The Nation Newspaper

Tag: Economy

  • Arik Air among global best in economy class

    Arik Air among global best in economy class

    Arik Air has ranked as one of the top 10 airlines in the world to offer most comfortable economy class seat.

    According to a report by www.airlinequality.com, Arik Air is among 10 airlines in the world that offers the most comfortable seats in Economy Class on its wide-body aircraft for medium and long haul flights.

    The report noted that whereas the majority of airlines around the world offer 31 to 32 inches with some offering even as low as 29 to 30 inches, Arik Air is one of the “elite few that still provide a comfortable 34 ins seat pitch where travelers will enjoy greatest comfort”

    Other Airlines rated in this category include: Qatar Airways, Kingfisher Airlines, Thai Airways, Asiana Airlines, Malaysia Airlines, Saudi Arabian Airlines, Air China, Garuda Indonesia, and Korean Air.

  • Nigeria ready for digital economy, says Smile Communication chief

    Nigeria’s 4G or long term evolution (LTE) broadband provider, Smile Communications has described the Nigeria’s digital economy as huge, and will impact virtually all segments of the economy.

    Its Managing Director, Mr. Michiel Buitelaar, who spoke in Lagos, said in the face of dwindling oil revenue and increasing pressure on the economy as shown in budget deficits, infrastructural deficit, high unemployment rate, harsh business environment, corruption, among others, leveraging on digital economy should be regarded as a sine qua non for sustaining the economy by the incoming administration of Muhammed Buhari.

    Mr. Buitelaar spoke during a panel discussion at the sixth Annual Pan-African 1:1 Investor Conference organised by Renaissance Capital and identified infrastructural advancement as overriding factor for the immediate expansion of sectors such as agriculture, transportation, banking & finance, healthcare/medicine and education.

    He said Smile Communications aligns itself with the key statistics expected for the Nigerian Digital Economy by 2018 as released by the Federal Ministry of Communication Technology, especially for the emergence of an industry that is less fragmented.

    According to the National Broadband Plan (NBP), the government expects to attain 30 per cent broadband penetration by 2018 from the present current about six per cent.

    “There are various advantages the digital economic providers have over the traditional. However, to make this happen faster, there are catalysts required for it to even drive other sectors outside the ICT. Digital economy will be the driver of the agricultural, transport, health-care/medicine, education, banking & finance, among others. In our company, for instance, we are talking to companies in those sectors and one recently said ‘the software is eating the world’.

    “We do believe the new digital ICT will influence other sectors. For example, in agriculture; like I have seen in other countries, the efficiency and productivity is very likely to explode once the digital economy has entered into the arena. It is also our expectation that the impact will become more pronounced within the next 10 years. For emphasis, sectors such as agricultural, transport, health-care/medicine, education, commerce, in fact, the whole move of digitisation will have impact on the emerging economy and Nigeria’s economy is well positioned to make their journey better than many others,” he said.

    Buitelaar lauded the outgoing government for approving the NBP, expressing confidence in the Buhari government’s compelling posture for its implementation of the plans.

    He said: “I think the Federal Government did well, especially, by releasing a NBP. The next government should continue with the plan in an even ‘forceful’ manner. Similarly, spectrum allocations should be looked at too; it is more of technical, but very important in the nation’s quest for more ubiquitous broadband. There are sub-sectors that the broadband availability will immediately impact their operations such as the delivery of ecommerce, e-payment, education and other clusters of business. These are crucial reasons the digital economy should be allowed to blossom.

    “Nigeria is a wonderful country. The incoming government should do something regarding the image of the country and its perception in the eyes of the rest of the world. That alone is capable of convincing foreign investors about the country’s business climate. Secondly, on infrastructure, I do believe that the whole country will benefit in smart investments in infrastructure. There are issues in transport, power and payment systems; if these issues can be addressed, with a couple of other commitments, I believe that in the next few years, the country will be reaping large chunk of benefits from them,” he added.

  • The economy

    • Time not only to stop the bleeding but also to rebuild

    A staggering debt portfolio estimated at $60 billion; a threatening insolvency – the consequence of unbridled profligacy and graft; an industrial scale theft under which 20 percent oil production continues to be lost or unaccounted for on daily basis. An oil price gone bust with nigh prospects of imminent recovery; an environment of rising expectations of infrastructure renewal, particularly of power and transportation, job creation, poverty reduction and security of lives and property.

