Africonomy.Com

24/02/2024

What is implied by the absence of arbitrage opportunities in financial markets?

24/02/2024

Until Arbitrage Opportunities Shut off

17/02/2024

“A Naira today is more valuable than a Naira received in the future”
Why?
People have “time preference”
Inflation erodes the value of money over time
There is uncertainty about the future

06/02/2024

FG 2024 Revenue Projection: Where will the money come from?

The Federal Government of Nigeria plans to generate a total revenue of N19.6 trillion in the 2024 budget. Where will the money come from? Let’s have a quick look at the breakdown.

Out of the N19.6 trillion revenue projection, the federal government's FAAC share is expected to contribute N10.70 trillion, while Government-Owned Enterprises will remit N3.64 trillion. The independent revenue is projected to be N1.91 trillion, and the Education Tax Fund is set to contribute N700 billion.

Aid and grant total N685.6 billion; FG's VAT share is estimated at N512.8 billion; and the exchange rate difference is budgeted at N490 billion. NLNG dividends will account for N346.9 billion, and special levies are expected to contribute N300 billion.

Other funds amount to N275.6 billion, FG's share of electronic tax is projected to be N24.4 billion, and other dividends are anticipated to stand at N11 billion.

07/01/2024

The Growth Of Nations: How OBJ Delivered 15% GDP Growth And Buhari Recorded Recessions

What did Obasanjo do in 2002 for that 15.3% GDP growth rate spike? The telcos began operating at scale. Yes, a new industry was added in the Nigerian economy – and we grew. (That was the voice telephony era).

About ten years later, Jonathan got an extended version of it, when our phones became internet nodes as the mobile internet era began. Another was expected to follow a decade later. Unfortunately, as I write, Nigeria is still struggling to unlock that era. I have called it the application utility era where our devices now become bank branches, logistics hubs, etc at scale.

Lagos, which has the potential to become more important than Nigeria from 2030 is there, but other areas are yet to join. The Lagos budget of N2.3 trillion, about N2 trillion larger than the budget of Kano, is expected to widen, to the extent that by 2030, the per capita on Lagos’ budget will be multiples of Nigeria’s budget. Simply, everyone will move to Lagos because it will be like Vatican City in Italy without a special visa. I posit that Nigeria will be structurally dismantled, economically, because Lagos will exert more influence than Abuja.

As we search for growth vistas, understand that OBJ miracle has nothing to do with oil price. Across all indicators, Obasanjo was a great operator while Buhari was the worst, since 1999. And Jonathan was better than Buhari; he stabilized the exchange rate, inflation rate, etc, NOT because oil prices were high, but because he was better than the man who took over from him. Under him, Nigeria recorded its highest per capita on record.

Buhari engineered at least one preventable recession: the frozen government after delays on appointing ministers when he took over. The second one which happened during the pandemic was already brooding as a result of the land border closure.

Good People, if you look at the numbers, and focus on the national budgets, under Buhari, in absolute Naira and USD dollars, Buhari’s government spent more money than Jonathan’s, on yearly average, and what oil money did not provide to the administration, they borrowed. Because Naira is Naira, whether from oil sale or debt, the issue here is efficiency on its management and deployment. Follow me:

Nigeria 2013 budget: N4.99 trillion
Nigeria 2014 budget: N4.69 trillion
Nigeria 2015 budget: N4.5 trillion
Nigeria 2016 budget: N6.06 trillion
Budget 2019: N8.92 trillion
Budget 2022: N16.39 trillion
(convert with the exchange rate then, Buhari had more US dollars to spend)

As this new government begins 2024 to execute its budget, it must find an anchor to drive growth. OBJ used core telecoms but the impact is largely marginal now. The new government has real estate, agriculture, light manufacturing and amazingly education as areas to unlock growth. Nigeria must evolve out of the current finance-first mindset to industry*-first mindset which OBJ used to pioneer most of the economic anchors we enjoy today.

*includes services, manufacturing, etc

05/10/2023

The Federal Government of Nigeria Spent 106.8% of its 2022 Revenue on Debt Service.

In 2022, the Federal Government of Nigeria raked in a total revenue of N5.30 trillion. However, 106.8% (N5.65 trillion) of its total revenue was spent on debt servicing.

Of the total N5.30 trillion revenue, a significant portion, N3.63 trillion, flowed in from the Federation Account Allocation Committee (FAAC), while N1.67 trillion was generated through Independent revenue sources.

