Rising importation of goods and services in Nigeria is once again taking a toll on the economy, as a report on Nigeria’s balance of payment shows a current account deficit over the last one year.
According to a report released by Renaissance Capital, Nigeria recorded a 1.1% current account deficit of the country’s total Gross Domestic Product (GDP) in Q1 2019, as against the 1.6% current account surplus that was recorded in the corresponding quarter of 2018.
The report further revealed that the deficit recorded in the country’s current account was largely due to an increase in imports which was 13.4% of the GDP.
The breakdown shows that the influence on Nigeria’s external trade position in the last one year was largely due to high travel related service expenses. According to the report, travel-related service payments witnessed a significant increase, which suggests a surge in foreign travel. However, traveling expenses’ impact on the current account was mitigated by an increase in current transfers from sectors other than the usual workers’ remittances.
In Nigeria’s financial account, net portfolio inflows rose by a remarkable 39% year-on-year to $7.2 billion. Although, it was revealed that net portfolio inflow was partly undermined by a surge in foreign exchange (FX) assets held by banks.
The rise in non-oil import
Nigeria’s trade surplus declined and halved to 2.3% of GDP in the first quarter of 2019, from the 4.9% trade surplus recorded in the corresponding quarter of 2018. Specifically, import bill rose to 13.4% of GDP, up from 11.3% in the same period of 2018.
A closer look at the data shows that Nigeria’s non-oil imports constitute 70% of total imports, which almost double the proportion of non-oil imports recorded in the corresponding period of 2019. It should be noted that with the subdued growth of 2.0%, import demand is expected to surge as consumption increases.
An analysis of Foreign travel shows that Nigeria’s payments to foreign service providers rose by 47% in one year, estimated at $9.1 billion. Further insight shows that the rise in payment on foreign service providers was largely due to a strong increase in foreign travel and other business activities. On the other hand, Income payment decreased by 8% in the first quarter of 2019 (year-on-year), which was too low to mitigate the bulk payment made on foreign service providers.
Meanwhile, Current transfers which is the only component of Nigeria’s current account that has always yielded a positive position was boosted by a surge in non-workers remittance. Year-on-year, current transfers increased by 39% in the first quarter of 2019 to $7.1 billion. This represents the highest quarterly current account transfers in about a decade.
Capital inflow neutralises
Nigeria’s financial account is made up of three key components which include Portfolio, direct and other investments. In the first quarter of 2019, the net portfolio increased by 39% to $7.1 billion, which means that a large chunk of portfolio inflows in the country went into high-yielding debt instruments.
Similarly, net direct investments rose by two-thirds in the first quarter, on the back of 42% ($1.2 bn) year-on-year increase in foreign direct investments. Despite the positive growth recorded in both portfolio and net direct investments, the supposed positive impact was neutralised by a surge in investment liabilities. Specifically, a collapse in the foreign loan ($2.5 billion Eurobond was issued a year earlier) coupled with a 74% increase in foreign currency assets held by banks.
2019 Outlook of Nigeria’s current account
The Forcast of Nigeria’s Current account shows that by the end of the year, the declining oil prices would make the current account to worsen. The forecast shows that Nigeria is expected to witness another current account deficit of 0.3%, compared with a surplus of 1.5% in 2018. Meanwhile, the upside risk of the forecast shows that given sluggish growth and weak demand, lower imports could help slightly improve the current account balance.
FG to facilitate removal of tax on minimum wage, as NLC suspends strike
The FG has stated that it will work to facilitate the removal of tax on minimum wage.
The Nigerian Government says it is working to facilitate the removal of tax on minimum wage and also agreed to work with labour unions in the housing and gas schemes as the Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC) suspended the planned nationwide strike after a consultative meeting with the FG.
This was announced in a statement by the Nigerian government on Monday morning, following meetings held between FG and Labour unions on the 15th, 24th and 27th of September.
NOTICE ON RECENT ENGAGEMENT BETWEEN FGN AND ORGANIZED LABOUR:
The Federal Governmment and Organised Labour (NLC, TUC and others) held consultation meetings on September 15, 24 and 27, 2020.
Following the extensive deliberations, the following resolutions have been reached:
— Government of Nigeria (@NigeriaGov) September 28, 2020
Nairametrics reported earlier the NLC and the Trade Union Congress (TUC) have suspended the planned nationwide strike and protest that was to commence on Monday, September 28, 2020, over the recent hike in electricity tariff and petrol pump price.
In the agreement between the Federal Government and organized labour, the hike in electricity tariff is to be suspended for a period of 2 weeks, while the new pump price of petrol is to remain unchanged.
FG and Labour agreed to set up a technical committee on Electricity Tariff reforms. The terms of reference for the technical committee include;
- To examine the justification for the new policy on cost-reflective electricity tariff adjustments.
- To look at the different Electricity Distribution Companies (DISCOs) and their different electricity vis-à-vis NERC order and mandate.
- Examine and advice government on the issues that have hindered the deployment of the 6 million meters.
- To look into the NERC act under review with a view to expanding its representation to include organized labour.
