The Nation Newspaper

Tag: PwC

  • PwC: 2018 budget implementation hinges on revenue accretion

    The proposed 2018 N8.6 trillion Budget of Consolidation announced by the Federal Government is to be funded with projected revenues of N6.6 trillion, with oil and non-oil accounting for 37.0 per cent and 63.0 per cent, respectively.

    The budget proposes an aggressive increase in non-oil revenues to N4.2 trillion. However, while the reduced reliance on oil revenues is plausible, the trend and reasons for revenue under-performance in previous years suggest that this target might be difficult to achieve.

    PwC Nigeria made this known in its latest “Nigeria Economic Alert” tilled ‘2018 budget: Implementation Hinges on Revenue Accretion’ released on Wednesday.

    The audit and advisory firm said Nigeria’s low tax to Gross Domestic Product (GDP) ratio at around six per cent was a consequence of a poor and inefficient tax collection system.

    “While the government has implemented specific measures to address this by expanding the tax base and increasing tax compliance using various incentives, the impact is yet to materialise,” PwC said, in its analysis of the proposed spending.

    The report by PwC Nigeria Partner & Chief Economist Dr. Andrew S Nevin and Economist Adedayo Akinbiyi said as a result, “We estimate that the fiscal deficit could overshoot projections by as much as 67 .7 per cent to N3.4 trillion.

    The Federal Government announced a 2018 budget proposal, which put spending at a record high of N8.6 trillion. The 2018 budget assumes an oil price benchmark of $45/bbl, oil production of 2.3 million barrels per day, and an exchange rate of N305/USD.

    According to the budget speech, the aim was to consolidate on the improvement in economic growth in 2017 by sustaining the reflationary policies of the past two budgets.

    The budget is to be funded with revenues projected at N6.6 trillion (+30.1% y/y), with oil and non-oil accounting for 37.0 per cent and 63.0 per cent, respectively.

    Although, the budget estimates the 2018 deficit at N2.0 trillion, PwC said given its outlook of revenue under-performance, it expects a higher-than-expected deficit, which could bring the federal Government’s debt stock to N20.9 trillion in 2018 (2017E: N17 .6 trillion).

    “We believe government would rely more on the domestic debt market to finance this deficit, given the availability of a stable domestic investor base, which includes the Pension Funds.

    “Moreover, external financing could be tight in 2018 due to the uptrend in interest rates in advanced economies, particularly in the United States (US) and United Kingdom (UK). Following this, we estimate that debt to GDP could rise marginally to 15.1 per cent (201 7E: 1 4.6%)

    “This is closer to Nigeria’s country-specific threshold of 1 9.4 per cent, but still far below the International Monetary Fund (IMF’s) recommended threshold of 56 per cent,” PwC said.

    While noting that the low debt-to-GDP ratio was reassuring, the firm said debt service to revenue ratio, which is often cited as a better measure of debt sustainability is projected at 30.1 per cent in 2018 (threshold: 28per cent).

    “Based on our estimates, this could rise to 45.9 per cent in the event the budget deficit reaches 2.4 per cent of GDP,” the firm projected.

    It also said inflationary risks subdue scope for monetary easing. PwC said given a reduction in core inflation to 12.1 per cent y/y in September 2017, and its expectation of a continued moderation in inflation in the near term, it believes there is sufficient head-room for a rate cut in Q1 2018.

    “However, this reflationary budget, which provides for a 12.0 per cent increase in personnel costs, raises inflation expectations. Likewise, history suggests that the commencement of the election cycle ahead of the 2019 general elections could portend significant inflationary risks, thus reducing the scope for monetary easing,” the report concluded.

     

  • The Nation’s correspondent wins PwC’s award

    The Nation’s correspondent wins PwC’s award

    The Nation’s Senior Correspondent Collins Nweze has won a top prize in the second edition of the PricewaterhouseCoopers (PwC) Nigeria Media Excellence Awards.

    Nweze, at the weekend in Lagos, won in the Tax Reporting Category for his story: “Taxation: Endless games…endless controversies”, a special report on the government’s new push to get the citizenry to pay their taxes and resistance  from the people over claims that the government misuses tax revenues meant for societal growth.

    The awards celebrate and reward excellence in business reporting in Nigeria.

    PwC, a network of firms in 157 countries and one of the world’s top 10 most powerful brands in the Brand Finance Index 2017, rewarded this year’s category winners with N500,000 each.

    Finalists got N50,000 consolation prize each.

    Nkiruka Nnorom of Vanguard won in the Capita Market Category with her story: “Furore over conversion of dollar debts into equity”.

