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Business News

CBN advises government to adopt “Big Bang approach” to fixing economy

CBN says VAT IS “too little” and called for “BIG BANG” approach

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CBN advise government to adopt "Big Bang approach" to fixing economy

The Central Bank of Nigeria held its monetary policy committee meeting last week ending it with a decision to hold on all rates. Excerpts of the Monetary Policy Communique issued by the CBN indicates its members chose to retain MPR at 13.5% as well as CRR and liquidity ratios at 22.5% and 30% respectively. 

However, a cursory review of the communique reveals a somewhat aggressive tone from the CBN in terms of the direction of the economy and its expected reaction of the government. Of particular interest to us were its comments on the planned 50% increase in Value Added Tax from 5% to 7.5%.  

The Good; The CBN revealed its support for the planned increase stating the obvious that it will increase government revenue. 

“The MPC also noted the Government’s current drive to increase Value Added Tax (VAT), adding that this will improve fiscal revenue to support expenditure and reduce the budget deficit as well as Government borrowing when implemented.” Emefiele  

The bad: The Apex bank mentioned that an increase in VAT rates won’t salvage the government’s tight shoestring budget as it needed to do more to drive up revenues.  

“The Committee, however, noted that this was too little to close the gap in Government finances.” Emefiele 

BIG BANG: If an increase in VAT is not enough to shore up government revenues then what should it do?  

“Consequently, the MPC called on the Government to, as a matter of urgency, adopt what it termed a BIG BANG approach towards building fiscal buffers by purposefully freeing-up redundant public assets through an efficient, effective and transparent privatization process. This would raise significant revenue for Government and resuscitate the redundant assets to generate employment and contribute effectively to national economic growth.” 

What this means: The BIG BANG approach is basically the CBN telling the government point blank that it needs to sell off more government assets to raise money as well as cut increased cost of running government business.  This issue was a hot topic for debate in the run-up the elections where the government announced it was considering selling some of its assets to raise finance.  

But what assets are there for the government to sell? NNPC, Nigeria’s State Oil company behemoth is perhaps the juiciest of them all. However, political considerations, as well as a vested interest, may not allow for the sale of the company as recommended in the PIG bill yet to be signed by the president. 

A review of ongoing companies slated for privatisations the BPE shows only NIPOST is currently being considered by the Bureau.  

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

1 Comment

1 Comment

  1. Olugbenga

    September 27, 2019 at 9:16 am

    Why do Nigerian economist believe a burgeoning government revenue translates into a better Economy ? In Nigeria it suppresses the economy.

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Companies

Africa Prudential proposes dividend of N1 billion for shareholders

Africa Prudential Plc has proposed a sum of N1 billion as dividend for shareholders.

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African Prudential could be worth more than N4.55

The Board of Directors of Africa Prudential Plc has proposed a sum of N1 billion as dividend to shareholders for the period ended 31st of December 2020.

This is according to a disclosure signed by the firm’s secretary, Joseph Jibunoh and sent to the Nigerian Stock Exchange, as seen by Nairametrics.

According to the notification, the proposed dividend will be paid electronically to qualified shareholders on the 26th of March, 2021, subject to appropriate withholding tax and approval from the company’s Annual General Meeting (AGM) scheduled a day earlier.

The breakdown of the proposed dividend shows that a sum of 50 kobo will be paid for each outstanding 2,000,000,000 ordinary shares of the company, held by its shareholders, totalling N1 billion. The proposed dividend is 28.6% lower than the 2019 figures of N1.4 billion.

The comparative decline in the company’s proposed dividend for the year might be attributed to a recent dip in profit and other key metrics recorded by the firm in its latest audited financial statement for 2020. For example, the firm posted a profit of N1.45 billion for the year, indicating a decline of 13.98% YoY. In addition, its earnings per share declined by 14.29% to print at 72 kobo.

What you should know

  • Africa Prudential had recently announced the appointment of Mrs Zubaida Rasheed as Director.
  • Africa Prudential Plc, formerly known as UBA Registrars Ltd, was incorporated as a private limited liability company on 23rd March 2006. It was listed in the NSE on 17th of January, 2013.

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Corporate Press Releases

Konga launches revolutionary membership programme, Konga Prime

Konga Prime puts money back into the pockets of subscribers by helping them make great savings.

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Konga, Nigeria’s leading composite e-Commerce giant, has rolled out Konga Prime, a revolutionary membership programme, with a lot of benefits for shoppers.

Konga Prime members enjoy unlimited free shipping, have access to exclusive offers and early bird deals, among others.

The incentives-filled loyalty programme went live on Monday March 1st, 2021.

Specifically, Konga Prime brings together a suite of exciting benefits which delivers great value to subscribers, helping them enjoy exclusive deals and other incentives such as faster deliveries of their orders. In addition, Konga Prime puts money back into the pockets of subscribers by helping them make great savings, incomparable to that offered by any other retail platform.

Furthermore, members of Konga Prime including busy individuals and families get to enjoy premium access to the full range of Konga’s cutting-edge assets. Among these are its powerful e-Commerce engine and online presence as well as the nationwide reach of a growing list of over 31 stores spread across the nooks and crannies of Nigeria. With this, Konga Prime members can take advantage of nationwide delivery of their items as fast as the next day.
Also, members have the added incentive of unlimited free delivery from Konga.com and access to discounts that make shopping faster and cheaper for all categories of shoppers.

Interested subscribers can sign up for Konga Prime here: https://www.konga.com/konga-prime Membership of Konga Prime is available to all customers, effective March 1st, 2021, beginning with Lagos and Abuja, the Federal Capital Territory (FCT). Equally important, Konga is currently offering specially discounted rates for interested subscribers to sign up for Konga Prime. In other words, subscription rates for Konga Prime membership have been slashed by as much as 50% for early bird subscribers.

In Lagos, membership of Konga Prime is currently up for N1,000 a month, as against N2,000 and N2,490 for three months, instead of N4,950 along with a 7-day free trial period. For Abuja, membership rates presently stand at N1,290 a month, as opposed to N2,500 and N3,490 for three months, instead of N6,950.

Meanwhile, the Konga Prime rollout is set to be extended to other states soon.

Vice President, Konga Online, Kenny Oriola, says the initiative is one that will deliver great value for members, including exclusive access to a growing list of special offers. These include unlimited free delivery, early access to exclusive deals as well as partner benefits and rewards.

“This initiative was implemented to provide a platform that allows our esteemed customers enjoy great value, including having their orders delivered to their preferred location for free. Saving time and money is not just the end goal here, but having access to exclusive deals, and mouth-watering discounts on special products also makes this service one to subscribe to.

‘‘Today, we kick-off this initiative in Lagos and Abuja. Subsequently, other states across the country will benefit from this service. We urge all interested subscribers to take advantage of the ongoing discounted rates to sign up for this value-adding programme,’’ he disclosed.

Further, Oriola submits that in the future, Konga will leverage its wide-ranging assets to add additional benefits for members in a variety of services and offerings, adding that the list of benefits will continue to grow over time.

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