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Economy & Politics

Nigeria’s telecom sector posts double digit growth of 18.1%, manufacturing, others contract

According to the GDP report, the telecommunication sector grew by 18.1% in real terms during the second quarter of 2020.

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NCAA, Telecom masts, Why Nigeria’s Data woes may not end soon 

Nigeria’s telecommunication sector has proven to be one of the biggest gainers amid the COVID-19 pandemic. The sector recorded an 18.10% growth in Q2 2020. This is according to the latest Gross Domestic Product (GDP) report released by the National Bureau of Statistics. 

According to the GDP report, the telecommunication sector grew by 18.1% in real terms during the second quarter of 2020, compared to 11.34% recorded in the corresponding quarter of 2019, and 9.71% in the previous quarter (Q1 2020).  

The COVID-19 induced lockdown significantly disrupted the Nigerian economy in the second quarter of 2020. However, the telecommunication sector came out resilient, driven by increased demand for data usage and growth in the number of mobile subscribers. 

READ: Five oil majors reduce value of their assets by $50 billion in Q2

Nigeria’s telecom sector posts biggest growth in 6 quarters  

Broadly, the Information and Communication sector is comprised of the four activities of Telecommunications and Information Services, Publishing, Motion Picture, Sound Recording, and Music Production; and Broadcasting. 

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Information and Communication (ICT), as a broad sector, grew by 15.1% and contributed 17.87% to the total value of real GDP (N15.9 trillion) in the quarter. 

In Q2 2020, the telecommunication sector grew by 18.1% year-on-year, while it grew by 24.8% quarter-on-quarterThis is the biggest growth the telecom sector would record since Q4 2018, when the telecom sector posted a GDP growth of c.19%. 

READ ALSO: Jumia confirms COVID-19 lockdowns did not help e-commerce revenues

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Meanwhile, the agric sector slowed, while manufacturing, trade, and othershrunk 

Nigeria’s agricultural sector slowed down in Q2 2020, with a growth of 1.58% growth (year-on-year), from 1.7% in Q2 2019 and 2.2% in the previous quarter (Q1 2020).  

The report showed that other critical sectors of the economy such as manufacturing, transportation, construction, accommodation and food service, education, real estate, and trade also recorded significant contractions in the quarter under review.  See the indicators below:

  • Nigeria’s Manufacturing sector contracted by 8.78% in Q2 2020, from -0.13% and 0.43 recorded in Q2 2019 and Q1 2020. 
  • Oil refining, a component of the manufacturing sector, dipped by 67.7% (year-on-year).  
  • Transportation and storage sector contracted in real terms by 49.23% (year-on-year).  
  • Accommodation and food services contracted by 40.19%.
  • Construction sector shrinks by 31.8%. 
  • Education sector down by 24.1%.  
  • Other sectors with significant contractions include; Real Estate (21.99%), Trade (16.59%), Professional & Technical services (15.41%), other services (15.07%). 

READ: 2020 Q2 Analysis: Conoil Plc, hanging by the thread

Key Takeaways 

The Nigerian economy, during the quarter, witnessed the ripple effects of the twin shocks weakened global oil price which led to a decline in Nigeria’s oil revenue, and the COVID-19 induced lockdown which almost grounded the economy to a standstill. 

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The telecom sector has remained resilient amid the COVID-19 pandemic given the surge in the demand for data usage and increase in total mobile subscribersDue to the COVID-19 pandemic, organizations are adjusting to digital workspace, a new normal which is expected to increase data services, and further enhances growth in the sector in the short to medium term 

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READ ALSO: UPDATED: Nigeria’s GDP contracts by 6.10% in Q2 2020, as critical sectors plunge

While most sectors recorded negative growth in Q2, the trend may subsist in subsequent quarters of the year as concerns about emergence of second wave of the COVID-19 pandemic may distort the recovery trajectory of critical sectors 

Nairametrics Research team tracks, collates, maintains and manages a rich database of macro-economic and micro-economic data from Nigeria and Africa. Our analysts share some of the data collated on Nairametrics, using formats such as docs, tables and charts etc. The team also publishes research based analysis as articles on a regular basis.

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Economy & Politics

Emefiele tells economists to stop “overdramatizing” analysis that can create Panic

CBN has assured that the nation’s economy will emerge out of recession in the first quarter of 2021.

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CBN health intervention fund gets new interest rate by March 2012, Nigerian banks’ non-performing loans drop significantly by 41% in 2019, External reserves decline by over 8% in 3 months, Nigeria’s external reserves increase by $1.36 billion in 13 days

The Central Bank of Nigeria (CBN) has assured that the nation’s economy will grow by 2% in 2021. The apex bank is optimistic that its various intervention will make Nigeria emerge out of recession in the first quarter of 2021.

