04 Aug

Daily Watch – Govt expects economy to grow 2.2%, MTN returns to profit

  • Nigeria expects its economy to grow 2.2 percent this year, Reuters reports citing a government strategy document on Thursday, after the country suffered its first recession in more than two decades in 2016. The 2018-2020 Medium Term Fiscal Framework and Strategy Paper, to form the basis for its 2018 budget, projects spending of ₦7.94 trillion ($21.75 billion) next year, up 6.7 percent from the sum budgeted for 2017. The document was dated July 27. The International Monetary Fund on Wednesday said it expects Africa’s biggest economy to grow by 0.8 percent this year, with threats to growth remaining elevated.
  • Banks have started showing investors price quotes for the naira on screens instead of giving them by phone. A Reuters report said that the move is part of an effort to draw dollars back to the ailing economy, which has been short of dollars since the price of crude oil, the main source of hard currency, plunged three years ago. The CBN hopes the move will further narrow the spread between the official and black market rates by attracting more investment with higher transparency. Market operator FMDQ Securities Exchange initiated the change with an email on Monday, citing the need to improve liquidity. Trading by phone will also continue.
  • Okechukwu Enelamah, minister of industry, trade and investment, says the federal executive council has approved a three-year tax holiday for 27 new industries and products. Enelamah said it was done in a bid to enable them to grow and expand investments. He said: “The FEC gave approval to a memorandum that was presented to amend the list of pioneer industries and products that will enjoy pioneer status going forward. The pioneer incentive scheme is governed by the Industrial Development Income Tax Relief Act. The whole purpose of it is to give tax holidays to industries that we consider pioneer, not mature, to enable them to grow and attract investment in them.”
  • MTN Group, Africa’s biggest mobile phone operator, returned to first-half profit on Thursday, marking a move away from a turbulent 2016 that highlighted the risks of the company’s emerging markets strategy. The results were bolstered by the absence of charges related to a $1.1 billion fine imposed by Nigerian authorities last year in a long-running dispute over unregistered SIM cards. “These numbers give us hope for the future. It’s a very encouraging platform upon which to build our strategy,” said Rob Shuter, former Vodafone European head, who became chief executive in March. MTN, which operates in more than 20 countries in Africa and the Middle East, said headline earnings came in at 3.9 billion rand ($294.40 million), or 212 cents per share, in the six months to end June compared with a loss of 4.9 billion rand, or 271 cents per share, a year earlier. MTN had said last week it expected to return to profit in the first half of its financial year and that the loss in the first half of last year was mainly due to “non-recurring costs”, including the Nigeria fine.