    Add these to a virtually collapsed power sector; a downstream petroleum industry sector in crisis; suffocating industrial environment defined by infrastructure deficit, high interest rates and other inclement policies of government; unprecedented youth unemployment reckoned in staggering 50 percent; the horizon would seem entirely, bleak.

    As if the challenges are not daunting enough, nearly two-thirds of the states of the federation currently owe their workers backlog of salaries.

    These – and many more – are the realities that the incoming Muhammadu Buhari administration would have to grapple with as it settles into office in the coming days. The situation, if anything, calls for creative strategies as against a resort to quick-fixes. At the risk of sounding draconian, the current situation calls for drastic measures.

    A good way to start is to cause an immediate stoppage to the bleeding of the national treasury. Nigerians are, by now, familiar with the sources of the haemorrhage: the service-wide heist under which several billions are stolen annually; and the industrial scale theft of the nation’s crude known to be responsible for some 20 percent daily loss in the nation’s output of crude, and the mindless importation of refined petroleum products, sadly for a major oil-producing country.

    The administration must find the way and means to extirpate them. This of course means instituting effective controls and equipping the military to effectively police the nation’s exclusive economic zones. Much as we agree that the time has come for the Federal Government to end the current regime of fuel importation, we believe that the starting point is to review the current regime of subsidy as a first step to getting private domestic refineries on board.

    Giving the rather lean finances it is inheriting, it may well be necessary for the administration to consider putting new projects on hold – except those considered absolutely essential– until such a time it is able to put a handle on the financial situation. An inventory of all on-going projects against their scheduled delivery dates,  especially those for which huge monies have been paid would seem in the circumstance, an imperative. And if it becomes necessary to make examples of those who have over time treated public funds as their share of the proverbial national cake, so be it.

    In the short term, we expect the new administration to move swiftly to get the nation back to work. Part of the tragedy of a nation that claims to generate an abysmal 6,000Mw of electricity is that barely 1,000Mw is actually available for distribution.  The issue of power stabilisation must be considered an urgent priority if the administration is truly desirous of turning the tide in quick time. This is to the extent that our hordes of small and medium scale industries continue to close shop not so much for lack of market but from problems associated with access to electricity. And these are businesses that could have helped in no small way to absorb a good number of our idle youths.

    Moreover, for far too long, Nigerians have been treated to varied excuses ranging from lack of gas to inability to evacuate and distribute generated power. Even then, we are constantly reminded that the nation not only has gas in abundance but that the Federal Government has undertaken quantum investments to address these challenges and even more so in the last decade. We expect the new administration to do all that is necessary to ensure that power is stabilised. That way, our industries can roar back to life, boost their outputs and create jobs for the teeming youth.

    Talking about youth unemployment, we think it is about time the Federal Government brought back the idea of road gangs to undertake routine maintenance of our highways. While the youths so engaged would be delivering value by helping to mitigate the deplorable state of the roads, they also get to imbibe the value of honest labour. The same with agriculture – there is a lot the administration can do to make it attractive to the youths.

    In the same vein, the government must find the will to address the issue of access and costs of funds. Here, the point bears repeating that the existing interest rate regime hovering within the 20-22 percent band is not only a disincentive to business; it is the root of the lack of competitiveness of the local enterprise. The Buhari administration must see it as a challenge that needs to be dealt with.

  • Chinese economy is moving forward steadily with increased quality and efficiency, says consular

    Chinese economy is moving forward steadily with increased quality and efficiency, says consular

    Two events recently happened in the Chinese economic development.  One is that the National Statistic Bureau of China released macroeconomic data on April 15.  The other is that the Political Bureau of Central Committee of the Communist Party of China had a conference analysing current economic situation and performance.  The former showed the present Chinese economic status, while the latter pointed out the direction and prospect of Chinese economy.

    According to the Chinese Consular, LIU Kan, the preliminary estimation showed that the gross domestic product (GDP) of China in the first quarter of this year was 14,066.7 billion yuan(2301 billion U.S. dollars), a year-on-year growth of 7.0 per cent.

    “From the data released, we find several highlights: Firstly, retail increased by 10.6per cent, a growth rate higher than that of GDP, while online retail sales of goods grew by 41.3 per cent. These demonstrate the policy implemented by the Chinese government to stimulate that domestic demand has been effective to some extent.