In total, the Federal Government's expenditure for 2022 amounted to a staggering N14.63 trillion, creating a deficit of N9.30 trillion. This comprised a Non-debt recurrent expenditure that accounted for N5.03 trillion, Debt Service (Ways & Mean Interest, domestic & foreign) of N5.65 trillion, and N810.12 billion in Statutory Transfers.

A closer look at the Non-debt recurrent expenditure reveals that Personnel costs emerged as the highest expense, standing at N3.49 trillion, followed by Other Service-wide Votes at N715 billion, CRF pensions at N387 billion and Overhead costs at N371 billion.

Meanwhile, of the total expenditure, capital projects, which include infrastructure, economic development, and other long-term investments, received N3.13 trillion, which excludes the N1.24 trillion rolled over from 2021.

25/09/2023

Food insecurity will vanished in the next 5 years - AfDB

The African Development Bank (AfDB) $25 billion goal is "on track," President Akinwumi Adesina, whose organization supports programs in over 30 African nations that have contributed to the production of almost $12 billion worth of food.
Speak "As far as I'm concerned, we shouldn't be talking about food security in Africa in the next five years from now. There's no reason for it," the AfDB president disclosed to the American news agency, Reuters. "We have the technology and the financing to do it at scale," he added.

According to the report following the news agency’s discussion with the AfDB president, “Russia's February 2022 invasion of Ukraine, one of the world's top grain exporters, sent tremors through global grain markets, threatening food supplies for some of the most fragile nations, including many in Africa.”

The development of the El Nio weather pattern and the failure of a deal to move grain from Ukraine via the Black Sea have worsened the world's food security problems.
Adesina brought up the expansion of special agro-industrial processing zones, which in Nigeria alone might increase from covering eight states to 35 after a recent request, during her remarks on the sidelines of the UN General Assembly sessions in New York. These are rural regions where infrastructure development is being prioritized in order to attract food and agricultural businesses.

"Twenty-seven more states in Nigeria made a request to us to continue to support them in this particular area," the AfDB president said.

According to the AfDB, 216 million children in Africa are affected by undernutrition and stunting, and over half of all child fatalities on the continent are caused by inadequate nutrition. The economic cost of poor nutrition is estimated to be 11% of Africa's GDP.

Before governments gather in late November for international climate talks in Dubai, Adesina said he expected the International Monetary Fund board to push proposals to channel $100 billion in funding to vulnerable nations through multilateral development banks.

22/09/2023

At Today's Budget Preparation Committee

30/07/2023

Africa's Green Energy Leapfrog

Electrifying Africa is going to be one of the most significant challenges (and promising economic opportunities) of the global clean energy transition. The population of sub-Saharan Africa is the fastest growing in the world, expected to double by 2050. To put that in perspective, by midcentury one in four people on the planet will be in sub-Saharan Africa. Considering the significance of the African population on the global stage, and the need to connect those people to clean and reliable energy, the continent poses a significant challenge for climate goals on a global scale.

As sub-Saharan Africa grows and industrializes, African energy demand is expected to increase by a third over the next decade. Meeting this demand will require a ten-fold increase in power generation capacity by 2065. The problem is that in order to comply with decarbonization imperatives, Africa has to “leapfrog” over what is normally the next phase of development in a poor nation’s economic journey. Today, 600 million people across the African continent still lack access to energy. But while most economies had the good fortune of developing their economies in an era where there was no pushback for burning as many fossil fuels as suited them, African leaders are facing the necessary and virtually unprecedented necessity of skipping straight to cutting-edge (and comparatively expensive) green technologies.

The irony is that while Africa represents the greatest concentration of energy poverty in the world today, it also represents one of the most significant markets for renewable energy production growth potential. The continent is extremely rich in natural gas (considered to be a stepping stone away from dirtier fossil fuels like coal and oil), as well as abundant sunshine, wind, and highly sought-after rare Earth minerals such as lithium and cobalt which are essential components of renewable technologies including photovoltaic solar panels and lithium-ion batteries for electric vehicles and renewable energy storage.

Foreign investors are already flooding Africa in order to develop energy resources in order to shore up their own energy security. Russia and China have been investing in emerging African energy markets for years in a competition to establish dominance in the region, and European countries are increasingly pushing into Northern Africa to build mass-scale solar farms in the Sahara Desert. Now, after decades of decline, manufacturing in sub-Saharan Africa is on an upward trend, and solar panels built in Africa are already cost-competitive with those built in China.

