Transport fares jump 50% in Lagos on Okada, Keke ban
Steady demand + reduced supply = higher price
Steady demand + reduced supply = higher price
Lagosians paid 50 percent more to commute, after a state-wide restriction of Motorcycles and Tricycles popularly called Okadas and Kekes from its highways limited transportation options and left many stranded at bus stops on Monday.
For instance, the cost of transportation by public bus from Yaba to Obalende rose by N100 to N300 per head. Hailing riding taxis also increased their rates following a surge in demand fuelled by the ban policy.
BusinessDay check showed that Sabo to Victoria Island which used to cost N2,000 now goes for an average of N5000 to N6000 with a minimum of N3000 on a popular ride-hailing platform.
“Fares are higher due to increased demand,” both Uber and Bolt said yesterday.
Lagosians interviewed at bus stops say they have to stand under the sun for hours because buses are not available or too expensive. Governor Sanwo-Olu on Sunday directed the management of Lagos Bus Services Limited (LBSL) to deploy 65 buses to ply major routes from Monday.
Meanwhile, Rotimi Amaechi, the minister of Transportation told ChannelsTV that the FG cannot intervene in the matter as it is a state issue. The minister, however, warned that unemployment resulting from the policy might lead to an increase in crime rate.
New VAT means you get less value for voice calls & data
While the increase of VAT by 2.5 percent points to 7.5 percent does not mean a N1,000 call credit will now cost you N1,200, your call volume and data volume will be slightly reduced, a source in the telecoms industry told BusinessDay.
The new VAT is part of reforms signed into law by President Muhammadu Buhari in the new finance Act that took effect February 1.
The law aimed at improving tax regulations, revenue flow to the government and aligning Nigeria’s tax regime with global best practices has been praised by some experts as being supportive of MSMEs and the economy.
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“Nigeria still pays one of the lowest VATs in Africa. Some countries pay up to 15-20 percent as VAT,” the source told BusinessDay.
Following the signing of the finance bill into law, the Association of Licensed Telecoms Operators of Nigeria (ALTON) notified customers on the “application of the new VAT rate on all purchased telecommunications products and services with effect from February 1 2020,” ALTON Chairman said.
Stocks hit 3-wk low as bears hold sway
The equities market lost for the sixth-straight session by the most since mid-January to fall to the lowest in nearly a month.
28,533.40 All Share Index point is the lowest since January 8.
Banking stocks shed 3.85, the most among five sector trackers covered by BusinessDay, dragging the broad market. A CRR hike by CBN’s MPC set off bearish sentiments against banking stocks last week.
Investors have lost about N565bn in the year’s longest rout while year’s return has pared to 6.3 percent.
Nigeria faces revenue shock as Coronavirus-blues hit oil
The deadly novel coronavirus outbreak has kept Nigeria on its toes being classified a high-risk country by WHO, but a new headache for the country would be the effect of a depressed oil market on government’s revenue.
West Texas Intermediate (WTI) crude was down 2.38 percent at $52.06 and Brent Crude was trading down 2.39 percent at $57.52 in early trade yesterday. Brent dropped to $54 later in the day.
Fears of that dampened demand from China, the epicentre of the virus outbreak and the world’s second-biggest oil consumer, were priced into the oil market.
Since the outbreak of the virus, oil has lost more than 10 percent to hit the lowest price since early October 2019.
China consumed 13.5 million barrels of oil per day last year and grows its consumption by an average of 5.5 percent per year, but the virus outbreak has disrupted economic activities in the country and economists say will tell on their subsequent GDP readings as well as the world.
For Nigeria where both the currency stability and government revenue rely on oil market outcomes, there shocks to the economy resulting from the global epidemic.
Brent at around $54 per barrel is $3 below government’s budget benchmark of $57 per barrel for 2020.
This threatens to jeopardize the FG’s N2.64tn oil revenue target in 2020, around 32 percent of its expected income.
Nigeria misses out on exports boom from India to Indonesia
Nigeria can learn from successful Asian countries how to diversify export earnings and wean the economy off oil- a critical lesson for the African giant that remains extremely vulnerable to oil shocks.
A businessDay’s exclusive highlights the success of President Modi’s “Make in India” campaign and reforms to lower barrier to business in almost doubling the country’s FDI inflow in six months and boost the country’s exports earnings to as much as $330bn last year.
Indonesia which cut fuel subsidies in 2005 and restructured its economy to be driven by agriculture whilst improving the auto-industry is reaping from its astute policies today.
Crude oil still makes over 70 percent of Nigeria’s export earnings as it did four years ago when a decline in oil sent Nigeria to its first recession in over two decades.
Experts and economists warn Nigeria is only a significant oil shock away from devaluation, recession and accelerated poverty increase, hence the urgent need to diversify away from oil.