    “Secondly, the percentage of service to GDP increased significantly to 51.6 per cent, up from 48.2 percent in 2014 and 46.9 per cent in 2013.  Simultaneously, energy consumption per unit GDP continued to fall, recording a drop of 5.6 per cent in Q1, after last year’s 4.8 per cent decline.  China’s labour productivity increased 7 per cent in the first quarter on year-on-year basis. All these changes make it clear that Chinese economy is being in the process of turning more balanced and greener.

    “Thirdly, industrial output of the high-tech sector jumped by 11.4 per cent, outpacing the overall national economic growth. In the high-tech sector, new energy automobiles and robotics saw industrial output gain more than 50 per cent during the first quarter. The higher growth rate in hi-tech indicates the remarkable results achieved from state policies and measures to encourage hi-tech growth and more dependence of Chinese economy on scientific and technological innovation. The fast expansion of the high-tech and modern service industries demonstrates the Chinese economy is advancing to the middle and high end.

    “Furthermore, thanks to efforts to cut red tape and simplify administrative procedures, newly registered companies mushroomed, with the number of newly registered companies surging 38.4 per cent  and more than 3.2 million jobs being created,” he said.

    LIU said all items in the economic data of the first quarter indicated a downward pressure of domestic economic development in China is intensifying in the backdrop of complicated international situation and slow recovery of global economy.

    According to LIU,  after analysing the economic situation in China, the conference held by the Political Bureau of Central Committee on April 30, made the judgment that the comprehensively deepening reforms carried out in China had ensured the economy to perform in a reasonable range and economic growth to meet the expected target.

    Liu said after many years of two-digit growth, China’s economy has bred some problems and risks,and the old model of economic growth has been unsustainable.

    His words: “These problems include high energy and material consumption in manufacture, excessive industrial capacity, environmental pollution, over supply of property, and etc.  These problems are also reflected in parts of the economic data, such as decreasing housing sales volume and shrinking profits for large industrial firms.

    “Despite the slowdown, I am of the opinion that Chinese economy is still one of the world’s fastest growing and enjoys sound fundamentals. Q1 economic growth was within a “reasonable range” and the slowdown was within expectation. Firstly, as the economy continues to grow in size, one should not focus on growth rate only when looking at China’s economy.

    “Chinese economy focuses more on improving quality and efficiency, and gives even greater priority to shifting the growth model and adjusting the structure of development. China is shifting gear from high speed to medium-to-high speed growth, from an extensive model that emphasised scale and speed to a more intensive one emphasising quality and efficiency, and from being driven by investment in production factors to being driven by innovation.

    “Secondly, there are still enormous potential, huge resilience and ample room for the country’s development. Unlike advanced economies with high public debt and zero interest rates, China has further room for government borrowing and monetary easing to bolster growth.  China has the firepower to avert a hard landing, and should the slowdown cause widespread unemployment or a drop in citizens’ incomes, it would not hesitate to intervene with macro-economic control measures.”

    He said the People’s Bank of China (the Chinese central bank), which has cut interest rates three times since November last year and twice lowered the amount of cash the banks must hold as reserves, will roll out more policy easing measures if necessary. For fiscal policy, China can carry out acceleration of infrastructure projects, tax rate cutting among others.

    “Thirdly,on-going industrialisation, urbanisation, agricultural modernisation and digitalisation will be the major source of growth momentum for the economy. When combined with macro-economic control measures, the economy is poised to maintain stable and healthy development.

    “Fourthly, China is encouraging entrepreneurship and innovation among the people by offering preferential policies to micro businesses and individual start-ups. This is becoming a new engine for the economy in pursuit of a moderate to high speed of economic growth as well as a medium to high level of the economy,” Liu said.

    On the other hand, he said Chinese government is spending more fiscal fund on supplying more public goods and services.  “Chinese government will deepen reform and opening up policies of reform  will be implemented this year, covering finance, taxation, investment, price, state owned enterprises, pension, enterprise incorporation, high-tech industry incentives, innovation, research and development, etc,” he said.

    The role of government in providing public goods and deepening reform, according to him, will become the second engine for Chinese economic growth.  These two new engines will generate more power to bolster economic growth.

    “From the above data and analysis, its shows that the Chinese economy has undertaken some fundamental positive change and made eye-catching achievements in the first quarter, although the pace of growth slowed down.  Chinese economy still has great potential and large room for further development, and will surely have a bright future,” he said.

