Author: The Nation

Contrary to expectations, the gradual but steady rise in economic activities across the sectors in the first quarter of 2021 has proved bookmakers wrong that the economy will experience slow growth rate, reports Ibrahim Apekhade Yusuf

Worried about the parlous state of the economy as a result of the technical recession imposed by the COVID-19 pandemic, many had predicted gloom and doom for Nigeria for much of the year. Leading these naysayers of course was the World Bank, which said among other things, Nigeria’s per capita income could fall to its lowest level in 40 years this year.

The Country Director for Nigeria, Mr. Shubham Chaudhuri, said at the NESG conference that the decline in crude oil prices had impacted government finances, the balance of payments and remittances from Nigerians living abroad.

Per capita income is a measure of the amount of money earned per person in a nation or geographic region. It is calculated by dividing the country’s national income by its population.

Chaudhuri, who spoke during a panel session, noted that the country was still recovering from the last oil price shock of 2014-2016 before the COVID-19 crisis hit the economy. “The fact of the matter is that recovery was there but it was slow; it was only gathering pace,” he said.

World Bank data showed that Nigeria’s per capita income, which stood at $2,229.9 in 2019, was around $847.40 in 1980.

Can the economy recover?

That is the question of the hour as analysts who have been watching the trend in the nation’s ecosystem are upbeat that the worst may be over after all.

Speaking with a cross-section of financial and economic pundits, they expressed satisfaction that so far the policies initiative of the federal government is capable of returning the country on a steady growth trajectory.

Minister Zainab Ahmed’s optimism played out…

While delivering the keynote address on the economy and government’s policies towards the recovery, Minister of Finance, Budget & National Planning, Mrs. Zainab Shamsuna Ahmed, emphasised the administration is committed to enabling economic recovery and stimulating inclusive growth through policies and interventions designed to foster economic resilience and business sustainability. Thus, the Finance Act 2020 is aimed at supporting vulnerable households and businesses while improving fiscal discipline and procurement efficiency, enhancing economic competitiveness, encouraging domestic investors and enhancing macroeconomic stability amid the challenges posed by the COVID19 pandemic.

Enter the dollar incentives policy

Described as a masterstrokes policy, the Godwin Emefiele-led Central Bank of Nigeria (CBN) announced the introduction of an incentive of N5 for every $1 of remittances on 6 March, to increase incoming flows of foreign currency, and in the process support exchange-rate stability.

The ‘Naira-4-Dollar’ promo, which takes effect from March 8, 2021 and ends on May 8, 2021, offers recipients of Diaspora remittances N5 for every $1 received as remittance inflow through licensed International Money Transfer Operators (IMTOs).

According to analysts, this initiative is expected to increase Diaspora remittances flow into the country, boosting forex supply. This will also stem the depletion in the gross external reserves level (currently at $34.88bn as at March 4).

Nigeria was the 7th largest recipient of remittances in 2018 behind India, China, Mexico, Philippines, France and Egypt. However, the World Bank projected a $2bn drop in Diaspora remittances into Nigeria to $21.7bn in 2020 from $23.8bn in 2019, due to the impact of the COVID-19 pandemic and the attendant economic crisis.

With the increase in forex supply, the demand pressures to ease with a possible naira appreciation especially at the parallel market. Year-to-date, the naira has lost 2.55% at the parallel market (currently trading at N482/$). More importantly, experts believe that the new policy is likely to reduce the premium between the parallel market and the IEFX rates (currently at N71). It will also reduce the cost burden of remitting funds to Nigeria by Nigerians in the Diaspora.

PWC positive outlook

According to PWC, the bulk of Nigeria’s remittances flow came from the US, UK, Cameroon, Italy, Ghana, Spain, Germany, Benin Republic, Ireland and Canada in 2017. The good news is that all these countries are expected to recover from the COVID-induced recession in 2021 with an average growth rate of 4.3%.

The scheme amounts of an incentive of about 1% in naira to send dollars home. In itself, that’s “unlikely to contribute to currency stability”, says Anaïs Auvray, West Africa consultant at the Africa Matters advisory firm in London. “It enhances the probability that more naira will need to be printed, increasing the risk of further devaluation against the dollar.”

Finance Bill 2020

Taiwo Oyedele, Fiscal Policy Partner and West Africa Tax Leader PwC Nigeria, who shared insights on how the Finance Act 2020, and other significant changes that have been made to existing laws, will shape Nigeria’s tax environment in 2021 noted that there were no easy choices or a silver bullet given the limited fiscal space for incentives and to deliver on counter-cyclical measures. He commended the policy direction of the government not to introduce new taxes or increase the rate of existing taxes. While commending the government for the reduction in minimum tax rate, he advocated for a permanent removal of the tax which often tax companies that are vulnerable especially when they are loss making.