While Africa is all but guaranteed to be the next big thing in global energy markets, however, there is no guarantee that this newfound renewable energy production capacity will meet the enormous and urgent demand of Africa’s own energy grids. Instead, renewable energy supply chains are being established by foreign countries in order to serve the needs of those foreign countries. It’s a dilemma. Africa direly needs the money offered through such contracts, but it also desperately needs all of the energy it can get. After all, half of the continent’s population lacks reliable access to energy – a fundamental barrier to development.

Furthermore, those renewable energy resources are an absolutely necessary piece of Africa’s ability to reach decarbonization goals and “leapfrog” fossil fuels – which is a net gain for the entire planet. But the issue, once again, is money. Rich countries have the money to develop those supply chains (for their own needs) – but for African leaders, it’s another story. A recent study published in the journal Scientific Reports calculates that the cheapest investment cost from all case scenarios that would achieve a renewable energy-powered grid in Africa would be $298 billion.

By Haley Zaremba for

Crude oil prices & gas price charts. Oil price charts for Brent Crude, WTI & oil futures. Energy news covering oil, petroleum, natural gas and investment advice

20/06/2023

What’s wrong with Nigeria’s tertiary education system, and how can we fix it? In this episode, sits with former minister of youth to discuss the administrative and funding challenges in the public university system.
Listen at

The Official Page of the NESG Radio. Stories, Opinions, Episodes in the National Interest

19/05/2023

300,000 barrel of crude oil is set to be supplied to Dangote Refinery for the commencement of it's operation as assured by NNPCL Boss.

15/05/2023

Most Sub-Saharan African currencies have weakened against the US dollar, fanning inflationary pressures across the continent as import prices surge. This, together with a growth slowdown, leaves policymakers with difficult choices as they balance keeping inflation in check with a still-fragile recovery.

African Currencies Are Under Pressure Amid Higher-for-Longer US Interest Rates
a man on the phone positioned to the right of two signs showing foreign exchange currency rates. Most Sub-Saharan African currencies have weakened against the US dollar, fanning inflationary pressures across the continent as import prices surge. This, together with a growth slowdown, leaves policymakers with difficult choices as they balance keeping inflation in check with a still-fragile recovery.

As the Chart of the Week shows, the average depreciation for the region since January 2022 is about 8 percent. The extent varies by country, however. Ghana’s cedi and Sierra Leone’s leone depreciated by more than 45 percent.

chart showing pressures on african currencies
View the interactive version here.
The depreciations across the region were mostly driven by external factors. Lower risk appetite in global markets and interest rate hikes in the United States pushed investors away from the region towards safer and higher paying US treasury bonds.

Foreign exchange earnings took a hit in many countries as demand for the region’s exports dropped because of the economic slowdown in major economies. At the same time, high oil and food prices, partly due to Russia’s war in Ukraine, pushed up import costs in 2022.

Large budget deficits have compounded the effects of these external shocks by increasing the demand for foreign exchange. About half of the countries in the region had deficits exceeding 5 percent of gross domestic product in 2022, putting pressure on their exchange rates.

Implications

When currencies weaken against the US dollar, local prices rise, as much of what people buy, including essential items like food, are imported. More than two-thirds of imports are priced in US dollars for most countries in the region.

A 1 percentage point increase in the rate of depreciation against the US dollar leads, on average, to an increase in inflation of 0.22 percentage points within the first year in the region. There is also evidence that inflationary pressures do not come down quickly when local currencies strengthen against the US dollar.

Weaker currencies also push up public debt. About 40 percent of public debt is external in Sub-Saharan Africa and over 60 percent of that debt is in US dollars for most countries. Since the beginning of the pandemic, exchange rate depreciations have contributed to the region's rise in public debt by about 10 percentage points of GDP on average by end-2022, holding all else equal. Growth and inflation (which reduces the real value of existing debts) helped to contain the public debt increase to about 6 percent of GDP during the same period.

Many central banks in the region have tried to prop up their currencies by supplying foreign exchange to importers from their reserves. But with reserve buffers running low in many countries, there is little room to continue intervening in foreign exchange markets.

Countries have also applied administrative measures such as foreign exchange rationing or banning foreign currency transactions. These measures can be highly distortive and create opportunities for corruption.

Given that the external shocks are expected to persist, countries where exchange rates are not pegged (fixed) to a currency have little choice but to let the exchange rate adjust and tighten monetary policy to fight inflation. Countries with pegged exchange rates will need to adjust monetary policy in line with the country of the peg. In both country groups, fiscal consolidation can help to rein in external imbalances and limit the increase in debt related to currency depreciation. Structural reforms can help to boost growth.
IMF blog

04/05/2023

24 Countries Ready for BRICS Currency

12/04/2023

Should Nigeria benefits from BRICS attempt?