  • Zinox chief urges Buhari on knowledge economy, others

    Zinox chief urges Buhari on knowledge economy, others

    The Chairman of Zinox Group, Leo-Stan Ekeh has urged the incoming government of Muhammadu Buhari to build a knowledge-driven economy, invest in infrastructure and rebuild the ailing national economy to boost development and economic prosperity of the people.

    Ekeh, who spoke in Lagos during the official unveiling of the partnership between Technology Distributions (TD), a subsidiary of Zinox Technologies and EMC, global players in the data storage field, said the nation will witness technological explosion soon. According to him, with a population of 180million people without birth control, he said the nation is now breeding kids that are “digital from birth.”

    He assured the partners that the worst is over for the country as the new leadership will do the needful to oil the engine of the  economy, adding that the strategic initiative will go a long way in enhancing the profile of technology distribution and penetration on the continent for the benefit of all.

    Managing Director, EMC, Levant and Emerging Africa Region, Mr. Nazim Fraijat, said the addition of TD to EMC’s Global Business Partner Programme is in line with the organisation’s desire to deepen the pace of technological innovation in the West African sub-region and on the continent as a whole.

    He said: “We are happy to officially welcome Technology Distributions into our Business Partner Programme. Our delight further stems from TD’s status as one of the biggest and most structured ICT distributors in Nigeria and the West African region as a whole.

    “In view of our desire to make further in-roads into sub-Saharan Africa, we are confident that this partnership with TD will undoubtedly accelerate the rate of access to the wide range of innovative solutions that EMC is known for world-wide.”

    General Manager, EMC West Africa, Mr. Nicholas Travers, who delivered the keynote presentation, traced the organisation’s global trajectory and competence in the areas of storage, cloud computing, data security, content management and Big Data. According to him, EMC which is already a renowned global leader in the storage and information technology (IT) field, also has key interest in West Africa and Nigeria in particular.

    In his view, this interest is justified by the short space of time in which EMC has expanded its operations in Nigeria, going from having a single employee in 1999 to employing about 45 workers at present, while maintaining offices in Nigeria and Accra, Ghana.

    Ekeh said the pact with EMC serves to reaffirm TD’s prime position as the major driver of technological revolution in Africa. Ekeh, who commended EMC’s growth after just six years of operations in the country, also encouraged solution providers and resellers to take advantage of the unique opportunity offered by the partnership to grow their businesses.

    He said: “TD has maintained its position as the leader of the ICT distributor space over the years despite strong competition in the market place. This is why we see this partnership with EMC as strategic as it will go a long way to expand access to technology on the continent, especially considering the status of EMC as a major player in the global IT scene.

    “I wish to encourage all of our solution providers and resellers to take advantage of the unique partnership being officially unveiled, especially in view of the sheer scale of TD’s wide reach and after-sales support infrastructure which is unmatched in the sector as well as the innovative solutions in storage and data which EMC brings to the table.

    “Despite the current state of pessimism in the economy due to falling oil prices and the fluid state of the naira, I must reassure you that there is much to be hopeful about in Nigeria’s business space. We are Africa’s biggest economy and we have the right calibre of people in the incoming administration who will build on the gains recorded by the outgoing administration.”

    Managing Director, TD Solution, Mr. Etiene Etukudoh, who spoke about TD’s strong market presence and brand portfolio, also expressed delight at the partnership,  affirming its strategic importance as the company enters its 16th year of operations.

  • Jonathan ran down economy for six years, says Oshiomhole

    •‘Current debts make previous liabilities small’

    Edo State Governor Adams Oshiomhole has accused the Goodluck Jonathan administration of running down the nation’s economy and plunging the country into huge foreign debts.

    The governor spoke yesterday in Abuja when he visited the Dr. Aruba Wabba-led leadership of the Nigeria Labour Congress (NLC).

    He said the nation’s current debt profile has broken the records of previous foreign liabilities the Olusegun Obasanjo government got a debt cancellation.

    Oshiomhole, who is also a member of the National Economic Council (NEC), said: “This economy has been run down in the last six years and this country has over-borrowed. It has so over-borrowed that our current debt profile makes our previous situation a joke.

    “When you look at the current number, vis-a-viz the number we had before the debt cancellation, this huge debt burden at a time of declining oil revenue are likely to put pressure on the exchange rate.

    “When government faces serious deficit, the temptation to resort to ways and means will be strong. All that will affect the value of wages, which will put pressure on the working people to demand for more at a time of declining national revenue.”

