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Economy & Politics

AfCFTA delay: A bane to Africa’s $3.4 trillion economic bloc

Wamkele Mene, revealed that the implementation of the AfCFTA agreement will not begin on July 1st, 2020 as planned due to disruptions of the pandemic

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AfCFTA,,Take-off of Africa Free Trade Zone suffers set back

According to local media reports, the newly elected Secretary-General of the African Continental Free Trade Agreement (AfCFTA) secretariat, Wamkele Mene, revealed that the implementation of the AfCFTA agreement will not begin on July 1st, 2020 as planned due to disruptions caused by the global pandemic. We recall the agreement which entered its operational phase on July 7, 2019, was expected to kick start in July 2020, following the ratification by 54 of all 55 African countries.

It was also reported that the AU summit which was scheduled to hold in South Africa on 30th May to encourage trade negotiators to complete their bargaining on tariff reductions, rules of origin, and other necessary regulations has been postponed.

READ MORE: The good, bad and ugly of low oil prices for Nigeria

The AfCFTA agreement, which is aimed at removing trade barriers and in turn boosting intra-Africa trade, was brokered by African Union (AU) and signed on by 44 of its 55 member states in Kigali, Rwanda on March 21, 2018. President Muhammadu Buhari, in July 2019, after initially withdrawing assent, signed the agreement at the 12th Extraordinary Session of the Assembly of the African Union in the Niger Republic.

The agreement requires members to remove tariffs from 90% of goods traded, allowing free access to commodities, goods, and services across the continent. According to International Monetary Fund (IMF), the elimination of tariffs could boost trade in Africa by 15-25% in the medium term. Once operational, the agreement is expected to create a US$3.4 trillion economic bloc, connecting 1.3 billion people across Africa, which would make it the largest trading bloc since the World Trade Organization was formed in 1994.

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(READ MORE: Manufacturers, construction companies to receive waivers from Lagos State during lockdown ease-up phase)

Specifically for Nigeria, the agreement was expected to open up the African market for key manufacturing companies in the country to support export sales whilst also raising the prospects of attracting foreign direct investment across the value chain and different compartments in the manufacturing sector.

Although the delay in implementation implies these benefits will not be seen in the short to medium term, we think it gives the country ample time to accelerate investment in critical infrastructure that will reduce the cost of producing goods locally and improve the competitiveness of local manufacturers.

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In our view, African countries with the requisite infrastructure needed for large scale manufacturing activities will be better placed to attract foreign capital from multinational companies who are seeking to establish manufacturing hubs into Africa to take advantage of economies of scale as well as the benefit associated with the absence of regional taxes made possible by AfCFTA.

 


CSL Stockbrokers Limited, Lagos (CSLS) is a wholly-owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission.

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Economy & Politics

Nigeria generates N416.01 billion from Company Income Tax in Q3 2020

Total company income tax generated increased by 3.48% in Q3 2020, compared to N402.03 billion recorded in Q2 2020.

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Avoid paying taxes, Nigeria generates N416.01 billion from Company Income Tax in Q3 2020

Nigeria generated the sum of N416.01 billion from Company Income Tax (CIT) in the third quarter of 2020. This was revealed in the Company Income Tax by Sectors report, recently released by the National Bureau of Statistics (NBS).

According to the report, the total CIT generated increased by 3.48% in Q3 2020, compared to N402.03 billion recorded in the previous quarter (Q2 2020). It reduced by 20.13% compared to N520.89 billion recorded in the corresponding quarter (Q3) of 2019.

READ: Nigeria’s Value Added Tax collection dips slightly in Q1 2019

READ: VAT revenue may have hit 4 year high in 2018

Highlights

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  • Company income tax generated year-to-date sums up to N1.11 trillion as against N1.26 trillion in the comparable period of 2019.
  • Professional Services including Telecoms generated the highest amount of CIT with N55.52 billion generated, closely followed by Other Manufacturing with N42.03 billion.
  • Banks & Financial Institutions generated a sum of N24.05 billion.
  • Mining generated the least, closely followed by Textile and Garment Industry and Local Government Councils with N120.93 million, N167.51 million, and N321.72 million generated respectively.