    Victor Ekwealor of Techpoint.ng won in the Business and Economy Category with his story: “Can technology help dried fish nourish the Nigerian economy?”

    The SME Reporting Category was won by Isaac Anyaogu of BusinessDay for his report: “Pennies for a piece of the sun”.

    Head of Tax and Corporate Advisory Services at PwC Nigeria Taiwo Oyedele said 123 entries were submitted by journalists in four categories, namely: Capital Market Reporting, Tax Reporting, SME Reporting and Business & Economy Reporting. After review, the reports were pruned down to 83 “very good submissions”.

    Of the 83 reviewed entries, 15 were for Capital Market Reporting; 12 for SME Reporting; 45 for Business and Economy Reporting and 11 for Tax Reporting. The entries for Business and Economy Reporting were further pruned down to 12 quality reports.

    Oyedele said the winning entries were selected by a panel of four judges, who scored the reports based on originality, relevance, grammar/language skills and quality of research/insight as well as objectivity.

    Country Senior Partner at PwC Nigeria Uyi Akpata said PwC had a clear objective to partner with the media to improve the state of the economy and transparency in government.

    He said the award should be a motivating factor for journalists working in Nigeria to develop the country.

    Akpata said the number of entries received this year had tripled when compared with the number of entries received at the maiden edition. The quality of reports submitted, he said, also improved.

    “Our support for the media through the media excellence award is in line with our purpose, which is to build trust in society and solve important problems. It is a demonstration of our strong belief that for the Nigerian people to enjoy good governance, the media must perform its role optimally and professionally and this is reflected in the quality of reporting, in the capacity of individual journalists to carry out research and investigations, in the independence of editorial judgments and in their ability to use technology as an enabler,” Akpata said.

  • PwC launches guidelines for SDG reporting

    PwC launches guidelines for SDG reporting

    PwC Nigeria on Monday launched a new report – Business Reporting on the Sustainable Development Goals (SDGs): An Analysis of the Goals and Target.

    On September 21, at the 2017 UN Global Compact Leaders’ Summit, during the UN General Assembly in New York, the Global Reporting Initiative (GRI) and the United Nations Global Compact (UNGC), with the support of PwC, launched the new report.

    The report, which is the first step towards a harmonised set of indicators and methodologies for businesses to report on, provides an inventory of possible disclosures per SDG at target level.

    PwC Nigeria said up until this launch, there was no single methodology for businesses to measure and report their business progress and impacts on the SDGs, and thousands of companies have been using the Global Reporting Initiative (GRI) reporting standards in their sustainability reporting.

    The firms said this was despite the fact that these standards predate the ambitious SDGs agreed by over 150 world leaders at the UN Summit in 2015.

    “As more and more businesses work toward their SDG objectives, reporting on their impacts and contributions to SDGs is set to become less complex. They can now use only one common standard for reporting on their performance on the SDGs, in line with the ten (10) Principles of the UN Global Compact,” PwC said.

    It added that with the increasing interests of investors in directing funds towards businesses that are leading the way on responsible business practices, the need for businesses to be more transparent and effective in their corporate reporting has become very paramount.

    The firm in a statement made available to The Nation, explained that as technical partners and knowledge drivers to the Private Sector Advisory Group on SDGs as well as its dedication to the achievement of the UN SDGs in Nigeria, “We  are excited to bring the latest development on (SDGs) reporting to you.”

    “This gives PwC Nigeria the opportunity to finalise the localised version being prepared by the sustainability team for the private sector in Nigeria as we prepare to launch both in the next couple of months,” it added.

    The firm said undoubtedly, this ground-breaking initiative will help businesses in Nigeria to better engage and communicate their contributions to the SDGs with governments and inform their sustainability reporting at a national level.

    “We at PwC are at the centre of this and are best positioned to support your business move from sustainability to include SDG reporting,” the statement said.

  • Mining is long-term investment, PwC chief tells investors

    PriceWaterhouseCoopers (PwC) has advised investors in the mining sector not to expect returns on investments quickly as the life cycle in any mining is always long.

    Its Director, Mr. Cyril Azobu, said looking at the entire value chain of the industry, the development period is long, adding that exploration, which is the most risky part of the value chain, takes quite a long time.

    Listing the challenges that face investors in the sector, he said it takes over five years to do exploration, after which the investor would begin to develop the area by building plants that will carry out the operations and do some level of processing.

    Azobu told The Nation in Lagos that even after processing, the investor needs to have export channels, adding that what is produced would still be subject to global commodity pricing.

    He also said there were also shocks that could affect pricing globally, so returns on investment will not be expected soon on investments in mining sector.