    The governor urged labour leaders to unite and engage the incoming Muhammadu Buhari administration to ensure that the interests of the Nigerian worker form part of its policies.

    He said: “I can see a lot of social tension, going forward. The least you require is to have leaders being divided on petty issues. This is the time you need a united voice… Even my being in government cannot give you the comfort.

    “What will give workers the comfort is the existence of a powerful, well organised, articulate and focused labour movement. Even if I was the President of Nigeria, you would need a strong movement to help to draw the President’s attention to the lot of the majority, who are actually the voters.

    “I know that Nigerian workers are united by poverty at the moment. They are united by so much uncertainty, threats to jobs and unemployment. I am sure you are not carried away by those symbolic economic policies. You need to go beyond that and encourage the incoming government to revisit Nigeria industrial policy.”

    “We can’t celebrate success in agriculture and yet post huge import bill on food. There are many things you must do at this level. I know that you can help the next government to evolve policies that are pro poor, to put in place economic policies that will lead to job led growth.

    “There is a lot to be done than sit back and query over an election that has been lost and won. All those who love the Nigerian worker must stop the fight, egg back into NLC under the leadership and drive the change that NLC need and engage the incoming government to ensure that from day one, the interest of the Nigerian worker is reflected in policies that President Buhari is going to pursue”

    He told the new leadership of the congress that “the NLC has a task of rebuilding the movement because there is no doubt that you have lost a lot of mileage and a lot of goodwill in the eyes of ordinary Nigerians. Many believe that NLC went to sleet for almost eight years.

    “I ask you to rebuild the movement, you must continue to be the vehicle for conveying discontent,not only on wage questions, but also on questions of public policy choices that have to do with the management of our economy.

    “I have made the point over and over again that what determine the quality of a worker is not just the volume of his wages. If is the overall way in which the economy is managed, the provision of infrastructure, government social policies among others.

    “If you are detained by wage issues along, and unable to find your voice on critical micro economic issues,  wages can’t deliver on prosperity. Indeed, wages can be consumed by inflation and all kinds of forces”.

    While acknowledging the discontent about the elections that brought in the new leadership, he said “I am aware that there are some persons who are not happy by the outcome of the election. But that is the way democracy works. The only way to avoid defeat in a democracy is not to participate in an election in which you have more than one candidate.

    “Once you submit to an electoral process in which you have more than one candidate, it is obvious that only person would win. The beauty of the labour movement is that it doesn’t produce winners like the Nigeria political system. I can understand why politicians can parochial in their language and strategy.

    “We have a rich tradition of organising, mobilizing and contesting issues without recourse to ethnic and religious sentiments and NLC must uphold this tradition and build on it. It is a rich tradition which we must guide and protect.

    “Once a free and fair election has taken place, the outcome is binding on all democrats who participated. We can’t have have a tradition in which losers have to be massaged and persuaded to accept defeat. That will be offensive to the essence of labour unionism and the democratic principles.

    “As far as I am concerned there is no space to sit on the wall between the truth and the truth. I will stand by the truth anyway, anytime and it doesn’t matter the number that stand on the truth.

    “Let me declare that those complaining have all the qualities of being President, even of Nigeria, but it is just that at any one point in time, only one person will preside. I ask you to develop some additional capacity to embrace everyone, including those that undermine the election you clearly won. There are challenges in life which are meant to toughen us and not meant to weaken us.

    “I appreciate so much the contribution of the ASUU President who was the chairman of the committee and all of us old and not so old, veterans were all there to witnessed this process. I think that the outcome reflect the will of the Nigerian worker.

    “There is no honour that is greater than being selected by the productive forces of our great country, those who are responsible for the wealth of our nation.to be elected by the wealth creators of the country and not bugged down by the primordial sentiments of ethnicity and religion, the sort of thing that idol politicians still parade”.

     

     

     

     

     

  • Buhari on votes, security and economy

    Last week, this column pushed the argument for a national upgrade to electronic voting, as an important legacy,for the incoming administration.
    So, I was excited when I subsequently read an interview bythe President-elect, Gen. Muhammadu Buhari,where he promoted the fundamental connection between votes, security and the economy.

    In the president-elect’s interview,published by The Nation on Friday, April 17, the General said: “If Nigerians have the confidence that their votes counts, then they will mind their business and I assure you that there will be much security in the country. But when people feel that they are abandoned, then they will resist.”

