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Coronavirus causes prices of Chinese products in Nigeria to soar

Coronavirus has been blamed for the astronomical rise in the prices of most products Nigeria imported from China over the past couple of weeks.

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Fight against Coronavirus

It is no news that China is one of Nigeria’s major trade partners. What is news, however, is the fact that the prices of most products Nigeria imports from China have risen exponentially over the past couple of weeks. Coronavirus has been blamed for this situation.

Coronavirus causes prices of Chinese products in Nigeria to soar

Xi Jinping, China’s President

Let’s break down the situation 

The Coronavirus outbreak in China, which is the world’s second-largest economy by GDP, took everyone by surprise. So far, about 77, 150 cases of infection have been confirmed in the country, with 2,592 reported deaths. The disease has also spread beyond China to other Asian countries, countries in the Middle East, Europe, and even North Africa. Many now fear this might soon become a pandemic.

Asides the infections and the deaths, another thing that has left many people worried about the Coronavirus outbreak is the negative economic impacts it has wrought on China and elsewhere.

As Nairametrics reported earlier this month, the virus is partly responsible for pushing oil prices below the $57 per barrel benchmark on which Nigeria based its ambitious N10.6 trillion 2020 budget. This is because many Chinese factories have been shut down for weeks, thereby cutting down on the country’s energy demands.

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Now, an inactive Chinese economy means that fewer products are being produced. And because the country cannot produce as many goods as it used to, it also cannot export as much as it used to. This, of course, has direct impacts on countries like Nigeria that depend heavily on Chinese exports.

[READ MORE: Toyota suspends operations in China over Coronavirus outbreak)

Prices of goods are soaring 

It was reported that some car spare part and battery dealers all of whom confirmed that the prices of the products have gone up. The reason is that these products are scarce in the market. The dealers are scared to visit China out of fear for the Coronavirus.

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In the meantime, importers who already have goods in stock are beginning to hoard because they simply do not know when they will get the next shipment from China. An auto spare parts dealer identified as Chukwuebuka Maduabuchi said:

“It is very correct that the prices of Chinese products in the market is going high. The reason is that most of us importers have not gone to the market since this year. We did not anticipate that there would be an outbreak of a deadly disease in China early in the year. So, if you go round the market, the warehouses are becoming empty by the day. There is even panic buying of spare parts because we don’t know when this would come to an end.”

Xi Jinping, China's President

Chukwuebuka further added that unless a cure ends the epidemic soon, Nigeria may soon find itself in a serious problem. But while this is a legitimate worry, it is important to add that the country could always shift focus to another trade partner, or better still start thinking long and hard about producing its own products.

After all, as Chikezie Uwalaka noted, this might as well be a blessing in disguise for Nigeria.

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“For me, the Coronavirus could be a blessing in disguise. It could be an opportunity for us to start thinking inwards. If the Coronavirus continues, it would hurt Nigeria`s economy.”

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Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs. He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor. Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan. If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

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Companies

Abbey Mortgage Bank Plc projects N60.13 million profit in Q1 2021

Abbey Mortgage Bank Plc has projected a Profit after Tax (PAT) of N60.13million in its 2021 Q1.

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Abbey Mortgage Bank announce the appointment of substantive Managing Director, and 5 Directors.

Abbey Mortgage Bank Plc has projected a Profit after Tax (PAT) of N60.13million in its 2021 Q1.

According to the earnings forecast issued by the bank and seen by Nairametrics, it projected the 134.7% Q-o-Q rise from a loss of N173.49 million recorded in its most audited financial statement for Q3, 2020.

key highlights of its earnings forecast for Q1 2021 when compared with Q3 2020 figures include;

  • Pre-tax profit increased to N88.4 million, +151.5% Q-o-Q.
  • Interest income increased to approximately N515.9 million, +55.45% Q-o-Q.
  • Net operating income increased to N421.94 million, +79.9% Q-o-Q.
  • Interest expense increased to N208.06 million, +63.95% Q-o-Q.
  • Operating expenses declined to N333.52 million, -17.9% Q-o-Q.
  • Credit loss expense increased to N19.83 million, +100% Q-o-Q
  • Gross earnings of N649.83 million
  • Taxation of N28.3 million
  • Other income of N133.84 million.

Bottom line

Despite recording not too impressive results in its last financial statements, the firm is, however, optimistic going for Q1 2021 as reflected in its forecast.

This optimism might be premised on the news of a positive general economy by Q1 2021, which will trickle down to various sub-sectors of the economy.

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Economy & Politics

Nigeria needs $3trillion in 30 years to reduce infrastructure deficit – Osinbajo

Vice President Yemi Osinbajo has stated that Nigeria will need $3trillion in the next 30 years to reduce its infrastructural deficit.

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Solar, FG to slash import duties on tractors, buses, others in 2020 Finance Bill, Nigeria will not issue Eurobonds, says Vice President Yemi Osinbajo, FG guarantees mortgage loan to low income buyers at low interest rate, FG inaugurates gold refinery project in a landmark event

The Vice President, Yemi Osinbajo has said Nigeria will need $3trillion in the next 30 years to reduce its infrastructural deficit.

He disclosed this while featuring at a webinar organized by the Bureau of Public Enterprises (BPE).

Osinbajo told the webinar that Nigeria needs to adopt new models of investments for infrastructural developments because relying on public expenditure alone is not sustainable.

