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[BOOM] IMF Says Nigeria Should Increase VAT

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CBN Gov Godiwn Emefiele

The IMF Managing Director, Christine Lagarde has asked that the National Assembly to consider increasing the Value Added Tax from 5% according to reports from Bloomberg. Lagarde made this statement in a speech to the National Assembly on Wednesday according to Bloomberg. Here is how Bloomberg reported it;

“Hard decisions will need to be taken on revenue, expenditure, debt and investment going forward,” she said in a speech to lawmakers in the capital, Abuja, on Wednesday. The government must “act with resolve by stepping up revenue mobilization,” she said, and possibly raise the VAT rate from 5 percent, which is among the lowest in the world.

The slide in oil prices means the government of Africa’s largest crude producer needs a “fundamental change” in the way it operates and can’t rely on its oil wealth to deliver services, she said. President Muhammadu Buhari’s administration will need to focus on managing debt, curbing recurrent costs and eliminating fuel subsidies, she said.

Increasing VAT may have its negative effects on the economy as price of goods and services will likely increase in the same vein increasing inflation and further deepening the economic crisis. The IMF’s advice that we increase VAT will on the flip side increase government revenues and may add another N300 billion in tax revenues in 2016. The last government mulled increasing tax revenues, particularly VAT but did not have the courage to push it through as the election drew closer. It however imposed luxury taxes and other smaller taxes that analysts believed will not add significantly to government revenues. Rather than increase any component of out taxes, analysts believe the Buhari led Government is more inclined towards  widening the tax net ensuring that more people pay tax. Non-oil taxes currently makes up less than 3% of GDP and Nigeria is said to rank 181 of 189 countries in a World Bank and PricewaterhouseCoopers 2016 survey on paying taxes.

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Nigeria is relying heavily on non-oil revenues to fund the 2016 budget of N6 trillion with about N1.45 trillion coming from taxes, duties and levies. Nigeria collected about N2.2 trillion in non-oil taxes in 2014 . As at the third quarter of 2015 it had collected about N1.3 trillion compared to N1.8 trillion same period 2014. VAT revenue for the first 3 months of 2015 stood at N314.7 billion.  

 

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Business News

Oando loses Chief Legal Officer

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Oando loses Chief Legal Officer

Chief Legal Officer of Oando Plc, Ngozi J Okonkwo is dead.

Adewale Tinubu, Group Chief Executive Officer of Oando Plc announced this via a tweet.

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Until her death, she was the Chief Legal Officer of Oando Plc, having joined the company as Head, Legal Services of the company in 2009.

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According to a tweet from one of her nephews, she battled cancer for a while, recovered before having a relapse during the recent COVID-19 crisis.

READ ALSO: NSE, SEC train capital market operators on legal and regulatory requirements for the derivatives market

Before joining Oando, she worked as Junior Counsel  with F.O Akinrele & Co., and also with KPMG Professional Services (previously known as Arthur Andersen) as Manager in the Tax, Regulatory and People Services unit and Head of indirect tax services.

READ ALSO: Common legal and general mistakes made by new businesses (Part 1)

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She obtained LLB (Hons) from University of Nigeria, Nsukka in 1997 and BL from the Nigerian Law School, Lagos in 1999. She was a member of the Nigerian Bar Association, honorary fellow of the Association of Fellows and Legal scholars of the centre for International Legal Studies, Austria, Associate Member of the Chartered Institute of Arbitrators, United Kingdom and Associate Member of the Chartered Institute of Taxation, Nigeria.

Patricia

 

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Economy & Politics

NNPC diversifies into housing, power; plans to beat crude production cost to $10 per barrel

The Nigerian National Petroleum Corporation (NNPC) has announced that it is building up business portfolios in the housing, power, and medical sectors.  

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To cushion against the volatility in the global crude market and strengthen profitability, the Nigerian National Petroleum Corporation (NNPC) has announced that it is building up business portfolios in the housing, power, and medical sectors.

This is one of several measures the corporation is taking to sustain revenue generation for Nigeria, and cope with the boom and bust cycles which are gradually becoming a feature of the global crude oil market.

