The President of the Republic of Ghana perfectly captured the rhetoric essential in the fight against the Coronavirus pandemic when he stated, “We know how to bring the economy back to life. What we do not know is how to bring people back to life.”
So how exactly will the economy look like after this difficult time? There’s never a predestined image of a post-crisis economy, only speculations, and eventually, celebrations of the most accurate economists.
Hyman Minsky’s financial instability hypothesis for instance. Minsky proposed theories on financial market fragility and predicted events that could become of them. But it was not until after his death that these events eventually occurred and his predictions came to fruition.
His theory, which received belated and revived attention during the 2007-08 financial crisis, argues that the accumulation of unfettered debt by the non-government sector is a key mechanism that could plunge the economy into a crisis. And further described how stability could be destabilizing, generating the term ‘Minsky Moment’ coined by later economists.
There is perhaps a lot of empirical data from noteworthy events that we can only presume, points us to an eventuation we may or may not like. Economists generally predict outcomes based on contemporary events, or in cases like Minsky’s, constructed scenarios.
Look back to post-9/11 and how it has continued to inconvenience us to this day, Arabs in particular, having been subjected to excessive and unnecessary scrutiny while traveling. Every Arab speaking bearded man was given a potential terrorist treatment. As was the case to some extent in Nigeria after Boko Haram, as regards to Northerners, or Africans during the Ebola pandemic.
This points to a potential world where the Chinese will be subjected to similar persecution under different circumstances as already evidenced in a few viral videos or perhaps remarkably Africans (Nigerians in particular) being the victims in China.
More scrutiny measures soon followed as countries began spying on citizens and other countries alike. This included monitoring of emails, phone calls, social media footprints, and even drawing feeds through device cameras to catch a glimpse of anything relating to terrorism. A post-COVID economy could also create an obsession for acquiring health-related information by governments, be it legal or illegal. With inferior sophistication and magnitude to that of post-9/11.
An inevitable effect should be the long-overdue increase in health sector expenditure, especially in countries with poor health facilities like Nigeria. It is however unfortunate as to the circumstances that may finally lead to this deferred action.
More health inspections could also be prompted, and not only in health facilities but also in restaurants and other businesses leading to a prevalence of hand sanitizers, and prolonged use of face masks. This could also lead to a lockdown of businesses deemed below health standards. Or a lack of patronage due to the public’s overcautiousness in matters relating to health.
With increased investment in healthcare, we may be accustomed to constant health-related advertisements on social media or upon visiting every other site on the internet. And speaking of the internet, a spike in virtual learning and the utilization of online courses in a prolonged practice of social distancing.
The 2007-08 financial crisis also had lasting effects on world economies which could similarly manifest in a post-COVID economy. Perhaps the most evident would be the rise in global debt and a fall in interest rates. The IMF and World Bank will naturally serve as sanctuaries for countries. But having had a somewhat negative effect in their push for neoliberal and globalization policies, most notably in Africa and South America, countries could be wary of the effects of their association with these organizations. It does, however, seem like an ideal time to revise these policies.
In a bid to stimulate the economy by both governments and financial institutions, after what can only be hoped to be a short-lived loss of confidence in stock markets and a fall in asset prices, market distortions and higher transaction costs may emerge. Prompting endless assessments by neoclassical economists using Harberger triangles to point out caveats as to its exacerbation and effects on the real economy. And discourse either on social media or news outlets constantly uttering the words ‘quantitative easing’, ‘palliatives’ or ‘relief funds’ accompanied by pictures of and words spoken by finance heads.
After several observations, scrutiny, and warnings the economy will eventually recover. And at a pace determined by leadership, may even boom, which may or may not be a boon.
And while some of these effects may prove lasting, others will prove to be merely manifests of our vivid memories which is where is left to be seen.
But for now, stay home and stay safe.
Power: Nigeria records transmission peak of 5,459.50MW – TCN
TCN has announced that it hit a peak transmission of 5,459.50MW on the 28th, October 2020.
The Transmission Company of Nigeria (TCN) announced that it hit a peak transmission of 5,459.50MW on the 28th, October 2020.
This was disclosed on Thursday in a statement by Ms Ndidi Mbah, General Manager, Public Affairs, TCN.
Good Job from the Men and Women of the Transmission Company of Nigeria and everyone within the Power Sector.
— Engr. Sale Mamman (@EngrSMamman) October 29, 2020
She said Nigeria hit the milestone on October 28th and surpassed the earlier record of 5,420.30MW achieved on August 18.