READ: How digital transformation will impact Nigeria’s projected $8.79 billion economic expansion

The seminar discussed the roles of Public-Private Partnership (PPP) in developing Nigerian infrastructure. The Vice President said Nigeria still face a huge infrastructural deficit, despite government investment which is a roadblock to rapid economic growth.

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The Federal Government recognizes this fact, which is why we are considering other approaches to complement and boost financing for the development and maintenance of infrastructure in Nigeria.

READ: Nigeria’s Broadband subscriptions peak at 82.7m – Prof. Danbatta

“It is clear that this deficit can only be made up by private investment. Private sector is 92 per cent of GDP, while the public sector is mere 8 per cent. So, the synergy between the public and private sector through Public-Private Partnerships (PPP) is really the realistic solution.

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“The fact that only N2.49 trillion was appropriated for capital expenditure in 2020, reflects the importance of deliberate and pragmatic action to boost infrastructural spending.

READ: #EndSARS: Infrastructure and Works, Education, 3 others are prioritised in Lagos’ 2021 budget

“It seems to me to be quite clear that the financial outlay and management capability required for infrastructural development and service delivery outstrip the financial and technical resources available to government.

“In other words, the traditional method of building infrastructure through budgetary allocations is inadequate and set to become harder because of increasingly limited fiscal space,” he said.

READ: FEC okays FMBN’s request to purchase banking application software for N487.39 million

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He revealed that the FG has launched a series of PPP’s to enable Nigeria meet its infrastructure deficit needs, citing the roles of agencies like the BPE with PPP’s.

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The Federal Government has recently issued a circular on the administration of PPP projects in the country to provide the much-needed clarity.

READ: AfDB to support FERMA with $10 billion for roads, others 

“The circular re-emphasises that the BPE shall be responsible for the concession of public enterprises and infrastructure already listed in the First and Second Schedules of the Public Enterprises Act.

“The circular equally stipulates that the BPE shall act on behalf of the Federal Government, as the counterparty on all infrastructure projects being developed on a PPP basis,” he said.

READ: CBN launches Private Sector-led Accelerated Agriculture Development Scheme

He disclosed that the Infrastructure Concession Regulatory Commission (ICRC) would continue to act as the regulatory agency for PPP transactions, with directives including inspections and monitoring PPP projects.

“It is expected that this new policy direction would provide clarity to stakeholders and foster the improvement of PPP programmes in the country.

“Ministries, Departments and Agencies, as well as the multilateral agencies and our development partners are urged to support the PPP policy objectives and institutional arrangements already put up by government,” he said.

READ: FG says vehicle owners to pay N250,000 to convert from petrol to autogas

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What you should know 

  • Nairametrics reported last month that Moody Investors Services revealed that Nigeria needs to spend about $3 trillion in over 30 years to bridge the infrastructural gap experienced in the country.
  • The Minister of Works and Housing, Babatunde Raji Fashola, revealed that the Federal Government needs at least N500 billion annually for the next 3 years to develop and fix its 35,000 kilometres road network, as work continues on 13,000 kilometres of the network.
  • Nairametrics also reported last month that the FG approved the establishment of an infrastructure company that will be wholly focused on critical infrastructural investments in the country.

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Tech News

Stripe plans corporate banking services for merchants, vendors

Stripe Inc is partnering with American elite banks in offering corporate-banking services to its merchants and vendors.

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Stripe plans corporate banking services for merchants, vendors

Stripe Inc, one of the most valuable start-ups on this planet, is partnering with American elite banks such as Goldman Sachs Group Inc. and Citigroup Inc. in offering corporate-banking services.

This is as the fast-rising startup, known for simplifying payment, seeks to diversify its business offering, amid a competitive ecosystem that includes PayPal, Visa, Mastercard, Adyen.

READ: MainOne Cable: A decade-old journey to bridging the digital divide in West Africa

What this means

Stripe, best known for handling millions of online businesses and e-commerce web pages, will soon start offering some of its client’s interest yielding bank accounts, debit cards, and other cash-management services, according to a report credited to WSJ.

However, these service offerings listed are for its merchants and vendors that do business with Stripe.

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READ: Edlyft raises over $1.4 million venture capital during pandemic

  • Recall Nairametrics revealed how Stripe had raised $600 million to invest and acquire payments companies in developing nations. It disclosed that Nigerian startup, Paystack, had been on Stripe’s bucket list for a while since 2018 when Stripe led an $8 million funding round for it.
  •  Stripe acquired Paystack for an undisclosed deal believed to be worth over $200 million, making it the biggest fintech startup acquisition to date to come out of Nigeria, as well as Stripe’s biggest acquisition to date.

READ: America’s biggest food delivery app, DoorDash seeks for IPO approval

Patrick Collison, CEO of Stripe, spoke on the company’s strategy at the time it acquired Paystack. He said:

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“Stripe thinks on a longer time horizon than others, because we are an infrastructure company. We are thinking of what the world will look like in 2040-2050.”

He added that Stripe also planned to understand the ecosystem and keep its eyes open so it would see where help was needed, as the company did not tie up its investments into “complicated strategic investments.”

READ: Kaduna Inland Dry Port woos more partners with better service delivery ahead of 2021

READ: Nigeria owes foreign airlines $53 million as proceeds from ticket sales – IATA

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