READ: FBN Holdings Plc posts Profit of N21.9 billion in Q3 2020

Out of the total amount generated in Q3 2020, N244.70 billion was generated as CIT locally, while N70.34 billion was generated as foreign CIT payment. The balance of N100.97 billion was generated as income taxes from other payments.

Automobiles and Assemblies grows CIT by 994%

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In terms of sectors with the highest increase in company income tax remittances, the Automobiles and Assemblies sector grew its CIT by 994%, from N81.6 million in Q2 2020 to N892.7 million. It was closely followed by the Gas sector, which grew its CIT by 626% to stand at N4.76 billion from N655.5 million.

READ: FG rejects calls for tax reduction, offers tax relief for donors to intervention funds

On the flip side, transport and haulage services recorded the highest decline in company income tax, as it reduced by 76% to stand at N7.35 billion from N31.1 billion. This is closely followed by Banks and financial institutions, which declined by 51% to stand at N24.1 billion.

READ: Unity Bank Plc posts gross earnings of N11.04 billion in Q3 2020

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Bottom line

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The rise in company income tax is an indication of the Nigerian government’s move to improve the generation of revenue from the fiscal side as against oil exportation. However, the halt in economic activities due to the COVID-19 pandemic contributed to the year-on-year decline in company income tax.

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Economy & Politics

Bus fare paid by Nigerian commuters increased by 68.8% in October 2020

The average fare paid by Nigerian commuters for a bus journey intra-city spiked by 68.82% from N190.86 recorded in October 2019 to N322.22 in October 2020

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Mile 2 Road, Bus fare paid by Nigerian commuters increased by 68.8% in October 2020

The average fare paid by Nigerian commuters for bus journey within the city spiked by 68.82% year-on-year from N190.86 recorded in October 2019 to N322.22 in October 2020. This was contained in the transport fare watch report, released by the National Bureau of Statistics (NBS).

The Transport fare watch report for the month of October 2020 covered the following categories namely: bus journey within the city per drop constant route; bus journey intercity, state route, charge per person; air fare charge for specified routes single journey; journey by motorcycle (Okada) per drop; and waterway passenger transport.

READ: Nigeria’s inflation rate jumps to 14.23% in October 2020

According to the report, the average fare paid by Nigerians for a bus journey within a city also increased by 4.03% when compared to N309.73 recorded in September 2020. Meanwhile, States with the highest bus journey fare within the city were Zamfara (N585.34), Bauchi (N504.78), and Cross River (N431.04); while States with the lowest bus journey fare within the city were Abia (N192.11), Kebbi (N205.47), and Borno (N208.15).

READ: These 3 states are the most expensive to travel from in Nigeria

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Highlights

  • Average fare paid by commuters for bus journey intercity increased by 9.25% to N2,209.84 as against N2,022.7 recorded in September 2020, while it increased by 35% compared to N1,636.86 recorded in the corresponding month of 2019.
  • States with the highest bus journey fare intercity were Abuja FCT (N4,376.09), Lagos (N3,073.41), and Sokoto (N3,055.12); while States with the lowest bus journey fare intercity were Bayelsa (N1,473.67), Enugu (N1,560.00), and Bauchi (N1,560.49).
  • Average fare paid by commuters for journey by motorcycle per drop increased by 3.88% month-on-month and by 115.50% year-on-year to stand at N265.41 in October 2020 from N255.51 and N123.16 respectively.
  • States with the highest journey fare for motorcycle per drop were Niger (N1,476.40), Kogi (N372.45), and Rivers (N352.47); while states with the lowest journey fare for motorcycle per drop were Adamawa (N78.49), Katsina (N106.20), and Kebbi (N135.75).
  • In terms of air travel, the average fare paid by passengers for specified routes single journey decreased by -1.70% when compared to N36,884.59 recorded in September 2020. It however increased by 18.42% (year-on-year) to stand at N36,256.08 as against N30,615.43 recorded in October 2019.
  • States with the highest air fare were Anambra (N38,500.00), Cross River (N38,460.00), Jigawa (N38,250.00); while States with the lowest air fare were Akwa Ibom (N32,750.00), Sokoto (N33,250.00), and Gombe (N34,800.00).