    The import of the assertion by the incoming President on accountability of votes, is that electoral brigandage is substantially at the root of the insecurity in the country, and I guess the majority of Nigerians will agree with him. Indeed, when votes fail to count as a routine, we have the entrenchment of the undesirable. Many who have the competence and capacity to serve, take the back seats, out of fear, arising from the recurrent insecurity that pervade electoral malfeasance. So, electoral violence ensures that those with requisite competence are relegated to the background, while those with the capacity for violence are promoted, as they are found useful during every election cycle.

    Pushing the argument further, where electoral brigands hold sway, best-class Nigerians do not have the opportunity to serve, as they will not get elected. As footballer pundits willsay, the second or third elevenis allowed to play, at the expense of the first 11. So,those who get foisted on the people, are officials with limited capacity; who will concentrate all their time and energyon protecting and expanding political privileges, rather than growing and expanding the human and economic capital, that aggregates to improvement, in the quality of life of the people,and the society.

    Furthermore, with a limited world-view, the charlatans thrown-up through electoral sleaze, find it difficult to appreciate the far reaching consequences of their actions. So, whether as law makers or members of the executive branch, electoral malfeasance throw-up those who would rather make laws to increase their welfare packages, even when there is not enough money in the state or national coffer. That perhaps explains the incredible appropriation of nearly all the resources of the nation for recurrent expenditure. As rightly observed by the President-elect, “There must be more money available for infrastructure, for investment in getting the factories back, employment and getting goods and services for the population”.

    Accordingly the General in that interview, said:  “I think the worst thing is the lack of accountability and the terrible budgetary system. Imagine that over 90 per cent of Nigerian budget is on recurrent. How can you sustain development in a developing country like Nigeria with only 10 per cent of your income?” Of course, it is important to remember that the present federal government, led by the Peoples Democratic Party (PDP), had offered similar lamentations, about the sheer absurdity of having nearly all the national resources eaten-up by human termites, masquerading as leaders; but failed to effect the necessary changes.

    So, the president-elect must watch out, for an unwilling or aided regression to that to era of good ideas, without the will to effect thenecessary changes. While it is urgently important to plug all the loopholes, through which our national economy haemorrhages, it also abundantly important that the national economy is expanded and grown, to accommodate the high expectations of Nigerians. Of course, the greatest hindrance to an expanded national economy is poor supply of energy, which include electricity and other forms of fuel. Resolving the Nigerian energy quagmire, will perhaps be the greatest challenge for the in-coming administration, and it is of utmost importance, that,it does all in its power, to get it right.

    General Buhari in that interview, also lamented the dearth of national economic engines, like the Nigeria Railway, Nigeria Airways, and Nigeria Shipping Line among others. He argued that “some big companies that employ a lot of Nigerians and give them training facilities” have suffered similar faith as the crude oil which “rose to about $140 and has crashed to about $50 now”. He noted that “the important thing in a country with a huge population of youths, with more than 60 per cent of them under the age of 30 who are unemployed, is job creation”. For the General, “you need these institutions to give jobs and training to Nigerians”.

    While there will be arguments whether or not, we need to recreate mega state-monopolies, as in the past; there is no doubt that we need such economic expansion, as the president-elect envisages, to gain employment opportunities, for our teeming unemployed youths.

    Part of the obvious strategy which the All Progressive Congress (APC) government, must as of urgent necessity adopt, is to grant legal empowerment to states, to exploit the minerals and other natural resources within their geographical areas. The insane status-quo, where many states endowed with natural resources operate as poor church-rats, because a law incongruous with federalism, has placed all the mineral resources in the country, in the hands of the Federal Government, must change.

    As this column has persistently argued, Nigeria can only make the expected progress, when we have the courage to federalise, income and wages. Therefore, creating economic opportunities in all geo-political zones of the country, and indeed in all states, is not a mere political favour. It is rather a safety valve, to forestall the invasion of the political and economic space of the locals.Comparatively, the regrettable xenophobic war taking place in South Africa, will not solve the economic challenges of the South Africans. Truthfully, what will save local jobs and political space, is economic regeneration across zones.

  • Taxation: The Swivel of the economy (2)

    The Nigerian Tax System

    The Nigerian tax system has undergone significant changes in recent times. The tax laws are being reviewed with the aim of repealing obsolete provisions and simplifying the main ones. Taxation in Nigeria is within the administrative purview of the three tiers of government, i.e. federal, state, and local governments as stated in the constitution, with each having its tax space delineated by the Taxes and Levies (Approved List for Collection) Act.