    He urged the government to speed up the implementation of last year’s mining roadmap as it clearly articulates the government’s aspirations and expectations from the sector.

    According to him, the roadmap  determines particular strategy needed to be deployed to achieving the mining sector objectives as it looks at across a chain, from institution building to stakeholder management, funding, and management of players in the sector and the whole range of things that are needed.

    “The roadmap articulated how we intended to grow the sector, which is actually different from the one in 2012, which was very ambitious. We wanted to grow the sector by 10 per cent by 2020 and we are still hovering around five per cent. Perhaps, we are putting the cart before the horse. You can’t just have such growth objective without having a clear strategy on how you intend to get it done.

    “It is one thing to have a roadmap and another to implement that roadmap, that’s the reason I’m saying that there could be bit more work to be done, and there could be more action to be taken to make the implementation faster. To get this done, it is not just government’s action, the private sector must be carried along. In fact, it should be private sector driven,” he said.

    Azobu said there is a mining implementation and strategy brief in the roadmap. He also said a team has been constituted and its responsibility is to have a  clear implementation plan on who takes what responsibility.

  • PwC: Nigeria’s real GDP ’ll recover fully by 2019

    PwC: Nigeria’s real GDP ’ll recover fully by 2019

    Nigeria’s real Gross Domestic Product (GDP)will attain full recovery in two years, with growth moving closer to its long-term trend of 6.7 per cent, PricewaterhouseCoopers (PwC Nigeria Limited) has projected.

    The firm in its routine economic alert titled: “Nigeria’s Q2’17 GDP: From Recession to Recovery” released at the weekend, said latest GDP figures released by the National Bureau of Statistics (NBS) indicate that Nigeria’s economy has exited recession.

    PwC in the report by its  Partner & Chief Economist Dr. Andrew S Nevin and Economist Adedayo Akinbiyi said in Q2 2017, Nigeria’s economy returned to positive growth as real GDP grew 0.5 per cent year-on-year(y/y) after successive declines for five quarters.

    The report noted that this recovery was supported by a strong rebound in the oil sector (8.8 per cent of GDP), which expanded by 1.6 per cent y/y (–15.6 per cent y/y in Q1 2017).

    The firm also said the non-oil sector on the other hand was boosted by a strengthening of the broader manufacturing sector, reflecting impact of improved foreign exchange liquidity.

    “We note that the Q1 2017 real GDP growth was revised down to -0.9 per cent y/y (previous: -0.5 per cent y/y); a revision necessitated by lower than estimated oil production figures for March 2017, which dragged oil output lower,” PwC said.

    The report also provided an analysed key insights from the latest GDP figures as it affects selected sectors and also made projections for the future.

    It said, for instance, that agriculture decelerated on grain scarcity, expanding at a slower pace for the fifth consecutive quarter, recording a growth of 3.0 per cent y/y in Q2 2017 (Q1’1 7 : 3.4 per cent and Q2 2016: 4.5 per cent).

    According to PwC, “This trend has been driven mainly by weaker output in the livestock and fishing sub-sectors, resulting from the scarcity of grains.

    “In addition, we suspect the second quarter resurgence in insecurity in the North East might have negatively impacted crop production activities.

    “This explains the trend in food inflation, which spiked to a seven-year high of 20.3 per cent y/y in July 2017.”

    Similarly, manufacturing expanded at a slower pacefor the second consecutive quarter. Real growth increased by 0.6 per cent y/y in Q2 2017, relative to -3.3 per cent y/y a year earlier.

    Relative to Q1 2017, however, growth slowed from 1.3 per cent y/y, a reflection of the performance of sector heavy weights, food, beverage and tobacco and cement, which accounted for 54.0 per cent of manufacturing GDP.

    “Whilst the broader sector appears to have benefitted from the improved availability of forex, we suspect the price increases implemented across most consumer companies in the course of the year might have impacted volumes.

    “Nonetheless, quarterly data (Q2 2017:1.0 per cent q/q vs Q1 2017: -5.0 per cent q/q) suggests the consumer recovery remains underway, albeit fragile,” the firm said.

    PwC said its 2017 GDP forecast remained unchanged at 0.7 per cent y/y. “To attain this growth forecast, we estimate that real GDP will expand by 1.8 per cent y/y in Q3 2017 and 1.1 per cent y/y in Q4 2017,” it stated.

    The firm said “This is plausible, given our expectation of a strong harvest season and sustained FX liquidity, which should support a broad-based economic recovery.”

    It, however, added that risks to its forecast include a decline in oil price and production, and policy disruptions, which could hamper investment flows to the economy.