What you should know

Nairametrics reported in October that the average fare paid by commuters for a journey by motorcycle per drop, more than doubled in September 2020 when compared to the corresponding month in 2019, increasing by 111.11% to stand at N255.51 in the month.

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READ: NBS discloses States with highest bus fares in Nigeria (Full List)

Bottom line

The persistent increase in the prices of transport fares across the country is a resultant effect of the Covid-19 pandemic, which necessitated drivers and transporters to reduce the number of commuters they carry at a time.

This is in line with the health measures implemented by the Federal government to help curb the spread of the corona virus in the country.

Explore Data on the Nairametrics Research Website

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Economy & Politics

PIB and Electoral Amendment Bill pass second reading in House of Reps

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Reps to investigate alleged illegal withdrawal of $1.05 billion from NLNG account, NDDC Probe: Reps give Akpabio 48 hours to publish name of lawmakers who got contracts, PIB and Electoral Amendment Bill pass second reading at House of Reps

The Petroleum Industry Bill (PIB) and the Electoral Act Amendment Bill has passed second reading in the House of Representatives.

This was disclosed by Channels TV on Tuesday after both bills were addressed by Lawmakers for the second time during plenary.

On the Petroleum Industry Bill

Rep leader, Alhassan Doguwa, said the PIB has been in the pipeline since the firth assembly and hopes the 9th Assembly would be able to pass the bill.

Chairman of the House Committee on  Upstream Petroleum, Musa Adar, stated that Nigeria needs the PIB, as it does not have the luxury to be irresponsible with resources. Citing the effects of the pandemic on the economy, he added that Nigeria’s needs a mature oil industry that will maximize productivity and compete with other crude oil and gas exporting nations in the continent.

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Minority Leader, Ndudi Elumelu, said the PIB is a necessity, as the world is going green and Nigeria needs to maximize its oil and gas sector, and also explore other options.

The world is looking to go green in less than 20 years and it makes it pertinent for Nigeria to gain maximally from the oil sector and look to explore other oil products before petroleum goes obsolete as a commodity,” he said.

(READ MORE: The new PIB may scrap DPR, PPRA, others)

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On the Electoral Act Amendment Bill

The purpose of the Bill is to regulate the Electoral process across Federal and Local government levels, in order to give it more transparency.

The bill was sponsored by Rep. Aishatu Dukku (APC-Gombe). She added that the bill is necessary to fix Nigeria’s flawed electoral system. 

“This amendment has become necessary because of the flaws observed in our electoral system. It’s no longer news that our electoral experiences since 1999 show a strong correlation between an efficient and effective electoral legal framework and the conduct of free, fair, and credible elections.

“In fact, amendments of our electoral laws were long identified as priority legislation by the National Assembly, because of the need to consolidate on the gains of our democratic achievements and to also address the lacuna identified in the electoral legal framework.

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“A typical example is the case of the Kogi Governorship election in 2016, where a leading candidate died after the commencement of polls, but before the declaration of results.

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“In addition to this are concerns that the legal framework on certain issues should be well settled ahead of the 2023 elections, such as the use of technological devices like the card reader and electronic voting system.

“Also, criteria for substitution of candidates, disclosure of the source of funds contributed to political parties, replacement of lost or destroyed permanent voters card, the penalty for the possession of fake voters’ card, dates for conducting primary elections, shall not be earlier than 150 days and not later than 120 days before the date of the election, etc.

“The bill, therefore, seeks to address many loopholes in our electoral system by way of amending over 300 clauses (including new provisions) of the Electoral Act 2010,” she said.

What you should know 

Nairametrics reported last week that the Minister of State for Petroleum Resources, Timipreye Sylva said the Petroleum Industry Bill (PIB) may be passed into law by the first quarter of 2021.

“There is no better way of diversifying the country’s economy than through a well-developed oil and gas industry, particularly with the huge gas resources in Nigeria. So, PIB will be the most credible attempt towards a holistic diversification of the Nigerian economy,” he added.

House of Representative Speaker, Femi Gbajabiamila, also disclosed that the House would ensure that it passes the Petroleum Industry Bill within the next six months or probably less.

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