The economy continues to recover, and the outlook remains broadly positive, though subject to some challenges; Fiscal performance is on-track but spending pressures are starting to emerge.
An International Monetary Fund (IMF) mission led by Edward Gemayel visited N’Djamena during February 6-12 to take stock of the latest economic and financial developments and follow-up on the implementation of the authorities’ structural reform agenda.
At the conclusion of the visit, Mr. Gemayel issued the following statement:
“Economic activity is expected to continue to recover and the macroeconomic outlook remains broadly positive. The non-oil economy is projected to grow at 3 percent this year backed by higher public investment and domestic arrears repayment as well as the pick-up in cotton and livestock. Oil GDP is expected to grow by 7.5 percent as a result of new extraction technologies as well as additional production from new fields. Inflation last year was in negative territory (-1 percent annual average), reflecting subdued food and transport prices and is projected to remain below 3 percent this year.
“Preliminary data suggest that performance under the IMF-supported program was broadly satisfactory in 2019, with fiscal performance on track. Both non-oil and oil revenues exceeded projections. The wage bill slightly exceeded its target, but this was offset by underspending on goods and services, mainly reflecting procurement problems. Domestic investments exceeded the end-year target due to security spending. Banking sector liquidity has improved, reflecting higher deposit collection, but vulnerabilities remain in some banks.
“Spending pressures are emerging, which could undermine the hard-won fiscal adjustment efforts implemented since the 2014-15 economic crisis. Maintaining fiscal discipline in the run up to the parliamentary and presidential elections is critical for macroeconomic stability and maintaining a sustainable debt position. To this end, the authorities’ efforts should continue to focus on strengthening domestic revenue mobilization, streamlining exemptions, improving VAT collection, controlling the wage bill, increasing social spending, and clearing domestic arrears. Staying the course with the reform agenda is equally important, including in the banking sector.
“The IMF team would like to thank the Chadian authorities and other counterparts for their hospitality, excellent cooperation, and candid and constructive discussions during the visit, and reaffirms the IMF’s support to the government’s efforts to implement their economic reform program. Discussions for the 6th and last review under the current ECF arrangement will be initiated in Washington during the Spring Meetings and pursued in N’Djamena at the end of April.
“During its visit, the mission met Mr. Tahir Hamid Nguilin, Minister of Finance and Budget, Mr. Issa Doubragne, Minister of Economy and Development Planning, Mr. Annour Mahamat Hassan, the National Director of BEAC, and other senior officials, as well as representatives of international development partners.”
MPC: Financial experts seek monetary, fiscal policies alignment
The experts spoke with the News Agency of Nigeria on Friday in Lagos against the backdrop of the 275th MPC meeting slated for Sept. 21 and 22 in Abuja.
They said that monetary and fiscal policies must align to grow businesses and attract investments into the country.
He noted that VAT increment was affecting both small and big businesses in the country.
“Increasing tax is not the best way to help this economy, because when the tax rate is high, employers will sack people from their jobs.
“When the tax is reduced, you will see increase in productivity, more tax returns and more employment.
“Central Bank of Nigeria should work with the fiscal section for their own policies to work because when CBN makes a policy that is contrary to the fiscal policy, it will not make any headway,” he said.
Unegbu said that challenges in the monetary system were huge and should be addressed beyond provision of palliatives for banks by CBN.
He said that the recent increase in electricity tariff when there was no stable power, should be addressed.
Adebayo Adeleke, former General-Secretary, Independent Shareholders Association of Nigeria said that the committee should find ways to ensure that the country did not plunder into recession.
“The committee should be looking at ensuring the continuity of policies that will not drive the country into recession.
“What CBN has done so far is to try as much as they can to discourage savings by lowering interest rate.
“There are two legs to it, if you lower interest rate so that people do not bring their money and dump in the bank, is because you want more money in circulation in the economy.
“The next leg is that we lower interest so that we can inflate the economy. The economy has taken a downturn because of COVID-19; a lot of businesses have been affected.
“So if you are closing the gate to deposit or by discouraging people with the lower interest rate, then we should lower the interest on borrowing.
“Interest on loan should be lowered. That will also encourage people to take more money to restart their businesses because we need to bring the economy back on stream,” he said.
Adeleke said he would be expecting to see more deliberations on how businesses could access more funds, which he believed was a major expectation of the general investing public.
Kurfi said that the committee should consider maintaining the rate on treasury bill, which will attract banks to lend out money to businesses.
“If you want to push the economy upward, you need to have lower interest rate in terms of borrowing.
“Treasury bill should be low to attract banks to lend out their money because if you remember in 2016 when the treasury bill was 15 to 16 per cent, banks took all their money to buy treasury bill and could not lend which affected the economy.
