- President Buhari presented a 2017 budget proposal of ₦7.298 trillion to the National Assembly yesterday. The proposal aptly titled ‘Budget of Recovery and Growth,’ seeks to increase agriculture output and productivity, promote domestic manufacturing and ‘Made in Nigeria’ goods, through intervention funds, eliminate costly Joint Venture cash calls for the NNPC, and increase funding for infrastructure, especially roads, rail and power. The budget will also borrow heavily to plug a ₦2.36 trillion deficit for 2017, which is estimated at about 2.18 percent of GDP. The 2017 budget is based on a benchmark crude oil price of $42.5 per barrel; an oil production estimate of 2.2 million barrels per day; and an average exchange rate of ₦305 to the US dollar. Based on these assumptions, aggregate revenue available to fund the federal budget is ₦4.94 trillion, which is about 28 percent higher than 2016 full year projections, with oil revenues projected to contribute ₦1.985 trillion of this amount. Non-oil revenues, largely comprising Companies Income Tax, Value Added Tax, Customs and Excise duties, and Federation Account levies, are estimated to contribute ₦1.373 trillion. Independent Revenues are projected at ₦807.57 billion, while ₦565.1 billion is projected as receipts from various recoveries. Other revenue sources, including mining, amounting to ₦210.9 billion. The ₦7.298 trillion budget proposal is 20.4 percent higher in nominal terms over 2016 estimates with 30.7 percent of this expected to be for capital expenses.
- Stakeholders in the maritime sector have blamed the drop in cargo volume and huge loss of revenue by port and terminal operators on the anti-trade policies of the FG. They said that these policies had also made the country unattractive to investors. Lucky Amiwero, president, National Council of Managing Directors of Licensed Customs Agents, said that arbitrary import duty hikes led to the diversion of vessels carrying vehicles to the ports of neighbouring West African countries, thereby boosting operations in those ports – especially the Port of Cotonou, leading to massive revenue and job losses. According to him, the reduction in activities by 70 percent in the operation of terminal operators that pay the FG based on cargo, through earnings and shipping companies had drastically affected their activities. The NBS had reported that the country recorded a decline of ₦793.5 billion in Q1 merchandise trade to close at ₦2.72 trillion from ₦3.51 trillion in Q4 of 2015, the first decline in last seven years. Data at the NPA also showed that 341 vessels entered Nigeria in September 2016, the lowest in nine months and a fall from 400 vessels recorded in August 2016.
- South African retail giants Steinhoff International and supermarket group Shoprite Holding have announced that they are in talks to merge their African operations to form a single company worth over $14 billion. The companies said they had initiated talks “regarding the potential combination of their respective African retail businesses” with an objective of creating what could be regarded as “the retail champion of Africa”. The new venture, to be called Retail Africa, would have annual revenues of about 200 billion rand (₦7 trillion). The companies said the proposition of this “formidable entity” was supported by their shareholders. Shoprite is Africa’s largest food retailer with a presence in 14 African countries, including Nigeria, Angola and Zambia. Retail Africa would employ nearly 186,000 people and would give Steinhoff “African exposure”. Steinhoff’s African businesses include a range of credit-based household goods and the company has vast interests in Europe. The company recently bought UK discount chain Poundland and US retailer Mattress Firm Holding.
- Reports from the Nigerian Inter-Bank Settlement System have shown that about 46 million accounts have not been linked to the Biometric Verification Number. Figures from the NIBSS show that the number of the total bank accounts increased from 85 million in December 2015 to 95 million in 2016. The total number of accounts that have been linked to a BVN also increased from 28 million in December 2015 to 49 million in November 2016. BVN registration experienced a sharp increase between July and August when the figures increased from 36.79 million to 46.39 million. In total, about 10 million new accounts were opened in 2016, while 20.84 million new BVN have been linked to accounts from January to November 2016. The exercise, started in February 2014 as an attempt to curb fraud and theft. The deadline for the registration was fixed for June 30 at first and then extended to October 31, 2015. The initial deadline for Nigerians in the diaspora was fixed for January 31, 2016, but after several complaints by customers, CBN asked banks to continue the exercise regardless of the October 31 deadline.
- For the second time in a decade, the US Federal Reserve on Wednesday voted to raise interest rates. The committee took the rate to zero percent during the financial crisis of 2008. The Federal Reserve said it would raise the rate on federal-funds rate by a quarter percentage point, to between 0.50 percent and 0.75 percent, a move that would raise borrowing costs of virtually every fund in the US economy. The hike has immediately led to a stronger dollar, pushing the global currency to a 10-month high, directly hurting the naira, which has become much weaker to the dollar. The naira opened at the interbank market at ₦315/$1, and has depreciated to the strong dollar to trade at ₦316.25/$1. The parallel market is yet to react to the rate hike, as dollar still trades at ₦485.