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IMF Forecasts 3.4 Percent Growth For Nigeria, Angola In 2019

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By Mathew Dadiya, Abuja

The International Monetary Fund (IMF) Wednesday, predicted a 3.4 percent Gross Domestic Product(GDP) growth for Nigeria, Angola and other oil producing countries in sub-Saharan Africa in 2019 and 3.6 percent in 2020.

According to IMF, 0.1 percentage point lower for both years than in the April forecast, as strong growth in many non-resource-intensive countries partially offsets the lackluster performance of the region’s largest economies.

 

The Fund in its World Economic Outlook (WEO) published on Wednesday stated that higher albeit, volatile oil prices have supported the outlook for Angola, Nigeria, and other oil-exporting countries in the region.

 

But growth in South Africa is expected at a more subdued pace in 2019 than projected in the April WEO following a very weak first quarter, reflecting a larger-than-anticipated impact of strike activity and energy supply issues in mining and weak agricultural production.

Activity in the Commonwealth of Independent States is projected to grow at 1.9 percent in 2019, picking up to 2.4 percent in 2020. 

The 0.3 percentage point downward revision to 2019 growth reflects a downgrade to Russia’s outlook following a weak first quarter.

Against this backdrop, global growth is forecast at 3.2 percent in 2019, picking up to 3.5 percent in 2020, 0.1 percentage point lower than in the April WEO projections for both years.

GDP releases so far this year, together with generally softening inflation, point to weaker-than-anticipated global activity. Investment and demand for consumer durables have been subdued across advanced and emerging market economies as firms and households continue to hold back on long-range spending. 

More so, downward risks have intensified since the April 2019 WEO, the IMF said.

The risks according to the Fund, include escalating trade and technology tensions, the possibility of a protracted risk-off episode that exposes financial vulnerabilities accumulated over years of low interest rates, geopolitical tensions, and mounting disinflationary pressures that make adverse shocks more persistent.

Disruptions to trade and tech supply chains: Business confidence and financial market sentiment have been repeatedly buffeted since early 2018 by a still-unfolding sequence of US tariff actions, retaliation by trading partners, and prolonged uncertainty surrounding the United Kingdom’s withdrawal from the European Union.

Accordingly, global trade, which is intensive in machinery and consumer durables, remains sluggish. The projected growth pickup in 2020 is precarious, presuming stabilization in currently stressed emerging market and developing economies and progress toward resolving trade policy differences.

Risks to the forecast are mainly to the downside. They include further trade and technology tensions that dent sentiment and slow investment; a protracted increase in risk aversion that exposes the financial vulnerabilities continuing to accumulate after years of low interest rates; and mounting disinflationary pressures that increase debt service difficulties, constrain monetary policy space to counter downturns, and make adverse shocks more persistent than normal.

Multilateral and national policy actions are vital to place global growth on a stronger footing. The pressing needs include reducing trade and technology tensions and expeditiously resolving uncertainty around trade agreements (including between the United Kingdom and the European Union and the free trade area encompassing Canada, Mexico, and the United States). Specifically, countries should not use tariffs to target bilateral trade balances or as a substitute for dialogue to pressure others for reforms. 

Economy

Domestic Securities Market a Major Source of Funding for FG – DMO

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The Debt Management Office (DMO), says the Nigerian domestic securities market remains a major source of funding for the Federal Government.

The Director-General of the DMO, Patience Oniha, said this on Monday in Lagos at an interactive session with primary dealers in the Federal Government securities market.

According to Oniha, during COVID-19, when the international markets were closed, we were able to raise the full amount needed to fund the budget.

“Last year, we raised seven trillion Naira as new domestic borrowing. It speaks to the size of the domestic market, its resilience, and its sophistication, unlike we have in many African markets,’’ she said.

Oniha said that the 2024 budget had a deficit of six trillion Naira to be financed through new domestic borrowing.

She said that the National Assembly also approved N7.3 trillion Ways and Means for securitisation.

“Out of the new domestic borrowing of six trillion Naira, we have raised N4.5 trillion. For the Ways and Means, out of seven trillion approved for securitisation, we have raised N4.905 trillion.

“The financial sector has come a long way, and this is another strategic meeting to chart a way forward,’’ Oniha said.

Mrs Nadia Zakari, the President, Financial Market Dealers Association (FMDA), said that the Nigerian business environment was evolving and unique, necessitating such interactive sessions.

According to Zakari, such sessions are critical for both market operators and the Federal Government for them to be able to make decisions as they plan for the rest of the year.

“We stand as financial intermediaries, and we are in a very important position of interacting with other market operators, the end investors and the DMO,’’ she said. (NAN)

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Business News

CBN Unveils Strategy to Boost Remittances, Grants AIP To 14 New IMTOs

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By Tony Obiechina, Abuja 

The Central Bank of Nigeria (CBN) has activated plans to double foreign-currency remittance flows through formal channels by granting 14 new International Money Transfer Operators (IMTOs) Approval-in-Principle (AIP).