11/04/2023

BRICS NATIONs
What would be the prospects of US Dollar when BRICS NATIONS (BRAZIL, RUSSIA, INDIA, CHINA AND SOUTH AFRICA ) succeeded in adopting common currency?

09/04/2023

Failed Banks are announced Orderly Liquidation

06/01/2023

Africa Wealth Report
2022
The Africa Wealth Report is the continent’s annual benchmark for private wealth research. Now in its 7th year, the report provides the most comprehensive review of the wealth sector in Africa, including trends among high-net-worth individuals, the luxury market, and wealth management.

The report reveals that total private wealth currently held on the African continent is USD 2.1 trillion and is expected to rise by 38% over the next 10 years, while Africa’s ‘Big 5’ private wealth markets together account for over 50% of the continent’s total private wealth.

https://www.henleyglobal.com/publications/africa-wealth-report-2022

03/01/2023

10 countries with highest food price inflation in the world http://wrld.bg/9uAc50MaMyq
Source: World Bank

23/12/2022

Africa could make €1 TRILLION of Green Hydrogen a YEAR, EIB Says: has the potential to produce €1 trillion ($1.06 trillion) worth of green hydrogen a year by 2035, allowing it to the and boost local industry, according to a study backed by the .

By harnessing the world’s best resource a number of countries on the could produce the fuel, which is made by splitting water using , at a cost of less than two euros a kilogram by 2030, the and its partners, the and the International Solar Alliance, said in the report released on Wednesday.

Source: https://www.linkedin.com/in/mark-anthony-johnson-55615926?

11/12/2022

Nigeria ranks 8 on the African Industrialization Index by the AfDB

Nigeria ranks number 8 on the African Industrialization Index that was released by the African Development Bank (AfDB) Group in November 2022.

In the index, the top 10 countries are ranked as follows; South Africa, Morocco, Egypt, Tunisia, Mauritius, Eswatini, Senegal, Nigeria, Kenya, and Namibia.

Breakdown of Nigeria data: In 2010, Nigeria ranked number 10 at 0.5766. In 2011, Nigeria ranked number 10 at 0.5792. In 2012, Nigeria ranked number 11 at 0.5817. In 2013, the country ranked number 13 at 0.5901. In 2014, the country ranked number 7 at 0.6207. In 2015, the country ranked number 10 at 0.5991.

In 2016, Nigeria ranked number 17 at 0.5635. In 2017, the country ranked number 15 at 0.5734. In 2018, Nigeria ranked 12 at 0.5921. In 2019, Nigeria ranked number 9 at 0.6133. In 2020, Nigeria ranked number 9 at 0.6122. In 2021, Nigeria ranked number 8 at 0.6046.

West Africa performance: In West Africa, Senegal, Nigeria, Cote d’Ivoire, Ghana, and Benin are the advanced countries in industrial development. According to the index, out of the 15 countries in the region, Senegal and Nigeria rank among the top 10 countries. Côte d’Ivoire and Ghana are consistently good performers, benefitting from large coastal economies and steady growth. West Africa benefits from growing economic integration.

Industrialization objectives: According to the AfDB index, the smart use of trade policy offers important tools for African countries to achieve their industrialization objectives. These are:

Special economic zones and industrial parks can promote linkages between trade and industry. Through incentives such as tax breaks, favourable customs regimes, government subsidies and targeted infrastructure, they can help support the establishment of new export-oriented industries.
Tariffs policy can help to boost domestic production. The index says the Nigerian government is using tariff policy to encourage the revival of the country’s automotive industry, by raising tariffs on fully assembled vehicles and lowering tariffs on component parts. Nigeria anticipates that the assembly industry could create as many as 70,000 direct jobs and another 200,000 indirect jobs.
Non-tariff barriers to trade directly correlate with barriers to industrialization. Action to address access to credit, infrastructure and skills enhance policy in other areas.
Intra-regional trade has the potential to facilitate increased economies of scale, diversification and value addition. The introduction of the AfCFTA has the potential to boost trade in goods among African countries by 52.3%, with industrial products leading the way.
In the report, the AfDB also notes some present conditions that could contribute to Africa’s industrialization. These are:
Africa has been increasingly stable and well-governed, which is reflected in the continent’s strong growth performance over the past two decades.
Africa has the youngest population of any continent, and by 2050 will be home to the world’s largest labour pool.
Africa is an increasingly attractive investment destination, for both foreign and domestic investors.
Africa is moving rapidly towards an integrated economic space because of the ratification of the Africa Continental Free Trade Agreement (AfCFTA).
For the record: The AfDB says it has approved a $100 million senior loan to a Nigerian fertilizer company, Indorama, to increase its productive capacity, create jobs and target export markets.