This was disclosed by the Governor, CBN, Godwin Emefiele while delivering his keynote address at the 55th Annual Bankers Dinner of the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos on Friday.

READ: Total credit to the economy rose to N19.54trillion – CBN Governor

What he is saying

He said, “We expect that growth in 2021 would attain 2.0 percent. It is important to insulate the economy from shocks that may undermine the attainment of the projected 2.0 percent economic growth.

However, downside risks remain, as restoration of full economic activities, particularly in service-related sectors, remains uncertain until a COVID vaccine is produced and made available to millions of people across the world.

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READ: Dark Clouds loom for investors as stocks fall 8% in first half of 2020

“Second, with the significant rise in cases in advanced markets and the imposition of lockdowns in parts of Europe, concerns remain on the impact this could have on growth in advanced economies, commodity prices and the financial markets.”

He emphasized on the need to find ways to insulate the economy from the impact of these shocks through diversification efforts, while also working to ensure that the nation adheres to safety protocols in order to prevent a surge in COVID-19 related cases, as this could further cripple economic activities.

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READ: CBN discloses how much has been disbursed from N50 billion COVID-19 intervention fund

Stop overdramatizing analysis

Emefiele appealed to economic analysts to stay clear from analysis that can create panic and thus hamper the economic recovery process. “When you overdramatized you create panic in the system and that slows down the process of recovery.

“Our actions in 2021 would be guided by the considerations that emerged from the Monetary Policy Committee meeting of November 23 & 24, 2020, which sought to address the major headwinds exerting downward pressure on output growth and upward pressure on domestic prices,” he added.

Mr. Emefiele has often accused “armchair” economists of making exaggerated comments when expressing their views on the economy.

Explore Data on the Nairametrics Research Website

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READ: Finance Minister gives reason FG approached China for $17 billion loan

What you need to know

On November 23, 2020, Nairametrics reported that the Minister for Finance, Budget and National Planning, Mrs. Zainab Ahmed, said the country will exit recession by the first quarter of 2021 as the government is working towards reversing the declining economic trend in the country.

  • The Finance Minister said the COVID-19-induced recession followed the pattern across the world, where many countries had entered an economic recession.

READ: Nigerian economy going into recession, might contract by -8.9% – Finance Minister

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Economy & Politics

Nigeria edges closer to getting World Bank loan, in the final stages of talk

The Finance Minister has disclosed that Nigeria has fulfilled the conditions and is in the last stages of securing a World Bank loan.

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FG projects spending plan of N11.86 trillion and deficit of N5.16 trillion,IMF, International monetary fund, Zainab Ahmed, Nigeria's Minister of Finance, Budget and National Planning

Nigeria is set to achieve its plans of getting the $1.5 billion World Bank loan package as it is in the closing stages of the deal following its fulfilment of the conditions set by the international multilateral organization.

This disclosure was made by the Minister for Finance, Budget and National Planning, Zainab Ahmed, during an interview on Friday, November 27, 2020, with Bloomberg Television.

While pointing out that Nigeria’s senate approved the borrowing plan from the World Bank in June, Ahmed said the board of the multilateral institution will discuss the loan package at their next meeting.

What you should know

It can be recalled that the World Bank loan which had been sought by Nigeria in the wake of the devastating impact of the coronavirus pandemic, was being delayed by the Brettonwood institution due to concerns over reforms as it feels that Nigeria has not shown enough commitment towards achieving them.

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Some of the reforms include the unification and flexibility of the exchange rate, removal of fuel subsidy, increase in electricity tariffs amongst others.

However, it seems that with the recent deregulation of the downstream sector of the oil industry with the attendant removal of fuel subsidy and increase in electricity tariff, some of those concerns of the World Bank are gradually being sorted out.

Ahmed also said that Nigeria is considering joining the G-20 debt-relief initiative and is talking to commercial lenders to secure their backing.

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She said, “We will consider joining as long as it is safe for us to do so. Nigeria couldn’t participate initially because some of the conditions were unfavourable for existing loan commitments with bilateral lenders and other international borrowings.”

On the increased gap between the official rate and parallel market rate, the minister said the government is concerned about the widening gap in the naira’s exchange rate on the official and parallel markets.

She said, “We have been taking measures to close the gap. We hope to get to an even level very soon so the impact of the exchange rate will become moderated.”

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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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