The Manufacturers Association of Nigeria (MAN), Lagos Chamber of Commerce and Industry (LCCI), Nigeria Employers’ Consultative Association (NECA), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and other private sector operators, have unanimously kicked against the Federal Government’s intention to increase Value Added Tax (VAT) to 7.2% from 5%.
Nairametrics had reported that the Federal Executive Council (FEC) had on Wednesday, September 11, 2019, approved the increment of the VAT.
In recently held separate interviews, the private sector stakeholders expressed confidence that the VAT increment will have a negative impact on the real sector and the economy at large.
While enjoining the Federal Government to shelve its plan to increase the VAT, the operators advised the government to include more enterprises in the tax net to widen the tax base instead of increasing the VAT rate.
According to Mansur Ahmed, MAN President, Mansur Ahmed, the plan to increase VAT would worsen the current economic hardship Nigerians are experiencing at the moment.
Ahmed said, “Increasing VAT by nearly 50 per cent would worsen the problem of high cost of doing business in the country. It will also reduce the effective demand of consumers in purchasing goods and services. This will not augur well with manufacturers who already have more unsold items in their warehouses due to low purchasing power of Nigerian consumers.
“Therefore, efforts should be directed at expanding the tax base. This effort has not been exhausted.”
Backing Ahmed’s statement, the Director General of the LCCI, Muda Yusuf, said the VAT hike would threaten the business environment that is already challenging investors.
He said: “And knowing the way VAT is operated in this environment, it will not count whether the product is an input for production or not. Because practically everything is subjected to VAT unlike what happens in other climes where VAT is treated purely as a consumption tax.”
On her part, the National President of NACCIMA, Hajiya Saratu Iya Aliyu, said while the country had not fully recovered from the 2016 economic recession, it makes no economic sense for the Nigerian government to increase VAT.
Aliyu argued that the GDP growth rate per quarter has been 1.74 per cent on average – not exceeding 2.4 per cent at its highest point, since the country regained positive economic growth in the second quarter of 2017.
She added that inflation rate is still high, revolving around 11.3 per cent since May 2018 while unemployment rate as at the third quarter of 2018, stood at 23.1 per cent, with an estimated 20.9 million people unemployed.
NECA Director General, Timothy Olawale, however, said in the event that the Federal Government decided to increase VAT against the will of the people, the increase should be limited to luxury or ostentatious goods only.
Sim cards are now virtual and here’s why we like it
Telcos have moved from macro Sims to micro and nano Sims, now we have the eSims.
MTN announced on July 15, 2020, that its virtual sim cards are now available in Nigeria. This eSim (embedded sim) is built into the smart device and provides the same function as the physical Sim cards; the difference is they cannot be damaged or lost like the physical ones. In cases where there is a damaged phone, the user will need to visit an MTN store to have it deactivated. Also, the MTN eSim can have more than the limited 200 contacts the physical cards normally carry.
However, not everyone can use the eSim just yet as it is compatible with a limited number of phone brands, some of which include: Google, Apple and Samsung, and even then, there are only a few models of these named brands the eSim can be integrated into.
How does it work?
The eSim has to be activated onto a user’s device. This activation will be done in an MTN store by a customer service agent, this process according to MTN comes at no cost to the user. As soon as the device is confirmed to be compatible, a profile of the subscriber is created and the agent completes the integration process.
Reportedly, MTN will be testing the virtual sim cards over the next 1 year and will only be available to 5000 people during this test run. Also, current phone numbers cannot be linked to the eSim cards at the moment.
Nonetheless, this is yet another first for MTN, Nigeria’s’ biggest telecom company. The telco is no stranger to firsts in these parts; since 2001, the company has been credited with many firsts when it came to mobile communication and internet penetration. With the launch of the eSim, MTN has become the pioneer in West Africa.
Why are we liking the Idea of eSims in Nigeria?
It is rather early to say whether or not the eSim will in time completely phase out the physical cards Nigerians are used to but the many upsides that come with it, give room for us to want the eSim to thrive.
Sims have had one of the most exciting evolutions- Telcos have moved from macro Sims to micro and nano Sims, now we have the eSims, very soon, we’ll probably go simless all together.
- Using eSims means no more need for a sim card slot in newer model devices- so in case of a damaged slot, you can still use your device. Most devices that are compatible still have the sim card slot but just like the head phone jacks, the slots will probably disappear too.
- It is much easier to have multiple telephone numbers on one phone- no need to spend so much on a phone that supports two sim cards and no need to swap out sim cards any longer.
- It’ll be much easier to buy one off data plans and phone services when travelling abroad.
- Phones with the eSim feature have much more internal space, so they can fit in more components like bigger batteries, not just phones.
- eSims can be used in smart watches without having to link it to your phone.
- With the eSim comes locks to prevent anyone other than the user from using the embedded device, making it almost useless for anyone who intends to steal.
- The process when a user wants to switch phones can be a bit of a hassle- they would have to log on to your carriers system to inform on the number change for the new phone/device.
- User can be tracked easily seeing as you cannot fully disconnect from the network.
- Can only work on expensive devices- this relatively new technology can only work on new and expensive phone and devices, hence, the chance it will go mainstream in Nigeria where there is still a large market for the older model phones that are not even internet compatible is rather unlikely.
- Could cause a slow in business for telecom companies as the eSim allows consumers to purchase data connectivity from whoever they choose online.
From all the offerings of the eSim, it seems the most beneficial to a user who travels a lot rather than the next door mobile phone user. Regardless, the eSim has a lot of potential and eventually it could take the place of physical cards, but for now they will have to exist alongside the physical cards.
Exchange rate falls across forex markets as dollar liquidity remains low
The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Tuesday.