    In pursuing a vibrant tax fiscal policy, the Nigerian government has since 2002 embarked on series of tax reforms at the federal level. Beginning with the Federal Inland Revenue Service (FIRS) Establishment Act, 2007, the drive has been on institutional reforms and modernisation of the Nigerian tax system at the federal level. These reform efforts cut across tax policies, tax laws and tax administration.

    Tax Policies

    Tax policies are general statements of procedure, which guide the thinking and action of all concerned towards the realization of the stated tax objectives. The tax policies of Nigeria are to:

    a)            pursue a low tax regime which aims at reducing individual tax burden and thereby encouraging savings and investments;

    b)            move from the traditional coercive method of taxation to voluntary compliance;

    c)            engage in taxpayer education through public enlightenment;

    d)            deliberate movement of emphasis from income tax to consumption tax which is less prone to tax evasion;

    e)            introduce self-assessment to encourage taxpayers participation in the tax assessment process which is more realistic in approach and democratic in nature; and

    f)             reduce tax evasion and avoidance using the due process of law and the mechanism of an efficient tax administration.

     

    In an effort to consolidate and achieve the objectives above, the Federal Inland Revenue Service collaborated with the Ministry of Finance and the Joint Tax Board to launch the National Tax Policy in 2012. The National Tax Policy is a document that will revolutionize the Nigerian tax system and place it at par with global practice. It is a big step in the modernization of the Nigerian tax system and provides a firm basis for tax legislation and improve the efficiency of tax administration by laying down guidelines and regulations. It also enhances the climate for doing business in the country.

    Tax Laws

    The various legal instruments put in place to ensure the realization of the tax policy objectives of the government have also been undergoing series of reviews and amendments. The notable ones are: PITA CAP P8 LFN 2004 (as Amended in 2011), Transfer Pricing Regulations, 2012, and currently, the redrafting of all tax laws in plain English which is on-going.

     

    Tax Administration

    There has been a repositioning of tax administration system ranging from tax campaigns, automation of processes, to entrenching a vibrant tax refund mechanism. The Integrated Tax Administration System, ITAS is the biggest of the repositioning efforts. It is a revolutionary tax administration system that will ease tax payment as well as administration.

    ITAS is designed to increase revenue yield on a phenomenal scale. It is to be implemented with the Standard Integrated Government Tax Administration (SIGTAS) software solution- a solution designed to meet the needs of developing countries that wish to increase their control over state revenue. The specific objectives of ITAS is to make operations faster, increase voluntary compliance, increase revenue generated for national development and improve the efficiency and skills competence of employees in the FIRS.

    Overall taxation as a concept should be viewed as a pivot, if not the pivot of economic development and the platform upon which fiscal policies are developed and implemented. In this regard, expenditure being the other plank of fiscal policy must always be tied to revenue and, given the general consensus that expenditure should as much as possible be based on available and sustainable resources, taxation provides the best option for achieving this harmony between revenue and expenditure especially in developing countries. In this way, taxation would play a key – if not the central role in sustaining fiscal policy in any economy.

     

    It is therefore pertinent to look at the objectives of fiscal policy with a view to analyzing how taxation impacts these objectives and helps to attain them. By and large, fiscal policy in Nigeria is focused on addressing the major developmental challenges of providing revenue for sustainable expenditure and also ensuring that expenditure is productive i.e. channeled towards areas, which will in turn stimulate growth and development in the economy and provide additional avenues for raising revenue through taxation. Some of the ways in which taxation has impacted fiscal policy in Nigeria include:

     

    Taxation of resource revenue to develop other sectors of the economy: Nigeria has a significant source of resource wealth, such as oil, gas and natural and solid minerals. Although resource wealth is usually easier to realize in the short term, it is generally not viewed as a sustainable source of revenue. It can however be used as a platform for developing other sustainable sources of revenue by utilizing revenue from such areas to stimulate growth and production in other areas of the economy, which are more stable and sustainable than resource wealth. Taxation in this regard, can be used to raise higher revenue from the identified sectors, which is then ploughed back into other areas through a conscious policy which government seeks to develop in the long and short term.