The loan has created 9,000 construction jobs and nearly 500 long-term jobs while benefitting over 330,000 farmers through out-grower schemes.
As well as boosting exports, the projects promote more use of fertilizer, addressing one of the major constraints on Nigeria’s agricultural development.

Source: Omono Okonkwo

06/12/2022

Lets Discuss Macroeconomic Environment Around Tax Revenue
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30/10/2022

Sub Saharan African Countries are witnessing increase in digital currency circulations, started rapidly from 2021.

30/10/2022

Absa Released Index on African best performing financial Markets in 2022

25/10/2022

May Allah have mercy on us

Friend invites you to join the largest Muslim Community Worldwide !

25/09/2022

12 daily practices to guarantee tomorrow success

John Maxwell

14/09/2022

It's Big Innovation Credit Tax Scheme; Nami

At the Senate Stakeholder and Public Hearing on the Medium-Term Expenditure Framework (MTEF) and Fiscal Paper yesterday, I presented a review of the 2022 Operational Budget Performance as well as major highlights of the 2023 Proposed Revenue Target to the members of the Senate Finance Committee.

One of the issues raised by the Committee was the ex*****on of the Road Infrastructure Tax Credit Scheme. It was a good opportunity to provide a background and testimonies of the scheme to members of parliament, and consequently seek their support for it—I believe the Tax Credit Scheme is one of the greatest innovations of the government of the day in its resolve to tackle Nigeria’s infrastructure challenges.

The scheme provides for public-private partnership intervention in the construction, refurbishment and maintenance of critical road infrastructure across the country, where participants are entitled to Tax Credits against their future Companies Income Tax.

The FIRS is jointly handling an arm of this scheme with the NNPC through one of its subsidiary. They are investing in about 1,824 kilometres of roads across the 6 geopolitical zones in Nigeria.

Some of the roads currently being fixed had been constructed as far back as 1976. I could remember when I was still rounding up my primary school education, the road that leads Suleja to Lapai-Agaie-Bida was constructed by a company called DTV. I am not aware of any significant work done on that road 40 years later, only until now when the NNPC is using Executive Order 007 to reconstruct the road.

I can report authoritatively that from December 2021 to July this year, the contractor has completed the reconstruction of well over 50 percent of that road.

The challenge of road construction in Nigeria has always been funding. Yes, there are contracts for the construction of roads, but funding these constructions is the challenge.

In my remarks, I also noted that a major cause of tax revenue loses for the country is the issue of having “fragmented tax systems and agencies.”

In Nigeria we have 774 Local Governments, each of them have a tax authority; each of the 36 States, too, have revenue authorities with their respective mandates; then we have the FIRS and Customs. What I would advise for efficiency and to do things in line with global best practices, is that we should amend our tax laws to harmonise the tax agencies and tax system.

With this, when the FIRS, for instance visits ‘Company A,’ it can serve one assessment on the company, and also on the individual that owns the Company; it can also ask the company to account for the VAT it has collected and ask for PAYE it has deducted from its employees as well as the Personal Income Tax of the Promoters of the Company.

This is currently not the case, and as such has created a huge gap in our tax system.

12/09/2022

Menene Africonomy.com

10/09/2022

THE PURPOSE OF LEARNING ECONOMICS:As the millennium ushered in a new era of globalisation and international interdependence,the importance of economics understanding reached new heights.There is power in knowledge,and learning economics empowers us.it helps us make better and more reasoned decisions as private individuals and as participating citizens in a world of scarcity.it increases an appreciation of the importance of incentives in shaping people's decisions,and it develops an understanding of how complex economic systems work.The empowerment of understanding is not easily accomplished.many people have taken courses in economics to the problems and issues facing them on a daily basis.Economics applies to business,, government,medicine,science,the military,law,politics,films,religion,sports and many other aspects of modern life.We are amazed and delighted at the ability of our profession to contribute to a better understanding in these diverse areas of study..indeed,George stigler,the 1982,Nobel laureate in economics,has called economics the "imperial science".
Dr. Gazzali