Nigeria’s exchange rate at the NAFEX window depreciated to N389 during intraday trading on Tuesday, August 4, 2020. In a similar situation, the exchange rate at the parallel market depreciated marginally on Tuesday as well to close at N474/$1 and as high as N480/$1.
Parallel Market: At the black market where forex is traded unofficially, the Naira depreciated against the dollar to close at N474/$1 on Tuesday, according to information from Abokifx, a prominent FX tracking website. This represents a N1 drop when compared to the N473/$1 that it exchanged on Monday, August 3. However, Nairametrics forex tracker obtained a price of N480/$1 from some traders who we also source information from.
NAFEX: The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Tuesday, closing at N389/$1. This represents a N1 drop when compared to the N388 rate close that was reported on the last trading day, Monday August 3. The opening indicative rate was N388.46 to a dollar on Tuesday. This represents a 13 kobo drop when compared to the N388.33 to a dollar that was recorded on Monday.
The naira fell to as high as N392.50 during intraday trading before strengthening to the closed rate of N389. It also sold for as low as N380/$1 during intraday trading. Forex is sold at several prices and different times during the day.
Forex Turnover: Meanwhile, forex turnover at the Investor and Exporters (I&E) window recorded an increase on Tuesday, August 4, 2020, as it rose by 43.12% day on day. According to the data tracked by Nairametrics from FMDQ, forex turnover increased from $17.23 million on Monday, August 3, 2020, to $24.66 million on Tuesday, August 4, 2020. Despite the increase, the volume is a far cry from the average of over $200 million that was recorded in January 2020.
The average forex sale for last week was a low volume of about $32 million which is slightly better than the $27 million that was recorded the previous week. FX turnover which was not impressive last week has not show any sign of recovery despite the picking up of business activities after the 2-day Sallah holiday.
Total forex trading at the NAFEX window in the month of July was $937 million compared to $875 million in June.
The exchange rate disparity between the official NAFEX rate and the black-market rate remained wide on Monday staying as wide as N85. Nigeria maintains multiple exchange rates comprising the CBN official rate, the BDC rates, SMIS, and the NAFEX (I&E window).
Exchange rate unification remains on the cards and yet to be implemented weeks after the central bank governor confirmed it will be executed.
Nigeria’s airspace remains closed to commercial international flight operations and won’t be open till October 2020. Foreign Travel has often been a source of demand for the greenback.
- The recent demand for dollars at the parallel market is thought to be fueled by speculators.
- The parallel market also caters to forex trades through wire transfers especially for buyers who cannot fulfil their dollar demands at the I&E window or the SMIS window.
- The exchange rate for wired transfer is often at a premium to the black market rate.
Forex Challenges: Last few weeks have been most challenging for the foreign exchange market as it witnessed very low liquidity. The downward slide against the greenback and some other major currencies continued this week due to tightened liquidity in the system.
According to a report from FSDH research, forex inflows into the I&E window had dropped significantly in the second quarter of 2020 on the back of lower foreign portfolio inflows. Although there was a slight improvement in the month of July, the turnover of $937 million is a far cry from the $3.7 billion turnover that was recorded in the month of March before the lockdown which was triggered by the coronavirus pandemic.
The low oil prices have constrained the CBN’s capacity to intervene further in the foreign exchange market as dollar inflow still remains very low.
How to access CBN’s Health Research & Development grant
The Scheme shall be funded from the Developmental Component of MSMEDF.
The Central Bank of Nigeria has issued the guideline for accessing the Healthcare Sector Research and Development Intervention Scheme (HSRDIS) grant.
The grant, which is part of the apex bank’s policy response to the COVID-19 pandemic, is designed to help strengthen the public healthcare system with innovative financing of research and development (R&D) in new and improved drugs, vaccines, and diagnostics of infectious diseases in Nigeria.
The guideline was published on the CBN’s website on Tuesday.
Why it matters: HSRDIS is designed to trigger intense national R&D activities to develop a Nigerian vaccine, drugs and herbal medicines against the spread of COVID-19 and any other communicable or non-communicable diseases. This would be done through the provision of grants to biotechnological and pharmaceutical companies, institutions, researchers, and research institutes.
Who is eligible: Activities eligible for consideration under the Scheme shall include:
- Research and development of candidate drugs, herbal medicines, and vaccines validated by relevant health authorities for the control, prevention and treatment of infectious diseases.
- Manufacturing of drugs, herbal medicines and vaccines validated by relevant health authorities for the control, prevention and treatment of infectious diseases.
- Red biotechnological R&D in new health technology for the control, prevention and treatment of infectious diseases.
- The research partnership between academia and industry into the development of drugs and vaccines for the control, prevention and treatment of infectious diseases.
- Research and development into validated phytomedicines for the control, prevention and treatment of infectious diseases.
Important Notice: Candidate vaccines undergoing pre-clinical testing or trials shall not be eligible for consideration under this Scheme. However, candidate vaccines 4 Classified as Confidential undergoing clinical testing or trials shall be eligible for consideration under the Scheme if considered to have high potential to cross the clinical trial stage and prospects of scale by the Body of Experts (BoE).
Who funds the grant: The Scheme shall be funded from the Developmental Component of the Micro, Small and Medium Enterprise Development Fund (MSMEDF).
- Research activities: Maximum of N50.0 million.
- Development/Manufacturing activities: Maximum of N500.0 million.
NOTE: Disbursement under the Scheme shall be made to beneficiaries in tranches, subject to approved milestones achieved.
Research and Development Timeframe
- research activities: Not more than two (2) years from the date of release of fund.
- Development/Manufacturing activities: Not more than one (1) year from the date of release of fund.
Read the full guidelines here.