Kurfi said that devaluation of naira was another challenge to be tackled but envisaged that CBN would continue to intervene at least with the bureau de change to bring down the price of dollar.
He said that before CBN intervention, dollar was trading in the parallel market at N470 but now less at N450 or N445.
He expressed optimism that the upward price change of petrol would encourage establishment of new refineries and attract investors once the price is right.
Edited By: Grace Yussuf
FG, LASG inaugurates Eko MSME Fashion Hub-1
The Federal Government and the Lagos State Government on Friday inaugurated Eko Micro, Small and Medium Enterprises (MSME) Fashion Hub-1 at Old Alade Market, Ikeja, Lagos.
Speaking virtually during the inauguration, the Vice President, Prof. Yemi Osinbajo, reiterated President Muhammadu Buhari administration’s commitment to supporting the growth and development of MSMEs in the country.
Osinbajo said with the launch of the Eko MSME Fashion Hub-1, MSMEs in and around Ikeja would no longer have to travel far to use the equipment.
According to him, the fashion equipment are expensive for individual businesses to procure by themselves, hence, the need for the fashion hub.
”With the full scale production line, this hub will enable production of a diverse range of clothing and garments, wedding dresses, office dress.
”Very soon, the products of the hub will be ubiquitous on the streets and will be sourced around the country.
”The fashion industry will be one of Nigeria’s biggest sources of revenue.
”The shared facility scheme which we are launching today and this particular one seeks to provide high quality operating equipment which small businesses can access at a reasonable cost.
”It help reduce operating cost for users, allowing them to invest their savings in expanding their businesses and hiring more staff
”MSMEs are the engine for Nigeria’s economy because when they thrive, the country thrives and when they struggle, the country struggles,” he said.
The vice president said plans were also ongoing to commission similar facilities at Kaduna, Anambra and the Federal Capital Territory (FCT) before the end of the year.
According to him, the Fashion Hub 1 was expected to serve 380 Small and Medium Enterprises daily.
Osinbajo said that the federal government was committed to ensuring that MSMEs thrived through access to credit from the Central Bank of Nigeria (CBN), Development Bank of Nigeria and Bank of Industry (BoI).
He charged other state governments and the Organised Private Sector to emulate initiatives that would engender the development of MSME across the country.
Lagos State Governor, Mr Babajide Sanwo-Olu, said that in spite of the efforts of the small and medium enterprises, only about 40 per cent ever survive beyond five years.
Sanwo-Olu said that this made it impossible for the small businesses to contribute their quota to the country’s socio-economic growth on a sustainable basis.
He said that the shared facility that was being commissioned and handed over to the community was certainly a step in the right direction.
According to him, it is a win-win situation for everybody as it shows the progressive dedication to the eradication of poverty and the economic emancipation of the people
”We are here to witness the implementation of an innovative strategy that is expected to re-energise the fashion industry, stimulate creativity, and also create employment opportunities for our teeming population.
”The destiny of several Lagosians is about to positively change because of this facility. This is the beginning of many victories over unemployment and poverty,” the government said.
Also, Mrs Mariam Katagum, Minister of State for Industry, Trade and Investment, said the shared facility would provide a conducive environment for the SME space.
Katagum said that the initiative was one of the key take aways of the MSME clinic chaired by the vice president.
She said that shared facilities were effective tools that could address infrastructure challenges, which had hindered the growth of SMEs.
The minister commended the Lagos State Government for the laudable initiative, particularly at this time when support for SMEs was critical amid the pandemic.
Dr Lola Akande, Lagos State Commissioner for Commerce, Industry and Cooperatives, said that the centre was the first phase of the shared MSME Fashion facility.
Akande said that the facility was equipped with state-of-the-art machinery such as industrial button-hole machines, monogram machines, among others.
”This would serve for suits and shirts, tinko machines, straight sewing industrial machines, industrial embroidery machines, amongst others, to afford MSMEs in the fashion space the opportunity to utilise them for a token,” she said.
The commissioner said that the facility would also enhance productivity of quality apparel capable of competing favourably globally.
”In so doing, skilled and semi-skilled fashion designers who ordinarily would be thwarted by prohibitive start-up expenses are availed the privilege of access to these industrial machines for a token.
”This is aimed at ultimately creating jobs, boosting trade and commerce, improving income and increasing GDP as a corollary.
”This centre is also intended for capacity building and continued upskilling of those in the fashion industry; after all, education is known to be a life-long process,” she said.
The Managing Director, Access Bank Plc, Mr Herbert Wigwe, while acknowledging the outstanding growth of the Nigerian fashion industry, reaffirmed the bank’s commitment to grow the nation’s fashion industry.