     

    Use of tax revenue for sector focused development:This is closely related to the option above, but different in that, under this option, tax revenue from a particular source is utilized only in a particular area. This means for example that as fiscal policy, taxes from the oil and gas sector will only be utilized on capital or infrastructural expenditure, while taxes on personal income will be utilized only for recurrent expenditure. In this way, government is able to regulate its expenditure as it can only utilize what is available from the specified source for expenditure. A positive spin-off on this is that it would ultimately lead to improvement in each revenue source as government seeks increased revenue to fund the beneficiary sector.

     

    Use of consumption/indirect taxes to raise revenue and to encourage or discourage consumption: Consumption and indirect taxes such as Value Added Tax (VAT) and other forms of sales tax are usually viewed as a more efficient means of taxation and also as more effective tools for regulating taxpayer behavior. Fiscal policy could therefore be focused on consumption taxes i.e VAT, which have a potentially wider tax base and could be more easily collected and accounted for. Other than raising revenue, consumption taxes could also be used to manage expenditure by government and taxpayers alike, by imposing higher or lower rates on specific items depending on the applicable policy to be implemented.

     

    Use of tax incentives and special dispensations to attract and retain investments and stimulate growth in a particular sector– Over time, governments, especially in developing nations have had to grant tax incentives to investors in order to encourage such investors to make or retain investment in their economies. Incentives could be sector based or granted on individual basis, although it is preferable that incentives are always sector based and granted on some clearly defined basis rather than to individual companies or investors. Such incentives are effective tools for managing and sustaining fiscal policy, especially where the benefits are carefully monitored and measured to ensure there is an overall positive impact on the economy and on government fiscal policy.

     

    Use of tax policy and legislation to shape fiscal policy: Tax policy and legislation being integral parts of taxation and indeed the major planks on which it rests are key tools, which can be utilized to develop and sustain fiscal policy. Tax policy provides the general framework and guidelines for the tax system, while legislation makes specific rules and regulations for implementation. A combination of the two will put in place a definite framework, which is backed by force of legislation and must be observed by Government. Examples of such policy and legislative directives could include periodic review of tax rates, tax incentives and provision of rules for regular review and amendments of tax laws amongst others.

     

    From the foregoing, it becomes immediately clear that the role of taxation cannot be over-emphasized. Indeed without taxation, there cannot be a fiscal policy, seeing as it is the second of the two legs that constitute fiscal policy. One important thing to note is that, careful and diligent implementation of effective and proactive tax policy can have a measurably beneficial effect on the economy in particular and development in general.

  • Chamber welcomes turnaround in economy

    Chamber welcomes turnaround in economy

    Abuja Chamber of Commerce has hailed the peaceful conclusion of the presidential election and the declaration of Gen Mohummadu Buhari (rtd) as president elect. It said  this has had immediate turnaround in economic activities in the country.

    In a statement endorsed by its Vice President,  Media,  Jude Igwe, it said the business community is looking forward to the implementation of the economic policies promised by Gen. Buhari stating that the community is confident that with his pedigree as a strict disciplinarian, the economy will be run with discipline, leaving no room for waste or frivolities.

    He said: “We are looking forward to seeing a strong team, made of serious minded and patriotic individuals that will bring not only their wealth of experience but also their love for the country into play.

    “The private sector has been so concerned with the negative trends that have persisted for the past couple of weeks leading to the elections.

  • Buhari’s integrity an asset to economy, says Makarfi

    Buhari’s integrity an asset to economy, says Makarfi

    The former Kaduna State Governor and Chairman, Senate Committee on Finance, Alhaji Ahmed Mohammed Makarfi, has said the integrity of President-elect Muhammadu Buhari remains an asset that will boost investors’ confidence in the economy.

    Senator Makarfi, who contested a senatorial seat in the March 28 National Assembly election, but lost to Alhaji Suleiman Othman Hunkuyi, his former commissioner for Finance and the All Progressives Congress (APC) candidate, said: “Gen. Buhari has all it takes to take Nigeria to a higher level.”

    He told The Nation yesterday that given the track record of Buhari, he was confident that the economy would be revived and the masses would reap the dividends of democracy.

    Makarfi said he conceded defeat to Hunkuyi because it was the will of God, as expressed by the people.

    He congratulated the people who participated in the elections and were victorious.

    The former governor, who served between 1999 and 2007, expressed gratitude to his political associates for their support and understanding when he served as the governor and senator.

    “In particular, I wish to send my hearty congratulations to Gen. Buhari on his victory in the presidential election, believing that he will use his wealth of experience, integrity, fairness and discipline to lift Nigeria higher,” Makarfi asserted.