This was disclosed in Abuja on Wednesday, by the Bank’s Acting Director of Corporate Communications, Mrs.

Hakama Sidi Ali, who stated that the initiative will help increase the sustained supply of foreign exchange in the official market by promoting greater competition and innovation amongst IMTOs to lower the cost of remittance transactions and boost financial inclusion.
 

She said, “This will spur liquidity in Nigeria’s Autonomous Foreign Exchange Market (NAFEX), augmenting price discovery to enable a market-driven fair value for the naira.

“It will be recalled that the CBN Governor, Mr. Olayemi Cardoso, had recently declared: “We’ve set ourselves a target to double remittance flows into Nigeria within a year, a goal I firmly believe is within reach. 

“We are wasting no time driving progress to remove any bottlenecks hindering flows through formal channels permanently. We have a determined pathway and a sequenced approach to tackling all challenges ahead, working hand in hand with key stakeholders in the remittance industry,” she stated.

Continuing, Sidi Ali, said that the CBN viewed increasing formal remittance flows—one of the major sources of foreign exchange, accounting for over 6% of GDP—as a means of reducing the historical volatility in Nigeria’s exchange rate caused by external factors, such as fluctuations in foreign investment and oil export proceeds.

The increase in the number of IMTOs is one of the primary actions initiated by the CBN’s remittance task force, overseen by Governor Cardoso as a collaborative unit pulling together specialists to work closely with the private sector and market operators to facilitate the ease of doing business in the remittance ecosystem in Nigeria. 

The task force was established as a direct result of an executive learning session with IMTOs during the World Bank/IMF Spring Meetings held in Washington DC, United States of America, in April 2024. The task force will meet regularly to implement strategy and monitor the impact of its measures on remittance inflows.

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Economy

FG Vows To Ensure Continuous Flow of Tax Revenue – Madein

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By Tony Obiechina, Abuja 

The Federal government is committed a tax culture that will ensure the continuous flow of revenues into government coffers, the Accountant General of the Federation, Dr Oluwatoyin Madein has said.

Madein stated this at the 26th Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN) in Abuja, with the theme: “Sustainable Tax Culture and Economic Roadmap for Nation Building”.

Madein said, “Like the CITN, the Office of the Accountant-General of the Federation is committed to a sustainable tax culture that will ensure the continuous flow of revenues even at an improved level.

“Tax revenue as at today is the highest source of revenue accruing to the federation.

Therefore at the Federation Account Allocation Committee meetings we eagerly await the numbers coming from the FIRS because the performance keeps on increasing and brings succour to all tiers of government.”

She charged tax practitioners to work harder in getting more revenue from taxes, stressing that tax revenue is currently the highest income source for the federation.

The government noted that based on the current high revenue from taxes, members of the Federation Accounts Allocation Committee were always looking forward to the figures from the Federal Inland Revenue Service every month, in order to have funds to share to the three tiers of government.

“Tax revenue as at today is the highest source of revenue accruing to the federation. Therefore at the Federation Account Allocation Committee meetings we eagerly await the numbers coming from the FIRS because the performance keeps on increasing and brings succour to all tiers of government”, she added. 

FIRS exceeded its 2023 revenue target by N816bn, as its total actual revenue collection for last year stood at N12.37tn, outperforming the N11.56tn target.

This is contained in a presentation by Amina Ado, Coordinating Director of Special Tax Operations Group at the FIRS.

The accountant-general tasked tax practitioners to step up efforts in collecting taxes, so as to shore up more revenue for the government to provide infrastructure and other amenities.

Madein said, “Let us remain steadfast in our commitment to building a better future for all. Together we can harness the transformative power of taxation to create a more prosperous, equitable and sustainable world.

“Like I said earlier, at FAAC we eagerly look forward to tax numbers because at the moment revenue from non-oil has been a great revenue source to the federation.

“Therefore, to tax practitioners, you are doing so well, but we need more of this to be able to deliver on all the areas that the citizens are looking forward to, because for even infrastructure development, it is only through funds that we can get it done.”

She further stated that it was her strong belief that “the conference will go a long way to deepen the collaboration between our organisations in building capacity for all the professionals, experts and tax payers for better understanding of the tax laws, rules and regulations.”

In his remarks, the President/Chairman of Council, CITN, Samuel Agbeluyi, pointed out that the withdrawal of subsidies on fuel and electricity had reduced the purchasing power of the masses.

He noted that raising electricity tariff for a selected band after fuel subsidy was withdrawn “is going to reduce the purchasing power of the masses. So we urge govt to consider these actions on the masses.

He, however, stated that the institute was happy to know that President Bola Tinubu had asked the Central Bank of Nigeria to slow down on the recent cybersecurity levy that was approved by the apex bank.

“We will continue to advise the govt on its policies, considering how these polices affect the citizens,” Agbeluyi stated.

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