Nigerian economic sustainability (Series 1)

Over the next few days, the United States of America will decide on either electing the first female president or a survivor of two assassination attempts. This decision would influence the global economy, conflicts in Europe and the Middle East, social values, LGBTQ, technological innovation, energy, and other global indices. The US Federal Reserve Bank reduced the FED rate by 50 basis points (bps) for the first time since the COVID pandemic to ease heightened inflation and other unpalatable economic situations. This will result in a slight depreciation of the US dollar against other global currencies. At least 5 major central banks have also reduced their rates, like the Bank of England and the European Central Bank, which reduced rates by 25 bps. The major BRICS players, China and Russia, interest in Africa has been on the increase and very evident through investments, support, partnerships, accessibility, integration, and advisory. Inflation in Africa has been on a downward trend, as Kenya attained 3.6 percent inflation in September 2024, the lowest in 12 years, and Ghana’s inflation eased to 20.4 percent in August 2024 from 54.1 percent in December 2022.

“The Nigerian economy over the last few years has really been tough due to high inflation, high interest rate, high cost of debt, foreign exchange devaluation, weak fiscal policies, overdependence on crude and natural gas income, low exploration of viable, suitable, and more sustainable income drivers.”

Nigeria has not yet attained that status of influencing the global system despite being significantly influenced by the decisions taken by the world market influencers. The Nigerian economy over the last few years has really been tough due to high inflation, high interest rate, high cost of debt, foreign exchange devaluation, weak fiscal policies, overdependence on crude and natural gas income, low exploration of viable, suitable, and more sustainable income drivers. The Nigerian population is majorly vibrant and youthful, with current estimations of over 220 million people increasing at an annual rate of 2.4 percent. Recently, Dangote refinery, with a processing capacity of 650,000 bpd, the largest single-train refinery in the world, commenced full operation and has proven to display the ability required to deliver petrol, diesel, and jet fuel to local consumers within Sub-Saharan Africa and beyond. The release of petrol from the Dangote refinery has increased the incentive for further deregulation of PMS, as we saw that the prices increased by three times within the last 60 days without still being at the true cost of the imported produce as not all PMS consumed in Nigeria is sourced locally. The national grid collapsed three times within the week ended October 19, 2024 and eight times within the year 2024. Seventeen states within northern Nigeria have been negatively affected by the grid collapse and the ministry of power has restored power supply to Damaturu and Maiduguri and promised full power restoration to the other affected areas on or before November 12, 2024.

A lot of Nigerians are concerned about the government’s renewed tax agenda as the Finance Act (Amendment) Bill 2024 brought some laudable and disturbing initiatives. The bill intends to fund developments in infrastructure, education, healthcare, public welfare through some initiatives such as 70 percent tax charge on realised foreign exchange transactions for banks between 2023 and 2025 financial years through a deferred payment agreement (DPA), duty free importation, value added tax exemption on basic food and living items, amendment to income tax laws, value added tax amendments, tax reliefs, tax suspensions, WHT deduction at source, tax incentive, electronic invoicing, electronic tax administration and tax collection consolidation. FIRS has also proposed to partner with the national assembly in regulating cryptocurrency within Nigeria. At the 79th UNGA assembly, Nigerian representatives to the United Nations advocated for a convention framework on international tax cooperation to advance African development. On October 3, 2024, four bills relating to taxation and related matters in Nigeria were presented to the National Assembly, which are: the Nigeria Tax Bill 2024, the Nigerian Revenue Service Bill 2024, the Nigeria Tax Administration Bill 2024, and the Joint Revenue Board (Establishment) Bill 2024. After the review of the communiqué read by the current governor of Gombe State at the last NEC meeting on some teething issues drafted at a meeting held by the 19 northern governors and monarchs under the authority of the sultan of Sokoto, on October 28, 2024. The National Economic Council opted to allow for further consultations and consensus development on the recent tax reform bill presented to the national assembly earlier in October. The Nigerian 16th president, through a statement issued by his media assistant on November 1, 2024, kicked against the withdrawal as proposed by the NEC. He proposed that further consultations and engagement should be carried out through the public hearing session of the bills as required before a bill is passed by the House of Assembly.

Let us ask ourselves some provoking questions!!!!