     

  • Solid minerals sector can contribute 3% to GDP, says PwC

    I am quite optimistic that if the right steps are taken and the momentum is sustained, the solid minerals sector in Nigeria can contribute up to three per cent of the Gross Domestic Product (GDP) by 2025 as predicted in the current roadmap, up from a contribution of just about 0.5 per cent, the Advisory Partner and Mining Leader at PricewaterhouseCoopers (PwC) Nigeria, Cyril Azobu has said.

    Azobu said: “My vision for the sector is one that is profitable to all stakeholders and in which the Nigerian people are able to enjoy the maximum benefits possible ffrom these natural endowments.”

    He spoke against the backdrop of the upcoming Nigeria Mining Week  taking place in Abuja from October16-19, in which there is partnership between PwC, the Miners Association of Nigeria (MAN) and event organisers Spintelligent.

    The strategic mining investment platform will link investors, project developers, financiers, technology providers and government to share best practices and demonstrate the latest strategies to evolve the sector successfully.

    According to Azobu, several important developments in the mining sector in the last year bode well for the industry’s future.

    “Perhaps the most significant is the approval in August 2016 of a new roadmap for the sector by the government. This very important policy document has really set the tone for the development of the sector. Following from this, we have seen the constitution of the Mining Implementation and Strategy team whose duty is to co-ordinate the implementation of the roadmap and programme manage its execution.”

    “Furthermore, the Federal Government also approved N30billion Mining Intervention Fund. A significant proportion of the fund has gone into data gathering and a part of it is to go into capacity building for artisanal miners. We are also seeing the Federal Government making efforts to take advantage of some strategic minerals such as Steel and Bitumen but all of these are still in the early stages.”

  • Artificial intelligence ‘ll drive GDP to $15.7tr, says PwC

    The implementation of artificial intelligence (AI) initiatives in businesses in Nigeria and other parts of the world will contribute around $15.7 trillion to global gross domestic product (GDP)  by 2030, a PricewaterhouseCoopers (PwC) report titled: AI Impact Index, has stated.

    The report found that global GDP will be 14 per cent higher by 2030, as a result of productivity driven by AI initiatives used by organisations around the world – more than the current output of China and India combined.

    The report draws on input from sector experts and partners at Fraunhofer, a global leader in emerging technology research and development (R&D).

    This growth rate, according to PwC, makes AI the biggest commercial opportunity in today’s fast changing economy. All regions of the global economy will experience benefits from AI, including North America, China, Europe and developed Asia. However, developing countries will experience more modest increases (less than six per cent of GDP) due to the much lower rates of adoption of AI technologies expected (including Latin America, and Africa).

    Intelligent Automation Lead for PwC South Africa, Alistair Hofert, said: “The report highlights how AI can enhance and augment what enterprises can do, the value potential of which is as large, if not larger, than automation. It shows just how a big game changer AI is likely to be and the impact it will have on our lives as organisations, individuals and society as a whole. AI is set to be the key source of transformation, disruption and competitive advantage in today’s fast-changing economy. No industry or business is immune from the impact of AI.”

    Overall, the report further reveals the biggest absolute sector gains will be in retail, financial services, and healthcare as AI increases productivity, product value and consumption.

    Providing a local perspective, solutions architect at software solutions company Entelect, Rishal Hurbans, said in South Africa certain industries such as the banking and retail industries are experimenting with AI, with mixed success.

    “South African organisations have yet to fully embrace AI, they’re using chatbots to quickly and efficiently respond to customers but chatbots are flawed because they don’t understand sarcasm or depth of sentiment and can only respond to limited questions. We’re still in the experimental stages and organisations should resist the temptation to implement AI for the sake of following a buzzword or craze because this could result in wasted time and investment. It’s important to have a use case and execution strategy within the business before investing time and resources,” he said.

    One reason narrow AI is becoming more prominent within local businesses, Hurbans said is that computing power and data have made it feasible to experiment with AI – with the goal of making money, saving money and uncovering business opportunity.

     

  • PwC urges govt to check illegal mining

    Activities of illegal miners can be reduced if the government wakes up to its responsibility of monitoring.

    In an interview, Director, PricewaterCoopers (PwC), Cyril Azobu, said until serious attention was given to this by the government, the problem may not be solved.

    He added that it is an issue that needed to be addressed urgently.

    Azobu, however, agreed there had been talks on discouraging illegal mining, regretting that there hasn’t been any significant success in this regard. He said the government at some point tried to sensitise the monitoring agencies to address the issue.

    He said: “I think to be able to fully address illegal mining you have to have all agencies switched on; customs needs to be switched on because people are smuggling, and somebody has to be there to check at the point of exit.”

