Analysts at RenCap, an investment and securities firm declared that the closure of Nigeria’s land borders could lead to a slow-down in Nigeria’s economic growth in 2020. This was contained in an economic research report recently released by the company.
According to RenCap, Nigeria’s economic growth of 2.3% recorded in the third quarter of 2019 was, “…mainly on the back of a recovery in the oil and gas sector, and to a lesser extent financial services,” with the oil sector growing by 6.5% year on year in the third quarter of 2019.
The research firm also explained that the growth recorded in the oil sector, “…was largely due to an increase in oil production to 2.04mn b/d, from 1.93mn b/d,” while “Financial services also emerged from its slump and grew, albeit modestly, by 0.6% YoY in 3Q19, after declining for four consecutive quarters,” suggesting that the CBN’s policy played a major role.
“We think that the Central Bank’s directive to banks to increase their loan-to-deposit ratios (LDR) to 65%, as part of a bid to boost economic growth, partly explains the increase in lending. The pick-up in credit growth to 10.9% YoY in September, from 4.3% YoY a year earlier (see Figure 3), maybe in part attributed to this directive. The telco industry remains the biggest contributor to GDP growth, albeit a tad smaller. The sector grew by a brisk 12.2% YoY in 3Q19, a little slower than 15% YoY a year ago.”
Border Closure drags GDP: Whilst the CBN’s policy may have positively impacted on Nigeria’s third-quarter GDP growth rate, the Federal Government’s decision to keep the borders closed until January 2020 is expected to slow down economic recovery, particularly in the trade sector.
- Nigeria’s trade sector is about the second largest contributor to Nigeria’s GDP but has suffered from poor economic growth since Nigeria’s economic crisis began in late 2014. “We believe the border closures contributed to the decline in wholesale and retail trade in 3Q19” RenCap explains.
- “Trade’s decline partly explains the slowdown in the non-oil sector’s growth to 1.8% YoY in 3Q19, from 2.3% YoY a year earlier. Trade contracted by 1.5% YoY vs 1.0% growth a year earlier. As trade is the second-biggest economic sector, its performance has material implications on GDP growth. Trade declined despite a pickup in consumer confidence.” RenCap
- Unfortunately, growth may remain farfetched for the trade sector if the borders remain closed next year. “We believe the pick-up in inflation, on the back of the border closures, will undermine confidence and demand in subsequent quarters. This will also counter the positive impact of improving credit growth, resulting in a neutral impact on GDP growth.”
The recent inflation report released by the National Bureau of Statistics also revealed that Nigeria’s inflation rate rose by 11.61% year on year in October 2019, the highest in about 18 months. The rise was largely attributed to an increase in the cost of food items following the closure of the borders to cheaper imported goods.
With the full effect of the closed borders still being contemplated, Nigeria’s 4th quarter GDP numbers could be severely impacted, especially if the trade sector continues to cave under pressure from government policies.
A slew of government policies, ranging from border closure to the ban of 41 items, have negatively affected the sector. The Buhari–led government has focused on growing the local industry, backing the unpopular policy direction with executive orders such as the border closure, import-substitution, increase in import tariffs, etc.
FG approves 60% debt forgiveness for licensed radio and television stations
The effective date of the debt forgiveness shall be July 10 – October 6, 2020.
The Nigerian government granted a 60% debt forgiveness to all licensees indebted to the National Broadcasting Commission (NBC). The move was an additional step to the 2 months license fee waiver granted to the industry as a palliative to deal with the effects of the COVID-19 pandemic.
Minister of Information, Lai Mohammed, said the measures were put in place as a result of the report submitted by the post-COVID-19 initiative committee for the creative industry.
GOVERNMENT GRANTS 60% DEBT FORGIVENESS TO DEBTOR BROADCAST LICENCEES.
The Federal Government of Nigeria has granted 60% debt forgiveness to licencees indebted to the NBC. This is in addition to the 2 months licence fee waiver granted earlier……..https://t.co/Sd4UCPgNJH pic.twitter.com/1hkNJSjBvb
— nbcgovng (@nbcgovng) July 6, 2020
He added that many radio and television stations remain indebted to the government to the tune of N7.8 billion.