Light at the end of the tunnel

While addressing a public forum recently, Dr. Muda Yusuf, Director General of the Lagos Chamber of Commerce and Industry (LCCI), noted that Nigeria was able to exit recession in Q4 against all prediction, shows that things may be gradually looking up for the country and it was the duty of accountants to ensure they continue to advice on best strategy and good governance whether in the public or organised private sectors.

To maintain the growth trajectory in 2021, Yusuf said key policy decisions like the easing of the forex with the Diaspora remittances, reduction of the interest rate among other measures, should be encouraged.

In the view of the Director General, Odu’a Chambers of Commerce, Industry, Mines and Agriculture, David Awotipe expectations are high that the Organised Private Sector (OPS) known to be ever ready in pushing economic policies and commercial activities, hold the view and very strongly too that the federal government will make the difference as already seen major commanding heights of the economy.

Senior Economist/Head, Research & Strategy, Greenwich Merchant Bank, Mr. Ayodeji Ebo, predicted that the GDP will return to a growth path by Q1.

Ebo said: “It would be a major miracle to escape a negative growth rate in Q4 and we are already in November with no major policy that would take us out to that positive region within one month.

“The trade policy, FX liquidity is still a major challenge for most people to import, in the manufacturing space there is really no major policy that is helping bring down the cost of doing business. I feel that it sounds optimistic, but we expect Nigeria to move to positive growth rate by Q1.”

Afrigrants Foundation and Money Trust Micro Finance Bank recently launched REVIVE a micro-lending scheme to support market women in Nigeria.

According to the Chief Executive of Afrigrants, Ms Telma Ekiyor and Chief Business Officer of Money Trust Micro Finance Bank, Mrs. Sarah Osunsina, the goal of Revive is to support this important segment of the economy as they recover from the adverse effects of the COVID-19 pandemic.

The scheme hopes to support the long term financial inclusion and economic empowerment of every market woman, especially those regarded as the main stay of the small and medium businesses in Nigeria.

The two executives also disclosed that the project extends beyond loan and recovery of same. “We are not only out to give loans but to teach the women on the use of the money. This is why the project includes financial literacy training, needs assessment and profiling and assured access to consistent funding for all qualifying beneficiaries. The targeted women will have access to counseling, financial coaching and rudimentary business training as well as financial support to revive and grow their businesses, “they pointed out.

The Iyaloja of Jakande Estate Market Isolo, Lagos where the project was launched expressed her happiness and those of her members on the Revive project hoping that it will go a long way to bring financial sanity to the market and other markets in Nigeria.”Individual efforts at taking loans are cumbersome, erratic and most often too demanding considering that the economy is just recovering from the adverse effect of COVID-19. We look forward to working with Afrigrant and Money Trust for effective business recovery and stability.”

The Revive loan scheme which is backed up by African Development Bank is designed to spread across the nation before the end of the year.

VBank, Nigeria’s foremost fully digital bank unveiled new and better features of its app at an online press briefing recently to kick off the financial year, as well as promote ease of use for its customers. The new app, Version 3.0, boasts of exciting features including Cardless Withdrawals, Multiple Funds transfers, Recurring Transactions, Proximity Payments and Advance Budgeting.

The new VBank app will enable users securely access their accounts to automate recurring bills, manage multiple cards from different banks, send and receive funds using a unique QR code, track spending, generate virtual cards for online payments, buy airtime and data, fix deposits and make free transfers, all within a sleek, responsive and easy-to-use interface.

Speaking at the press briefing, Senior Product Manager VBank, Ebere Ahaotu, “Virtual banking is all about supporting the needs of every user. We are committed to ensuring that all our customers find banking enjoyable and remain satisfied with the banking process thereby encouraging them to do more. That’s why it takes less than 2 minutes to set up an active bank account.”

According to Osifo Anosike, Head of Engineering at VFD Tech, ‘it was important for us to ensure that the app becomes even more convenient to use and that informed the design and features that we introduced or enhanced in this version. Building Version 3.0 was an opportunity to relearn what it takes to satisfy our users. We had a long list of requirements we wanted to work on but after collecting customer feedback over a couple of months, we were able to prioritize in such a way that the app delivers to the users what they truly need.”

 

Africa’s financial ecosystem is on the verge of being redefined with the launch of the first social financial platform, MyTudo at the weekend.

The platform, which is the brainchild of Xerde Limited founded by Khadijat Abdulkadir, hopes to provide users an alternative way to achieve social financial goals by creating and then sharing them with contacts to achieve them faster with the contribution of each individual’s extended network.

