to the commission, all the Discos are obligated to settle their market invoices in full as adjusted and netted off by applicable tariff shortfall approved by the commission.
It said the Discos would be liable to relevant penalties/sanctions for failure to meet the minimum remittance requirement in any payment cycle in accordance with the terms of its respective contracts with the Nigerian Bulk Electricity Trading and the Market Operator, an arm of the Transmission Company of Nigeria.
The Discos only collect an estimated 24 per cent of the tariff revenue, while the balance goes to the TCN, generation companies and other industry stakeholders, according to the Association of Nigerian Electricity Distributors.
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