The Minister added that the debt forgiveness will not apply to pay-TV service operators but to only terrestrial TV and radio stations in the country.
He added that the criterion for enjoying the debt forgiveness is for the debtor to pay 40% of their existing debt within 3 months. Any station that is unable to pay the 40% indebtedness within 3 months window shall forfeit the opportunity.
Existing license fee is discounted by 30% for all open terrestrial radio and television services effective July 10.
The effective date of the debt forgiveness shall be July 10 – October 6, 2020.
Covid-19: Scientists ask WHO to revise recommendations as new evidence emerges
Researchers plan to publish in a scientific journal next week, an open letter to WHO.
Hundreds of scientists have asked the World Health Organization (WHO) to revise its recommendation for the novel coronavirus pandemic, after they discovered new evidence suggesting that air-borne smaller particles of the virus can infect people.
The WHO had disclosed that the coronavirus disease spreads primarily from person to person through small droplets from the nose or mouth, which are discharged when a person with the coronavirus disease coughs, sneezes or speaks.
According to the scientists whether the virus is carried by large droplets that zoom through the air after a sneeze or by much smaller exhaled droplets that may move quietly through the length of a room, the coronavirus is borne through air and can infect people when inhaled.
Researchers plan to publish in a scientific journal next week, an open letter to WHO by 239 scientists in 32 countries, where they outlined the evidence showing that smaller particles can infect people.
However, the United Nations health agency has said that the report from the scientists that the virus is airborne was not convincing.
According to the WHO technical lead for Infection Prevention and Control, Dr Benedetta Allegranzi, ‘’Especially in the last couple of months, we have been stating several times that we consider airborne transmission as possible but certainly not supported by solid or even clear evidence.”
It can be recalled that WHO said over the weekend that it was stopping its trials of the malaria drug hydroxychloroquine and combination HIV drug lopinavir/ritonavir on hospitalized patients with the coronavirus disease after they failed to reduce the death rate.
The setback came as the WHO reported more than 200,000 new cases of the disease globally, the first time in a single day.
FCMB shuts contact centre locations due to COVID-19 scare
Other banks have recently had to shut down their branches due to public health concerns caused by COVID-19.
First City Monument Bank (FCMB) Limited informed its customers, yesterday, that its contact centre locations have all been temporarily shut down following COVID-19 scare.
A brief statement that was issued via Twitter emphasised that the general shutdown of the physical locations is only a temporary and precautionary measure aimed at preventing further spread of the contagious virus. The statement, however, did not clarify whether there have been any reported cases of infection at these contact centre locations.
“Dear Customers, we trust you are doing well and staying safe. We would like to inform you about the temporary closure of one of our Contact Centre locations as a precautionary measure to curtail the spread of COVID-19 and protect our employees,” part of the statement said.
Meanwhile, customers were informed that FCMB’s contact centres will remain active in the meantime, albeit virtually. However, customers may experience delays prior to being attended to. Customers were also advised to explore the self-help options offered by the bank’s electronic banking channels in order to resolve their challenges.
As a result, even though our Contact Centre remains functional, you may experience longer wait times when reaching us. We sincerely apologize for every inconvenience.
— FCMB (@MyFCMB) July 5, 2020
Nairametrics understands that some of the bank’s customers have been experiencing some ‘not so great’ customer service over the past few weeks. One of these customers, who chose not to be named, confirmed this to Nairametrics. Reacting to the statement by the bank, the customer said:
“This statement explains why the bank has not been responding to complaints across all its channels. For at least 4 weeks now, they don’t respond to emails, WhatsApp messages or DMs. I have some funds that they have not reversed in like 4 weeks now. If you check Twitter, you will see so many similar complaints.”
Recall that some other banks have had to close down their branches due to the same reason given by FCMB. Just recently, Jaiz Bank Plc shut down its Ikeja branch for disinfection. Weeks before that, Wema Bank also confirmed that two of its branches were temporarily shut down after two staff became infected with the virus.