The Nigerian economy ended 2019 in what appears to be another major setback, as trade balance posted N579 billion deficit in the fourth quarter of 2019, no thanks to the surge in importation within the period.
According to the latest foreign trade report released by the National Bureau of Statistics (NBS) for full year 2019, this is the first time the Nigerian economy recorded deficit trade balance in a quarter since 2016m when it witnessed recession.
Nigeria’s trade balance historical trend (2016 – 2019)
It is worthy of note that at the end of 2019, Nigeria’s total trade was estimated at N36.15 trillion, a 108% rise when compared to N17.34 trillion recorded in 2016. This implies that Nigeria’s foreign trade has witnessed significant growth in recent years.
However, it is important to provide some insights into what is driving growth in the country’s foreign trade and the key implications ahead. Basically, foreign trade is the value of goods (import and export) a country traded with the rest of the world within a period.
So, if a country has more exports than imports, it is in a favourable trade position (surplus). On the other hand, if a country imports more than exports, then it is in an unfavourable trade position (deficit).
In 2016 Q1, Nigeria’s trade balance entered the negative territory, an unfavourable trade position with a N253.3 billion trade deficit, and this was largely driven by marginal increase in import. This followed consecutive trade deficits in Q2 and Q3 2016. By the end of Q2 2016, Nigeria had entered recession.
Over the years, since the post-recession era, Nigeria’s total import had dropped marginally below export, thereby leading to favourable trade balance. In 2019, Nigeria recorded positive trade balance between Q1 and Q3 2019, until a significant trade deficit was recorded at the end of Q4 2019. The trade deficit recorded in 2019 Q4 coincided with the period when the Nigerian government had ordered the customs to shut its land borders.
Import surge on the back of border closure
The quantum of illegally imported goods that flow into Nigeria has always been a constant sore spot for the country; hence, in August 2019, Nigeria closed its land borders in order to control the proliferation of smuggled items into Nigeria. However, critics of the government condemned the policy, stating that it would stifle businesses and lead to inflationary pressure.
Following the border closure, import has surged significantly, and inflation is equally on the rise, as the Nigerian economy continues to grapple with the impact of the closed borders. The surge in import suggests that goods formerly traded and those smuggled through the land borders are partly being redirected through sea.
The increase in import is expected to have a strong effect on the country’s depleting foreign reserves, and the Central Bank may be left with little or no choice but to consider another devaluation.
While Nigeria is yet to resolve the fallout from the closed borders as negotiations with other neighbouring countries are still ongoing, import may yet rise further, as Nigeria remains largely import dependent. This means the country may be in for another trade deficit in subsequent quarters, which will amount to increased pressure for another round of recessionary cycle for the economy.
Recession concerns intensify as Coronavirus dampens growth outlook
The outbreak of Coronavirus (COVID-19) in China, and subsequent rapid spread across countries, has crashed the global oil price. As at the time of this writing, Brent crude oil price has dropped to $35 a barrel, while WTI dropped to $31.
The drop in oil price due to COVID-19 has been driven by low demand for crude oil in China (second-largest economy in the world), as oil inventory continues to pile up. It should be noted that Brent oil at $35 a barrel is largely below Nigeria’s 2020 budget benchmark of $57. On the side, Nigeria may further have to approach the debt market.
Already, Nigeria is considering reviewing the budget benchmark; this has become necessary as oil price continues to plunge. Despite the decision of OPEC and its allies to cut oil production by 1.5 million barrel a day in the second quarter, this may not have significant push on oil price as the global oil demand continues to drop faster than supply.
For the Nigerian economy, while experts have predicted that Nigeria may not devalue naira in 2020, recent developments with the surge in import bill are expected to deplete the country’s external reserves further, and pressures will mount further on the Central Bank of Nigeria to pull the plug on naira in the medium term.
TikTok’s 38 year-old founder is worth $35.5 billion – Here’s what we know
At 38 years old, Zhang Yiming is the 39th richest man in the world.
TikTok a video sharing app was named the most downloaded app of the first quarter of 2021 but not much is known about its founder. The app now has over 689 million active users worldwide according to statistics from oberlo.com. It has also been downloaded over 2 billion times on App Store and Google Playstore. It is arguably the most popular video-sharing app out there and the numbers keep growing.
