Nigeria’s economy faces a double threat from the coronavirus pandemic and lower oil prices, which have badly affected its revenue and foreign exchange earnings.
In a chat with CNBC Africa, the Partner and West Africa Tax Lead at PwC Nigeria, Taiwo Oyedele, looked at how Nigeria could cope with the strain on revenue targets and options available to the Government.
Oyedele said, ”This is a very difficult time for the global economy, even more still for a developing country like Nigeria where there is a lot of reliance and dependence on crude oil revenue to fund the government as well as foreign exchange earnings”.
In the interview, Oyedele, pointed out that in a web dialogue series, the Minister for Finance, Budget and National Planning, Zainab Ahmed, and other top Government officials handling the economy disclosed that the Government was planning a further downward revision of the 2020 budget oil benchmark to $20 per barrel, which would be too low and probably below production cost.
Also, as a result of the impact of the coronavirus pandemic, the Federal Government revised downward the targets of revenue-generating agencies like Nigerian Customs Service, FIRS and others.
Even the recent receipt of the $311 million Abacha loot was deemed grossly inadequate to plug the huge revenue hole, created by the economic crisis.
On the palliative from the tax authority, he feels that the government should come up with measures that will have an immediate impact on businesses and add more cash to their businesses and not just extension of the filing deadline.
He said, ”What we are seeing mostly from government, has been an extension of filing deadline which means that you don’t have to file your returns now, you can file it later, in a few instances, you have an extension of payment of taxes. Though I see that the extension of taxes will help with the cash flow but extension filing of returns does not solve the problem”.
The PwC tax partner admitted that Nigeria did not have the financial resources of some bigger economies to provide palliatives like cash transfers, so the citizens were in for rough times.
He suggested that although the Federal Government, through the CBN, was providing intervention funds for some SMEs and households, more of the intervention should be targeted at the most vulnerable sectors like hotels, hospitality, aviation, transportation and others. Even at that, special attention should be given to the most vulnerable people in this sector.
Most importantly, Oyedele, said the Government needs to look at how they can raise revenue in these difficult times, without creating economic problems and dislocations.
He said, ”Government needs to look at areas where we seem to be wasting revenue, the subsidy is the biggest one. So we have a subsidy on petroleum products, particularly petrol. The government says we have removed subsidy but they are not paying attention to the fact that we have 3 components of subsidy. There is under-recovery, that is what has been removed; there is foreign exchange subsidy, that has not been removed; there is tax subsidy, that has not been removed”.
These subsidies, which involve spending a lot of resources that could have been added to the country’s revenue, include:
As for the foreign exchange subsidy, he pointed out that this can be removed by harmonizing the rate at which everyone gets the foreign currency. This will mean not given concessionary interest rates to petroleum products importers, but rather the market-driven rates.
Oyedele said that if you include that the taxes that should be on petroleum products like VAT and Excise duty, then the government should be looking at a revenue of about N2 trillion.
He also said, ”You have subsidy on electricity tariff, that’s about N1 trillion. The government needs to find a way to remove that. You also need to find out how do you harmonize the tax waivers and incentives that are not really adding value to the economy”.
The PwC boss said that by the time you put together the revenue that can be raised by doing away with these subsidies, one can easily raise between N3 trillion and N4 trillion in revenue, even with the biting economy. A tidy sum to help with the challenges faced by the country.
Skills Africa needs for sustainable development
Over a billion people with 5 official working languages – Arabic, English, French, Portuguese and Swahili , will again celebrate Africa Day this year.
From Addis Ababa to Durban, Lagos to Cairo, from the Sahara Dessert to the Nile River, over a billion people with 5 official working languages – Arabic, English, French, Portuguese and Swahili – will again celebrate Africa Day this year.
A day to remember, reminisce and celebrate successes recorded against the struggles for independence, freedom from apartheid and colonization. Although, with the new normal brought about by Coronavirus, the 2020 celebrations would be quite unlike previous years.
The Africa Union (Formerly OAU) has recorded good milestones in terms of political independence and self-governance. So now is a good time for Africa to reflect on our independence.
On reading the objectives of the Africa Union (AU), words like independence, territorial integrity, human rights, security, cooperation are splattered across the pages. Significantly, none of the AU objectives seeks economic autonomy for Africa or her member states. This is a fundamental flaw which speaks directly to Africa’s issue of having a large population without the requisite skills for growth.
Our education is largely dependent on the western curriculum and narrative. There is hardly any major infrastructure, industrial or development project in Africa with 100% African content in manpower, materials or capital.
It is now well established and more evident that political independence without economic independence is like a car without an engine. Economic empowerment is the nucleus of national development. No fewer than 14 West African countries currently use CFA Franc, with some having used the currency for at least 75 years. This goes beyond nameplate as the Bank of France holds half of those countries’ currency reserves. This is effectively cutting their growth capacity by 50%.
8 of those 14 countries will relinquish the CFA franc for the new ECOWAS currency, ECO (to be launched in July 2020). However, there is no indication that the affected African leaders would ask France for compensation for the years of economic sabotage to their countries. The introduction of the ECO was to bring a ray of hope, but we hope the real difference would not just be in the colour of the currency. This is because the ECO will not be autonomous but would be pegged against the Euro.