    He urged the government to check those who are buying the illegally mined mineral resources, adding that if there are no buyers, there will be no incentive to keep on with the illicit trade.

     

  • Technical Director urges more competitions, sponsorships for Chess

    Technical Director urges more competitions, sponsorships for Chess

    The Technical Director, Lagos State Chess Association (LSCA), Bayo Babalola, on Sunday appealed for more sponsorships of tournaments at the grassroots for the discovery of more talents in chess.

    Babalola made the call while reviewing the just-concluded PricewaterhouseCoopers (PwC) Chess4change Championships at the Teslim Balogun Stadium, Surulere, Lagos, in an interview with the News Agency of Nigeria (NAN).

    NAN reports that PwC, a multinational professional service network, headquartered in U.K. is the second largest professional services firm in the world and one of the big four auditors along with Deloitte, EY and KPMG.

    The tournament for the secondary school started last Wednesday ended on Friday and had 22 schools with about 320 students as participant.

    The first edition of the competition in 2014 had six schools represented but the number was doubled in 2015 to 12, and now increased to 22.

    Babalola said that dearth of competitions at the grassroots might not augur well for the future of the game in the country.

    “We need more grassroots sponsorships for competitions for chess in the country. PwC cannot do it alone. All hands must be on deck to promote the sport.

    “As we know grassroots competition is the future of any sport. So we need more of these championships to help the game grow more in Nigeria.

    “PwC has been in the forefront of grassroots chess sponsorship for the past three years because they believe that there are so many benefits children can derive from it.

    “Aside that, chess can help the children professionally, it can also help them academically too. It improves the mental alertness of the kids. It’s such an undeniable fact,’’ he told NAN.

    Babalola urged government at all levels to consider adding chess to the school curriculum, noting that it was done in some overseas countries.

    “We have talked about the usefulness of chess to the development of any child mentally and I know government is well aware of this, yet they are doing nothing to develop it.

    “As a matter of importance, government need to add chess to school curriculum. Many countries overseas have tried it and it worked for them. We should copy that.

    “Adding chess to the school curriculum will help to stimulate the mental alertness of the students, it will also increase their analytical thinking and quantitative and qualitative reasoning.

    “Chess has a lot of benefits children can derive, so we need to give it the due consideration it deserves,’’ he said.

  • Nigeria’ll be leader in Media Entertainment, market, says PwC Report

    Amid shifting consumer preferences, rapidadvances in technology and ongoing disruption to business models, the new strategic imperative for E&M companies is to turn customers into fans – by innovating to create the most compelling, engaging, and intuitive user experiences.

    The most rapid growth rates in E&M revenues over the coming five years will be in less-developed markets and economies, where entertainment and media spending on a per capita basis is generally quite low. This is according to PwC’s Global entertainment and media outlook 2017 -2021. The report provides PwC’s most recent and up-to-date forecast of consumer and advertising spend data as well as related commentary for 17 entertainment and media segments, across 54 countries including Nigeria. It is a powerful online tool that provides deep knowledge and actionable insights about the trends that are shaping the E&M industry.

    According to the latest report, Nigeria with a 12.1% CAGR (albeit strongly influenced by surging spending on mobile Internet access), will be the world’s fastest-growing E&M market over the coming five years while the slowest-growing will be Japan, growing at a 1.7% CAGR.

    While consumers in mature markets such as North America and Europe, and wealthier Asia-Pacific markets, spend a lot — more than US$500 per capita annually — on entertainment and media, growth rates are relatively slow in these areas. In contrast, less developed economies feature much lower per capita spending and faster growth albeit from a very low base – less than US$50 a year in many cases.

    The report noted that dramatic shifts are underway in howentertainment and media companies compete and generate value, as the quality of theexperience they deliver to consumers becomes their primary basis for strategic differentiation and revenue growth. To thrive in a marketplace that is increasingly competitive, crowded, and slower-growth, therefore, companies are developing strategies and building capabilities to engage and monetize their most loyal and passionate users — their fans. This means they must combine compelling content with breadth and depth of distribution, and then connect it all to a great user experience, where content is discoverable easily on an array of screens and at an attractive price.

    Femi Osinubi, Technology, Information, Communications and Entertainment (TICE) Industry Leader at PwC Nigeria, comments:

    “A raft of changes in technology, user behaviour and business models have opened up a gap between how consumers want to experience and pay for E&M offerings, and how companies produce and distribute them. The right user experience bridges this gap. To deliver it, companies must pursue two related strategies. First, build businesses and brands anchored by active, high-value communities of fans, united by shared passions, values, and interests. And second, capitalize on emerging technologies to delight users in new ways and provide superior user experiences.”