What you should know
Nairametrics reported that the Minister of Power, Engineer Sale Mamman, disclosed that Nigeria’s installed grid power generation capacity has grown from 8,000MW to 13,000MW under the leadership of President Muhammadu Buhari.
“The new peak surpasses the 5,420.30MW achieved on Aug. 18 by 39.20MW,” Ms Mbah said.
The Acting Managing Director, Mr Sule Ahmed Abdulaziz, commended all the players in the power sector value chain for the feat.
He attributed the gradual but steady improvement in the quantum of power delivery to collaboration by the sector players, as well as, the unbridled effort by the Federal Government – through the Ministry of Power – in setting the right environment for seamless operations.
The Acting Managing Director said the company will continue workings towards improved power transmission across the nation.
Nairametrics reported in August that the Federal Government of Nigeria revealed that the Siemens $2 billion power deal, under the Presidential Power Initiative (PPI) will save the nation over $1 billion annually.
Structure of the PPI funding:
- 85% from a consortium of banks guaranteed by the German government through credit insurance firm, Euler Hermes.
- 15% of the FG’s counterpart funding.
- 2–3 years moratorium.
- 10–12 years repayment at concessionary interest rates.
CBN grants Mortgage Refinancing Companies approval to refinance Non-member banks
The CBN has expanded access to mortgage financing by removing restrictions on refinancing mortgages earlier imposed.
The Central Bank of Nigeria (CBN), has granted approval to Mortgage Refinancing Companies (MRC), to re-finance non-member banks.
This is contained in a circular referenced FPR/DIR/GEN/CIR/07/056 and signed by Ibrahim Tukur, the Director of Financial Policy and Regulation Department, CBN.
The circular improved on the earlier provisions contained in section 184.108.40.206 which states that “A mortgage refinance company (MRC) shall not, without the prior approval of the CBN, extend total outstanding credit to any single borrower, which is equal to or more than twenty times the value of the borrower’s shares with the MRC or 25 percent of its shareholders’ funds unimpaired by losses.”
What this means
Based on the provisions contained in the latest circular, MRCs are now free and legally permitted to refinance the qualifying mortgages of banks and all other non-members ( that do not hold equity), subject to meeting all other relevant requirements specified in the framework.
In a nutshell, the restriction on non-member mortgage lenders from refinancing their mortgages with MRCs has been removed.
Why this matters
Prior to the provisions contained in the latest circular, CBN had expressed fears that provisions of section 220.127.116.11 negatively impacts the mortgages sub-sector, as it constrains the MRCS from refinancing the mortgages of non-shareholder banks. Therefore, the new order will help to remove the restrictions already highlighted.
In lieu of this, the latest circular stated that the provision of section 7.3.1 5 is hereby revised to “the MRC shall not, without prior approval of the CBN, extend total outstanding credit to any single borrower, which is equal to or more than 25 percent of its shareholders’ funds unimpaired by losses,” the circular reads.
Nascon Allied Industries Plc: Increase in sale of goods boosts revenues
Nascon Allied Industries Plc recorded a boost from an increase in the sale of goods revenue-generating unit
Nascon Allied Industries Plc recorded a boost from an increase in the sale of goods revenue-generating units, as total revenues increased slightly. The company reported revenues of N21.87 billion in 2020 (9months) – 4.01% increase compared to N21.03 billion in the corresponding period of 2019.
What you should know
Key highlights from 2020 (9months) results
- Revenues increased by 4.01% from N21.03 billion to N21.87 billion YoY.
- Revenues from sale of edible, refined, bulk grade salt; seasoning and vegetable oil, increased to N21.87 billion, +22.53% YoY.
- Other income increased to N12.81 million, +27.43% YoY.
- No revenue was recorded for freight income on the deliveries of salt and seasoning income-generating unit.
- Gross profit increased to N8.96 billion, +74.56% YoY.
- Operating profit increased to N3.64 billion +18.60% YoY.
- Pre-tax profits increased to N3.47 billion, +16.63% YoY.
- Post-tax profits increased to N2.29 billion, +13.27% YoY.
- Earnings Per Share increased to 115 kobo, +12.75% YoY
- Total assets increased to N44.36 billion, +45.79% YoY.
- Total liabilities increased to N32.04 billion, +67.21% YoY.
- Total equity increased to N12.32 billion, +9.35% YoY.
Nascon Allied Industries Plc recorded a boost from increase in sale of goods revenue-generating unit, but no revenue was recorded for its freight income on the deliveries of salt and seasoning revenue generating-unit.
Though companies have generally recorded decreased revenues in the last three quarters, mostly due to COVID-19; Nascon Allied Industries Plc was able to increase its total revenues and pre-tax profits in the period under consideration.