France is not alone in the economic sabotage of Africa, they are in the good company of the United Kingdom, the US and Belgium, to mention a few. However, are these foreign countries to blame? Africa got her independence, but African leaders refuse to be independent and the dependent mentality is also enshrined in the AU objectives.
One of the AU objectives states “to work with relevant international partners in the eradication of preventable diseases and the promotion of good health on the continent.” The statement looks good superficially, but it is enlaced with aid orientation, the lack of drive for self-reliance, and a beggarly mindset.
Let us educate Africa to pursue the development of its people, with core skills that are necessary to deliver the quality of the progress and growth that Africans desire. African construction companies should make African infrastructure and 100% African content should be the target in automobile engineering, healthcare, information technology,
Necessity is said to be the mother of invention. The need for Africans to lead Africa out of poverty, tyranny and underdevelopment is a matter of great importance, far beyond just necessity. Every African must desire to get skilled, and not just education, as we currently have it. We must have the competence to develop our agriculture system, mine Africa’s natural resources and add value by processing them locally.
Africa Day would only be truly worthy of celebration when African people and countries are skilled enough to accomplish our dreams of self-reliance and economic independence.
Article written by Olatunde Akintola. Olatunde is a Fellow of the Institute of Chartered Accountant of Nigeria and alumni of Manchester Business School. He writes from Lagos.
Tiktok’s In-App revenue surges amid lockdown
ByteDance Ltd’s brainchild, TikTok, together with Douyin ranking tops globally on mobile apps with the highest revenue generated for the month of April.
The meme-making business has proven to be worth all the fuss, with TikTok, as well as its Chinese twin app, Douyin, ranking tops globally on mobile apps with the highest revenue generated for the month of April.
Sensor Tower, notes that just in the first quarter of this year, ByteDance Ltd’s brainchild, TikTok, together with Douyin which caters to the Chinese market, generated 315 million downloads globally, from the 187 million it had just a year earlier.
The ranking, which was based on their in-app purchases, reveal a tenfold increase, as the companies garnered a whopping $78 million in revenue. The Chinese market is said to have contributed 86.6% of Douyin’s revenue, followed by the U.S market which contributed 8.2%.
This places them ahead of older names like Netflix & YouTube. As opposed to using subscriptions like these established brands, TikTok and Douyin allow users to purchase virtual currency to spend on their favorite content creators.
(READ MORE: Does YouTube stand a chance against TikTok?)
While ByteDance is exploring the world of online commerce, it continues to rely on advertising as its primary income source. However, Emarketer projects that more than 75 million US social network users will make at least one purchase from a social channel in the year 2020.
Sanwo-Olu to virtually inaugurate projects as he presents scorecard of first year in office
Some of the projects to be commissioned will be done virtually, while a few will be done on-site.
Lagos state governor, Babajide Sanwo-Olu, will virtually inaugurate housing, education, and road projects on May 29, as part of activities to mark his first year in office.
According to a report by NAN, the projects are part of the government’s efforts to renew infrastructure in critical sectors and to make the commercial centre a smart city.
Some of the projects to be commissioned will be done virtually, while a few will be done on-site.
Lagos state Commissioner for Information and Strategy, Mr Gbenga Omotoso, listed some of the projects in an official statement. He said:
”In the education sector, Sanwo-Olu will conduct virtual inauguration of completed classroom blocks in Maya Secondary School, Ikorodu; Eva Adelaja Junior School, Bariga; and Saviour Primary School, Ifako-Ijaiye, among others.
“Virtual inauguration of completed works such as the Concrete Jetty in Baiyeku, Ikorodu, Aradagun-Ajido- Epeme Road in Badagry, and the Maryland Signalisation project also form part of the itinerary to commemorate the anniversary.”
Omotoso also stated that the Governor would inaugurate the 360-unit Lagos Homes in Ikorodu, and then visit Igbogbo Baiyeku IIB Estate, Lekki, and the Courtland Villas on Femi Okunnu Estate during the week.
Plans for celebrating Children’s Day
In a related development, Governor Sanwo-Olu will deliver an address on Wednesday May 27 to mark the children’s day celebration, and the 53rd anniversary of Lagos state.
Omotoso, however, noted that all celebrations would be kept on the low in reflection of the current challenges and realities of the COVID-19 pandemic.
Presenting one-year scorecards
The activities for the week are expected to begin with press briefings at J.J.T Park in Alausa on May 27, where members of the State Executive Council will present their scorecards in line with the six pillars of the state’s T.H.E.M.E.S Agenda.
According to the information commissioner, there will be two sessions of press briefings daily from May 27 to June 3, as the Governor considers it expedient to render a stewardship account of the last one year.
“Three special publications highlighting the achievements of the Babajide Sanwo-Olu administration and testimonies of beneficiaries of various initiatives of the government are slated for presentation to the public by the governor and his Deputy, Dr Obafemi Hamzat,” he added.