Business

Kill subsidy, cut CBN loans, raise ‘sin’ taxes… 7 things World Bank wants Buhari to do in 2022

Published

3 years ago

November 23, 2021

The World Bank on Tuesday released its November 2021 Nigeria Development Update, which showed — among other things — that eight million Nigerians fell into poverty in less than two years as a result of inflation shocks.

The report also revealed that Nigeria no longer benefits from high oil prices, with record low revenues, and exorbitant fuel subsidies, which makes Nigeria the only country in the world granting universal price petrol subsidies.

Also, the report reiterated that Nigeria has the worst revenue-to-GDP ratio among 115 countries monitored by the World Bank. Worse than Haiti.

To address the grim picture of Nigeria’s economy going into the future, the World Bank has recommended a number of policy decisions for the Muhammadu Buhari administration and the Central Bank of Nigeria (CBN) starting from the year 2022.

The Cable brings you a summary of the policy recommendations from the 112-paged Nigeria Development Update.

RAISE TAXES ON SINFUL GOODS

The World Bank recommended that the government raises taxes on what it referred to as “sinful goods,” including cigarette, alcohol, sugary drinks.

The bank said FG has “accelerated efforts to diversify its revenue stream; however, risks to the implementation of these reforms remain high”.

“These reforms include improving tax administration, especially for VAT, while also undertaking some significant policy reforms, such as implementing a levy on electronic money transfers, and additional excise taxes on alcohol and tobacco

“While these reform efforts are expected to generate additional revenues of over ₦ 3 trillion a year, they may be challenging to politically implement in the run up to the national elections, planned for 2023.”

Despite the perceived difficulties, the bank advised that FG increase these taxes in order to generate adequate revenue.

KILL FUEL SUBSIDIES

Fuel subsidy removal has been a recurrent recommendation in World Bank/IMF policy briefs for Nigeria for more than a decade, but little has been done about this.

In this report, the World Bank has asked the government to remove subsidies, again. The bank argues that the poorest Nigerians do not benefit much from the subsidy regime.

“Nigeria is the only country in the world with a universal price subsidy that applies exclusively to PMS. Universal price subsidies for liquid fuels are almost always regressive, as the rich consume far more fuel than the poor,” the report read.

“PMS subsidies are especially regressive because PMS is used primarily in light- and medium-duty motor vehicles, which are rarely owned by the poor. Since raising PMS prices tends to have minimal adverse effects on poor households, governments worldwide have typically prioritized eliminating PMS subsidies over those that apply to other fuels.

“However, Nigeria has done the opposite—eliminating all subsidies for liquid fuels other than PMS. Moreover, the Nigerian PMS subsidy is exceptionally generous, and in October 2021 the PMS pump price was the seventh-lowest among 168 economies surveyed at just ₦495 per liter”

The bank said the poorest 40 percent of Nigerians consume less than 3 percent of the total PMS consumption in Nigeria.

CUT LOANS FROM CBN

The World Bank said in its projections for Nigeria, that if current debt accumulation levels are maintained, the country’s debt-to-GDP ratio will hit 40 percent by 2025.

The bank, therefore, advised that the Buhari-admin cut back on its request for overdrafts from the CBN through the Ways and Means financing system. The bank asked FG to keep overdrafts to levels stipulated by law.

“Faced with a widening budget deficit, policymakers have increasingly turned to costly CBN overdrafts (also known as Ways and Means financing), which are not properly integrated into the fiscal accounts.

“While Nigeria’s debt burden remains manageable for the time being, maintaining sustainable debt dynamics will require curbing the use of CBN financing for the deficit and addressing fiscal pressures to break the cycle of low growth and rising public debt.”

FIX FOREX POLICY

“The current mix of monetary, fiscal, foreign exchange (FX), and trade policies also plays a prominent role as a driver of inflation,” the World Bank said. The bank recommended that fixing inflation will need some solution from forex management.

“Trade and FX restrictions, including the closure of land borders starting in August 2019, have increased prices for food and consumer goods, and imports of over 40 goods, including many staple foods, are currently ineligible for FX through formal windows.

“Nigeria’s exchange-rate management has resulted in the rise of parallel rates, which are closely linked to food-price dynamics.”

To address inflation, the bank recommended enhancement of the “flexibility and predictability of exchange rate management”. It also asked that all land borders be fully open for trade.

BUILD THE DIGITAL ECOSYSTEM

“One leading barrier is Nigeria’s underdeveloped fixed broadband infrastructure, which is partly attributable to burdensome Federal and State regulations,” the World Bank diagnosed.

“This weak infrastructure base creates a ripple effect across the economy, contributing to low levels of financial inclusion, and persistent geographic and gender gaps in access to and use of digital technologies.

“Conflicts, particularly in the north, exacerbate these challenges, due to heightened security risks. By investing in its digital infrastructure and strong foundational ID systems, Nigeria can promote economic development, security, governance, and efficient delivery of services, thereby accelerating progress toward an inclusive digital economy.”

The bank advised Nigeria to build digital public platforms, digital financial services, digital entrepreneurship, digital skills, and digital infrastructure.

PROTECT THE POOR

When subsidies are removed, the World Bank forsees some inflation, which would affect the poor and vulnerable. The bank is therefore calling on the government to fix this by protecting the poor.

“Implement a large-scale (covering 25% to 50% of the population) and time-bound targeted cash-transfer program to mitigate impacts of high inflation and the PMS subsidy removal,” the bank said.