In the recent statement, the FG said, “We will ensure delivery of 1 million CNG/LPG Autogas Conversion Kits, Storage Skids and Dispensing Units under the Nigeria Gas Expansion Programme, by December 2021. A Governance Structure for this project will be established, and will include Labour Representatives. FG will work to facilitate removal of tax on minimum wage… Ongoing FG Housing Initiatives will have 10 percent allocated to Nigerian workers.”
The FG also announced that it will provide Labour with 133 LPG-driven Mass Transit Buses immediately, which would be used in cities across the nation and would be extended to all LGAs before December 2021.
Baba Bajaj: Runs faster, lasts longer, covers 5500 kms on tough Nigerian roads
The rally took up the challenge of proving how credible the product and also engaged the stories of the riders.
For the first time ever, Nigeria experienced its own keke rally that kicked off on 7th August from the Stallion Auto Keke – Ijesha Showroom for Bajaj Kekes. The Stallion Bajaj Keke Rally has now completed a tough terrain of 5594 kms through 27 cities and 18 states in the West, East and North Central in less than 41 days. It consisted of a team of 5 experienced riders and the Stallion Bajaj officials and security agents. Collectively the convoy covered more than 26000 Kms without any product issues.
Managing Director for the business, Mr. Manish Rohtagi stated that “The Keke Rally really boasts on how the New Baba Bajaj is tough, strong, reliable, and well equipped for the Nigerian roads. Having covered almost more than 5000 kms the Kekes did not face any performance or maintenance challenges. It kept its brand promise of “Runs Faster, Lasts Longer” through every rider who was a part of this rally.”
The rally was flagged off from Lagos and covered states like Ogun, Oyo, Kwara, Kogi, Benue, Enugu, Ebonyi, Cross River, Akwa Ibom, Abia, Rivers, Anambra, Delta, Edo, Ondo, Ekiti, Osun, to prove the durability of Bajaj Keke. It even spread the message of urging people of Nigeria to be responsible in maintaining hygiene to curb the spread of Corona Virus. The Stallion Bajaj Keke Rally visited celebrated cultural and historic sites in each state highlighting and sharing the Nigerian culture of host communities. The journey to these sites brought forth the stories around it to encourage connecting the youth to their rich heritage.
The vision from this rally was not only to take up the challenge of proving how credible the product is but also engaging in the stories of these riders that will go on to make the brand what it is. The alliance of Stallion and Bajaj will continue to improve lives by going an extra mile providing rider-training facilities, scholarship programmes, mechanic empowerment programmes, ease in financing, ease of spare part availability and differentiated customer service through its existing footprints within the auto industry.
Bajaj Auto Ltd. is a world leader in the intra city vehicle space. Loved in 70 countries the brand stands for integrity, dedication, resourcefulness, and determination to succeed and empower. It is a well-known brand for its durability, speed and manuverability and is the pioneer brand of tricycles in Nigeria loved by millions. It’s a keke for the people engineered for a smooth journey and better livelihood.
After 22 years, NBS is set to commence National Business Sample Census
The National Business Sample Census is expected to commence on October 12 2020, and end on December 12 2020.
The National Bureau of Statistics, with the support of the World Bank, has commenced the process of implementing the 2020 National Business Sample Census (NBSC) in Nigeria. This is exactly two decades and two years after the last business census of establishments in the country.
This disclosure was stated in a circular signed by Ichedi, Sunday Joel, Head, Public Affairs & International Relations Unit, which was released by the Statistician-General of the Federation this morning.
The Survey which is coming after a similar one conducted twenty-two years ago (1997/98) is necessary, especially now that the current government is re-structuring the economy for faster growth through support to Small, Medium and large-scale enterprises, in order to increase their productivity.
The National Business Sample Census is expected to last two months from October 12 to December 12.
The main objectives of NBSC includes:
• To compile, frame, and develop instruments and concepts, establish standards and methodology for industrial and business surveys in Nigeria.
• To serve as a benchmark for updates of subsequent commercial and industrial sector statistics.
• To develop a national directory of commercial and industrial business establishments, with all their associated social and economic characteristics
• To provide the country with comprehensive and detailed information about the structure of the Nigerian economy.
The Census will cover all the thirty-six (36) states of the Federation and FCT, with establishments in all economic sectors involved in the exercise.
For the avoidance of doubt, the establishments to be covered should have a fixed structure and location, a separate shop with a different entrance, and enclosed from dwelling place (in the case of residential areas), shops should have locks and keys for a market setting. While kiosks and shops under the umbrella are not to be listed during the census.
All commercial and industrial businesses in each LGA will be identified and listed by the state. Name, location address, postal address, phone number, email address, year of commencement, number of activities engaged in, main type of activity, and others are questions that will be asked.
NBS enumerators with customized T-Shirts and Face Caps will visit your establishment, at any date within the stipulated period, to collect necessary information for the census. Please oblige them with the information, as your cooperation is germane towards the successful execution of the census exercise.
However, the Bureau wishes to assure you that any information given will be kept in absolute confidentiality, and will not be divulged to a third party.