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NAN reports that this was contained in a statement from the Corporation Chief Operating Officer, Ventures and Business Development, Mr. Roland Ewubare, and signed by NNPC Spokesman, Kennie Obateru.

According to Ewubare, the NNPC will establish Independent Power Plants using the Ajaokuta-Kaduna-Kano (AKK) pipeline network, and consolidate its presence in the power sector.

(READ MORE: COVID-19: Nigerians react as CBN partners NNPC to feed, accommodate Nigerian returnees)

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The statement reads in part; “NNPC is creating an energy company that would have portfolios in renewable energy; we have initiatives on solar that is ongoing.

“We have got biofuels agreements with some state governments that would soon be activated. We do have a lot of non-core businesses that are aggregated under the Ventures and Business Development Autonomous Business Unit of the NNPC. 

“This would be expanded through effective collaboration and partnership with the private sectors,” 

NNPC diversifies into housing, power; plans to beat crude production cost to $10 per barrel

Lower costs, more profits

As part of moves to improve profitability, the NNPC also announced plans to drive crude oil production cost down to 10 dollar per barrel by Q4 2021,

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This according to the statement would be done by systematically and gradually beating down logistics costs.

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The Corporation’s revenue took a major hit in 2020 due to the slump in global oil prices, and this in turn affected the Nigerian budget given that oil proceeds account for a significant fraction of her income.

“When you have a low commodity price regime, as the case now, the only way we are able to squeeze out some reasonable cash and financial gain to the nation is by curtailing and constraining our costs in line with the GMD’s aspiration to push for a 10 dollar per barrel cost of production,” Ebuware said.

(READ MORE: NNPC pipeline vandalism up by 50% in January, may suspend crude oil production)

There is also an ongoing collaboration with selected partners to commercialise flared gas in order to preserve the flora and fauna of the country.

This would be done by converting it to Compressed Natural Gas (CNG) and Liquefied Natural Gas, for sale to consumers.

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The NNPC is partnering with private developers to reduce the housing deficit in the country and also partnering with medical centres to provide innovative healthcare for Nigeria.

 

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Business News

Microsoft Teams’ rival, Slack shares drop on withdrawal of full-year billings guidance

Slack reported steady revenue growth 50% in Q1 2020, compared with 49% recorded in Q1 2019 on an annualized basis this brought in more customers

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 Slack shares dropped as much as 17% yesterday after the company’s reported first-quarter earnings.

Investors and stock traders were not happy with Slack’s annual revenue forecast of $855 million to $870 million, up just slightly from Slack’s projection in March stock analysts, on the average, estimated $856.5 million, according to data obtained from Bloomberg.

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“Slack’s withdrawal of full-year billings guidance looks conservative to us and likely suggests a pull-forward of revenue amid faster new-customer additions due to remote work,” Mandeep Singh, a Bloomberg Intelligence analyst, wrote in a note yesterday.

Slack grew revenue 50% in Q1 2020, compared with 49% recorded in Q1 2019 on an annualized basis.

However, Slack reported steady revenue growth during  Q1 2020 brought in more customers, as organizations sought to keep communications going with their newly remote workforces during coronavirus pandemic. It had earnings per share of 2 cents loss per share, adjusted and adjusted revenue of $201.7 million

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(READ MORE: How to Profit from Directors’ Share Dealing Notifications)

Slack, in a statement, yesterday reported that it added a record 12,000 paid customers Q1 2020 as against two prior quarters when it added about 5,000 new customers. Slack’s top competitor, Microsoft’s Teams, has also experienced growth in recent months.

“What you saw with Zoom, what you saw with Teams is a great indication that this is not apples-to-apples and that the products are not truly competitive with one another,” Butterfield the Chief Executive Officer of Slack told Investment analysts on a conference call yesterday.

READ ALSO: Jumia is optimistic of COVID-19 boost, despite poor Q1 2020 earnings report

Paid users spent over 120 minutes per day in Slack at the end of the quarter, up from below 90 minutes one quarter earlier. 

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“I can’t care about the stock price on the level of individual days,” Butterfield said when asked about the reaction to earnings. “I just wouldn’t be able to do my job. I care about where the share price is five years from now and 10 years from now. This is just a very volatile time.” 

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