Khadijat Abdulkadir who recently returned from the diaspora to build a Financial Technology company positioned to provide cutting edge technology solution to help solve individual and corporate issues.

A seasoned IT specialist with over 10years experience in the Technology space across Europe and the United States, Khadijat  has worked with world leading organizations in the industry such as Microsoft and Accenture USA and Apside France and even Africa prudential Plc Nigeria, to name a few.

Over the years, she has worked in the capacity of Chief Technology Officer, Solutions Architect, Agile Process Manager and Head of Digital innovation and Engineering, providing expertise to Fortune 500 companies globally. Khadijat Holds a double Masters in Business engineering and Management science.

She is a social entrepreneur who founded Digital African Woman having deep passion for promoting and empowering women in IT. She is passionate about driving digital transformation and providing quality and accessible solutions to Africa.

She sits on the board of various technology entities. “The Female-Led Fintech 2.0 wants to provide a social approach for peer-to-peer finance between people. Collaborating to realize life’s achievements has never been so easy! In conversations with the CEO, during the Tudo launch, she passionately noted the inconvenience of gathering money from amongst friends just for basic things like baby showers, weddings, reunions and even church projects.”

 

By Jill Okeke

As part of its commitment to a successful implementation of the African Continental Free Trade (AfCFTA) Agreement, the federal government said, efforts are ongoing to establish a trade remedies authority to enforce Rules of origin and tighten borders against fraudulent invoicing.

The Minister of Industry, Trade and Investment, Otunba Adeniyi Adebayo, made the disclosure in Lagos State Government House while paying a call on Governor Babajide Sanwo-Olu as part of the nationwide sensitisation visit to Lagos by the National Action Committee on the AfCFTA.

Adebayo said the National Action Committee on the AfCFTA, which he chairs, is collaborating with the National Trade Facilitation Committee domiciled in the Federal Ministry of Industry, Trade and Investment to facilitate the execution of the regional trade facilitation roadmap.

The Minister highlighted the AfCFTA implementation plans to include domestication of the AfCFTA Agreement, border enforcement and Rules of origin enforcement, trade facilitation and ease of doing business, production and service capacity growth, power and trade logistics infrastructure, market access, skills and human capacity development, and quality infrastructure.

Responding, Governor Sanwo-Olu, announced the State Government’s willingness to domesticate the policies of the AfCFTA to accelerate the actualisation of the recently launched Lagos 30 years development plan.

According to Sanwo-Olu, Lagos state will explore all the opportunities inherent in the AfCFTA Agreement to grow its revenue and GDP base and create employment for youth.

Speaking at a press conference with the journalists shortly after the meeting with the governor, the Secretary of the National Action Committee, Francis Anatogu said: “Our strategy is to work with the states based on their areas of comparative advantages and Lagos State has been identified to have trade strength in ICT, telecommunication, transportation and financial services.”

Speaking, the Executive Secretary, African Shipowners Association, Funmi Folorunso, stressed the need for the Federal Government to focus energy on making Nigeria the transportation hub for Africa, adding that countries like Ghana have cut their trade niche under the AfCFTA.

Other key speakers at the press conference include Director of Trade, Federal Ministry of Industry, Trade and Investment, Aliyu Abubakar, Special Adviser to Lagos State Governor on SDG and Investment, Mrs.Solape Hammond and Director-General of NACCIMA, Ambassador Ayoola Olukanni.

 

By Ernest Nwokolo, Abeokuta

Ogun-Guangdong Free Trade Zone (FTZ), an outcome of the commercial partnership between China’s Guangdong province and Ogun state, southwestern Nigeria has boosted the economy of the state and Nigeria in the last 14 years with over $300m foreign investments in the industrial zone.

Chairman of the new management board of the FTZ, Prince Gboyega Nasir Isiaka, who disclosed this at the weekend, said challenges of multiple taxations, security and road infrastructure would be addressed to enhance the FTZ’s capacity to increase the state’s investment drive and realise its industrial potential for rapid socioeconomic development.

Isiaka spoke after a tour of the zone and some industries operating inside it, stressing that of the 80 companies licensed to operate within the facility, 44 are fully operational, 17 are at different levels of construction- with all engaging over 6000 people from the local environment, while 18 others were experiencing unspecified challenges.

He was accompanied by other members of the management team, including Hajia Gbemi Tafawa Balewa.

Isiaka who was part of the team that conceived the idea of FTZ during the administration of the then Governor Gbenga Daniel, disclosed that the new management board would make changes in the structure of the zone to reflect the law of the land and accommodate the interest of the host community.

According to him, a Memorandum of Understanding would be drafted soon to be signed by critical stakeholders, including the local community to ensure harmonious relationship required for smooth business operations while community social responsibility will henceforth be taken seriously.