Ahead of the official swearing-in ceremonies for the newly-elected political office holders as well as the celebration of the new Democracy Day on June 12, President Muhammadu Buhari gave Nigerians the perfect gift when he appended his signature to the 2019 appropriation bill.
The President signed the N8.91 trillion Budget into law in the early hours on Monday, at a ceremony held at the Presidential Villa in Abuja. Note that the signing of the budget comes just less than two weeks after the Nigerian Senate passed the Public Holiday Act Amendment Bill to recognise June 12 as the new Democracy Day.
— Presidency Nigeria (@NGRPresident) May 27, 2019
2019 Budget by Numbers: Yesterday’s signing of the 2019 budget makes it about five months since the President first presented it before a joint session of the National Assembly.
Earlier, the President presented N8.906 trillion budget for the 2019 fiscal year. The budget was predicated on $60 per barrel of oil benchmark at 2.3m litres per day, exchange rate of N305 to $1, a GDP growth rate of 3.01 percent, and an inflation rate of 9.98 percent. However, when the appropriation bill got to the floor of the National Assembly last month, the budget was raised from N8.906 trillion to N8.916 trillion.
- The sum of N2.094 trillion was allocated to capital expenditure,
- Recurrent expenditure got N4.055 trillion
- Statutory transfers N502 billion
- Fiscal deficit was raised to N1.908 trillion
- Special intervention fund N500 billion
The President originally proposed a total expenditure of N8.83 trillion to @nassnigeria for appropriation.
The Bill passed by NASS 2019 and signed into Law today provides for a total of N8.92 trillion, an increase of N90.33 billion over the original submission. #Budget2019
— Presidency Nigeria (@NGRPresident) May 27, 2019
An upturn in the economy: The signing of the 2019 budget must mean a lot to Nigerians. Despite the Presidency’s earlier dismissal of reports that many projects have been halted due to delay in the signing of the 2019 budget, the approval of the budget is expected to send some excitements to both local and foreign investors, thereby catalysing economic activities.
Below are some highlights of the trickle-down effects of the budget:
- The approval budget implementation would ease up the economy, by clearing policy uncertainties repelling investors
- Capital expenditure on infrastructures will move into full swings following the implementation
- Lastly, this will trickle down on business activities, as more funds enter into the circulation for use by economic agents, which will spur productivity.
Some critical downside: Prior to signing the budget, President Buhari expressed some concerns when he noted that the N90 billion adjustment to the budget by the National Assembly could affect its smooth implementation.
“Of course, some of these changes will adversely impact our programmes, making it difficult for us to achieve the objectives of the Economic Recovery and Growth Plan.
“Although I will be signing this bill, it is my intention to engage the National Assembly to ensure we deliver on our promises.” -Buhari
More troubles ahead: Workers, particularly, the civil servants, must have greeted the development with a great sigh of relief, as the new N30,000 minimum wage is now expected to go into full swing. However, the same cannot be said for State Governors who must be having difficult times trying to figure out how to implement the new national minimum wage.
Recall that the Minister of Labour and Employment, Senator Chris Ngige, stated on Sunday that the signing of the budget is what stands between new minimum wage and its implementation.
According to Ngige, state Governors may get into serious trade disputes if the new wage implementation is not strategically handled. He further stated that Governors must pay salary arrears because the new wage already started on April 18th.
In conclusion, it should be noted that even though the President’s signing of the 2019 appropriation bill is a positive development, trouble looms as State Governors and the organised labour could clash over the implementation of the new minimum wage.
Sell-off of shares by investors extend Flourmillers loss on NSE to N25 billion
Nigerian Flour millers on NSE suffer a decline as wary investors offload shares.
The sell-off of shares on the Nigerian Stock Exchange has triggered an N24.9 billion loss in the market capitalization of Flour Millers since the beginning of February, as wary investors offload.
It is important to note that the Nigerian Equity Market has been on the downward trend since the beginning of February, as wary investors sell off stakes in companies as the yields in the money market become attractive.
The results of this move led to a decline in the shares of companies listed on the Nigerian Stock Exchange, including a decline in the shares of Flour millers listed on the bourse.
A review of the performance of the stocks of these Flour millers on NSE revealed that the market capitalization of FLOUR MILLS, HONYFLOUR, and Northern Nigeria Flour Mills from the open of trade on February 1 till the close of trading activities on February 24 has declined from N154 billion to N129 billion.
How they have all performed
FlourMills has declined from N142.3 billion to N118.3 billion. However, the market cap of Honeywell Flour Mills has also declined, albeit marginally from N10.31 billion to N9.91 billion, while that of NNFM has declined from N1.72 billion to N1.25 billion. When added up, the three millers have lost N24.85 billion in market capitalization.
However, Flour Mills, the largest miller on NSE lost the most with N23.98 billion, as a percentage of market capitalization. Flour Mills is down by 16.85%.
At the end of trading activities on the floor of the Nigerian Stock Exchange, the shares of Flour Mills declined by 6.9% to close at N28.85 per share, as investors sell off 5,029,161 ordinary shares of the company worth N143,009,264.10.
Shares of Honeywell at the close of trading activities today declined by 1.6%, while shares of Northern Nigeria Flour Mills remained unchanged at N7.02 per share.
The Consumer good index to which the Flour millers belong has fallen by 6.1% year since the beginning of February, compared to the Nigerian Stock Exchange All Share Index -5.17%.
FG says Finance Bill 2020 will check inflation
The Finance Minister has stated that the reduction of import duties on vehicles will subsequently reduce transport fares and food prices.
The Federal Government has said that the Finance Bill 2020 was designed to reduce import duties on some commodities, including vehicles, thereby checking inflation.
This is as the Bill was part of measures to make transportation affordable, thereby reducing the cost of foodstuff across the country.
According to a report from the News Agency of Nigeria (NAN), this disclosure was made by the Minister of Finance, Budget and National Planning, Zainab Ahmed, while answering questions from State House correspondents in Abuja on Wednesday.
Ahmed explained that her Ministry advocated and got approval for a reduction in the import duties charged on vehicles precisely to check inflation trends.
What the Minister for Finance is saying
The Minister expressed concerns over the inflation rate in the country, saying inflation was high at 16.7% and still inching up gradually over the last couple of months.
Ahmed said, “When you look at the components that constitute inflation in our country, the largest contributor is food inflation and … if you decouple it, the largest contributor to food inflation is the cost of transport.
“We now look at how do we reduce the cost of transport because we can’t give every Nigerian money to pay for their transportation fares. We figured that one of the good ways to do it is to increase the acquisition of mass transit vehicles and to reduce the acquisition cost of vehicles and tractors that are used for productive purposes like agriculture.”
She expressed optimism that the reduction of the import duties on vehicles, when fully operational, would boost mass transit activities and subsequently reduce transport fares and food prices.
She said, “So the reason why we reduce those duties is to reduce the cost of transportation.
”So, once this implementation takes full effect, we are hoping that we’ll be able to see more tractors coming into the country, more mass transit buses coming to the country, reducing the cost of transportation as a result, and also having an impact on food prices.”
What you should know
- It can be recalled that as part of its bid to introduce tax incentives in the face of the economic downturn caused by the coronavirus pandemic, the Federal Government in November 2020, through the signed Finance Bill 2020, proposed the slash of import duties for tractors, buses and other motor vehicles from 35% to 10% and 0% to further help cushion the socio-economic conditions in the country.
- The Minister for Finance, Budget and National Planning had explained that the need to reduce food inflation figures through one of the causative factors of high production cost, which is transportation, inspired the bill.
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