”We will continue to partner with the fashion industry, because we believe it will boost local growth of SMEs in that space,” Wigwe said.
Edited By: Wale Ojetimi
NIGCOMSAT partners other satellite agencies to power 1st African Satellite-Based Augmentation System
This is contained in a statement by NIGCOMSAT General Manager, Corporate Affairs, Mr Adamu Idris in Abuja on Thursday.
According to him, the aim is to provide the first SBAS open service in this part of the world on NigComSat-1R satellite, a communications satellite managed and operated by NIGCOMSAT Ltd under the Federal Ministry of Communications and Digital Economy of Nigeria.
He said the open service was provided as part of the ‘SBAS for Africa and Indian Ocean’ programme which pursue the autonomous provision over the continent of SBAS services to augment the performances of the satellite navigation constellations GPS and Galileo.
“We are proud to be part of this ambitious programme to provide satellite navigation services in the African and Indian Ocean region.
” The use of our geostationary communication satellite, NigComSat-1R navigation payload to broadcast the first signal will be Africa’s premier communications satellite contribution to SBAS as a regional satellite-based augmentation system for the continent,”she said.
” The SBAS services will improve flight safety and efficiency in Africa, as well as support safety and commercial applications related to land, sea and rail transportation which are beneficial to the economy.
” It will follow the policy direction of the Minister of Communications and Digital Economy, Dr Isa Pantami in digitalising the Nigerian economy,”he said.
Lawal said the services was expected to grow the GDP and value propensity not only in the communications sector but aviation, maritime, railtransport, precision agriculture, survey, oil and gas,
He said it would boost security of strategic national infrastructure and mass market applications for sustainable development beyond Nigerian shores.
Lawal said the open service essentially aimed at carrying out technical trials as well as partnering with airlines, field demonstrations for aircraft and rotorcraft, to demonstrate the benefits of the future operational safety-of-life SBAS services expected from 2024.
“It is expected to include Precise Point Positioning (PPP) and emergency warning service to populations, which performance will be proven through demonstrations.
” The signal-in-space is generated by a dedicated system tested, developed as part of the SBAS for Africa and Indian Ocean preliminary design phase, which is financed by the EU and awarded to Thales Alenia space, a joint venture between Thales 67 per cent and Leonardo 33 per cent .
“The SBAS for Africa and Indian Ocean is based on the European EGNOS developed by the European Space Agency (ESA) acting under delegation of the European Commission and operated by the European GNSS agency GSA, “he said.
” It is compliant to the standards and recommended practices of the International Civil Aviation Organisation and the Minimum Operational Performance Standard developed by the Radio Technical Commission for Aeronautics (RTCA) organisation.
” It will be visible in the whole of Africa and the Indian Ocean up to the West Australian coast and also in Europe,” he said.
Edited By: Ali Baba-Inuwa
Botswana raises limits for domestic borrowing to nearly $3bn
Botswana’s National Assembly endorsed the doubling of the southern African country’s domestic borrowing to 30 billion pula (about $2.9 billion).
Thapelo Matsheka, Minister of Finance and Economic Development, had approached parliament seeking the approval of lawmakers to increase the bond programme ceiling from 15 billion pula (about $1.45 billion).
Against the backdrop of an economic slowdown caused by COVID-19 pandemic, Matsheka told parliament that increasing the limit for domestic borrowing was one of the fundamental options to fund the national budget.
Botswana, which boasts one of the highest sovereign credit ratings in Africa, is conventionally unenthusiastic about external funders for loans before exhausting all the available options domestically, hence increasing the bond programme ceiling.
“The development would cultivate more activity in the local capital market, which in turn would reduce the risks of drawing down from reserves and the risk of borrowing externally at exorbitant interest and foreign exchange rates,’’ Matsheka said after the parliamentary approval.
Moses Pelaelo, Governor of the Bank of Botswana, said borrowing more from local capital market offers the government a viable avenue for cost-effective domestic resource mobilisation for long-term investment and funding of government projects.
“This will result in a more frequent issuance of a sufficient quantum of domestic government securities in a predictable arrangement that will hopefully attract a larger pool of participants and support deficit financing with lower risks,’’ Pelaelo said.
The latest information from the Ministry of Finance and Economic Development indicate that Botswana’s gross domestic product (GDP) will shrink by 13.1 per cent in the 2020/21 financial year, with the budget deficit set to reach 5.9 per cent of the GDP.
According to the information, the projected shrinking of the GDP is the worst since the global recession of 2009, when the economy of the world’s second-biggest diamond producer by value shrank 7.7 per cent.
Edited By: Fatima Sule/Abdulfatah Babatunde