TikTok was able to grow at a faster rate than Facebook and Instagram since its startup. The man behind this massive success is currently worth $35.5 billion and he is our person of interest today.
Meet Zhang Yiming, the founder of Bytedance
38-year-old Zhang Yiming is the CEO and Founder of ByteDance, the parent company of TikTok. Zhang Yiming majored in microelectronics and software engineering at Nankai University. He worked for various tech startups including Microsoft before settling to start his own company.
The billionaire leads a very secretive lifestyle. He founded ByteDance back in 2012 and steered it all the way to financial success. He is currently worth $35.5 billion but his net worth is well on its way to doubling based on recent valuations.
ByteDance has two main flagship products – Toutiao, an AI-backed news aggregator and TikTok which he founded later after the success of Toutiao.
Revisiting the success of TikTok
Last year Zhang Yiming’s ByteDance was regarded as the most valuable startup in the world. TikTok became the most downloaded iOS app worldwide in the first quarter of 2019, according to the US research app Sensor Tower.
TikTok is available in 155 countries and in 75 languages.
Bytedance’s first major valuation was in 2018 where it was valued at $75bn according to Forbes. This was followed by another valuation which put it at $140bn according to CB Insights.
The latest 2021 valuation places ByteDance at over $250bn according to the South China morning post.
Zhang Yiming owns a quarter of ByteDance and with this recent valuation, his net worth is set to grow to $60bn according to experts in the field.
Donald Trump scare
The former president of the United States was on the verge of banning TikTok in the country. He claimed the App has ties to the Chinese government. This would have been a setback giving that the application is quite popular among US millennials and Gen Z. Donald Trump lost his re-election bid and very little has been said by the Biden administration on the issue.
What you should know
- At 38 years old, Zhang Yiming is the 39th richest man in the world. His parents were civil servants.
- The popularity of TikTok in the United States has raised concerns from US regulators.
FG explains why the loan amount for youth investment fund is limited to N300,000
At N300,000 per beneficiary, only 41,000 beneficiaries would be covered in the first tranche of N12.5bn.
The Federal Government has explained why it limited the loan amount for the current beneficiaries of the N75 billion Nigeria Youth Investment Fund (NYIF) to N300,000.
The government said that it had to place a limit of N300,000 for individuals and eligible businesses who meet the conditions and guideline in order to ensure that it gets to as many beneficiaries as possible.
This disclosure is contained in a statement signed by the Director of Press, Federal Ministry of Youth and Sports Development, who noted that the disbursement of the fund is being done in phases.
What the statement from the Federal Ministry of Youth and Sports Development is saying
The statement explained that the ministry had received more than 3 million applications for the initial N12.5bn made available adding that at the current cap of N300,000 per beneficiary, only about 41,000 beneficiaries could be covered.
The statement from the ministry partly reads, “The Ministry of Youth and Sports Development has been following with interest the reaction of some beneficiaries of the NYIF, particularly those expressing disappointment at the N300,000 cap on disbursement under the first tranche of N12.5bn.
Firstly, the framework specified N250,000 as the maximum for individuals and eligible businesses that are critical can access up toN3m subject to meeting key criteria set in the guideline and conditions.
Considering the number of applications received, there was the need to ensure spread and enable more beneficiaries enjoy the facility.”
The ministry assured beneficiaries that higher loan thresholds would be possible once additional funds were available in subsequent phases.
The ministry in the statement also noted that it is ideal to start and gradually increase, considering that there are lots of first-time borrowers as well.
The ministry reaffirmed that NYIF was not a grant, but a loan, targeted at supporting the youth to start small businesses or to inject funds into existing small businesses.
What you should know
- It can be recalled that the Federal Government had on October 15, 2020, launched the N75 billion Nigerian Youth Investment Fund, which was set up for investment in the innovative ideas, skills, and talents of Nigerian Youth.
- It is to also institutionally provide the Nigerian youth with a special window for accessing much-needed funds, finances, business management skills, and other inputs critical for sustainable enterprise development.
- The Federal Ministry of Youth and Sports Development is the lead implementation entity and is responsible for budgetary provisions and for funds mobilization.
Nairametrics | Company Earnings
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