It also called on government to “redirect savings from PMS subsidy to finance primary health, basic education, and rural connectivity projects”.

The bank said that the government in 2022 has planned to spend ~N3,000 per person per year on health while fuel subsidies could cost N13,000 per person per year in the same year”.

It called on the government to rearrange its priorities to shield the poor from bearing the burden of the subsidy removal.

SPEED UP PORT CLEARANCE

The World Bank advised that the government “reduce delays in border and port clearance by simplifying and harmonizing
documents, streamlining, automating procedures, and introducing risk-based customs interventions.”

This would entail spending up the processes of import at the popular Apapa Port, which is the busiest in the country, and one of the least efficient on the continent.

The Cable

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FG gets fresh $134m loan from AfDB for agric projects

Published

13 mins ago

November 14, 2024

Trends Admin

FG gets fresh $134m loan from AfDB for agric projects

The Federal Government has secured a loan facility of $134million from the African Development Bank (AfDB) to help farmers boost seeds and grain production in the country.

This is contained in a statement issued by Anthonia Eremah, Chief Information Officer, Ministry of Agriculture and Food Security, on Thursday, in Abuja.

Minister of Agriculture and Food Security, Sen. Abubakar Kyari, made his know at the unveiling of the 2024/2025 National Dry Season Farming in Calabar, Cross River State capital.

Kyari explained that with the re-introduction of the national dry season farming to boost year-round agricultural production, the loan would be handy and guarantee national food security in the country.

The minister said the initiative is under the National Agricultural Growth Support Scheme-Agro Pocket (NAGS-AP) Project.

He said the federal government had declared an emergency on food production to enable all Nigerians to get easy access to quality and nutritional food at affordable rates.

Kyari also said government wants to use the agricultural sector for national economic revival through increase in production of some staple food crops such as wheat, rice, maize, sorghum, soybean, and cassava during both dry and wet season farming.

He added that 107,429 wheat farmers were supported under phase 1 of the 2023/2024 dry season, and 43,997 rice farmers under the second phase of the 2023/2024 dry season.

FG gets fresh $134m loan from AfDB for agric projects

(NAN)

Auto

Chery relishes impactful presence at 2024 Lagos Trade Fair, says it’s a resounding success

Published

7 hours ago

November 14, 2024

Trends Admin

Chery relishes impactful presence at 2024 Lagos trade fair, says it’s a resounding success

Days after one of the biggest trade shows in Nigeria ended, talks about the spectacular displays, special products on offer and which companies did what at the 2024 Lagos International Trade Fair are still reverberating in the business industry in and around the nation’s commercial capital.

After staging one of the most outstanding displays at the fair, Carloha, sole representative of Chery vehicles in Nigeria, has declared that the 2024 Lagos International Trade Fair was a resounding success for Chery.

The fair held from November 1 to November 10 at Tafawa Balewa Square (TBS) in Lagos was attended by businesses from various sectors.

Chery made a commanding impression with a display of its array of vehicles that captivated attendees.

Chery’s lineup at the place featuring the Tiggo 8 Pro, Tiggo 4 Pro, Tiggo 2 Pro, and Arrizo 5 — easily became the highlight of the event, drawing admiration from automotive enthusiasts and industry experts alike.

Carloha Nigeria in its assessment of the show notes that the enthusiastic response from attendees reflected Chery’s alignment with the values of Nigerian consumers: durability, efficiency and style.

Indeed, it says the presence of Chery at the fair reinforced the brand’s status as a leader in innovative and high-quality vehicles.

“Chery’s presence at the fair signals its commitment to supporting Nigeria’s automotive industry growth,” it states, adding that the brand looks forward to continuing its journey with Nigerians seeking reliable and stylish vehicles that elevate their everyday driving experience.

Chery showcased the unique strengths and aesthetics of each of its models, with the Tiggo 8 Pro taking centre stage.

Tiggo 8 Pro

Known for its luxurious design and cutting-edge technology, the Tiggo 8 Pro made a lasting impact on attendees looking for a blend of sophistication and performance in an SUV.

Auto enthusiasts and prospective buyers were particularly captivated by the model’s spacious interior, high-quality finishes, and suite of intelligent features, which align with Chery’s reputation for engineering excellence.

Tiggo 4

For those interested in compact SUVs with versatility and style, the Tiggo 4 Pro was an instant hit.

Its sleek design, fuel efficiency, and advanced safety features resonated with visitors seeking a reliable yet stylish vehicle for urban and adventurous lifestyles alike.

The Tiggo 4 Pro’s appeal lies in its balance of form and function, and this resonated with young professionals, families, and automotive aficionados who stopped by Chery’s exhibit for a closer look.

Tiggo 2 Pro

The Tiggo 2 Pro also attracted significant attention at the fair.

Known as a stylish, compact SUV with a bold, urban design, the Tiggo 2 Pro struck a chord with those looking for a vehicle that combines affordability with aesthetic appeal and performance.

Its smaller size, combined with a powerful engine, makes it an ideal choice for city driving, and visitors were impressed by its efficient fuel consumption and user-friendly tech features, making it a perfect fit for Nigeria’s dynamic city life.

Arrizo 5

Arrizo 5, Chery’s stylish sedan that combines efficiency with cutting-edge technology, was part of the impressive lineup.

Many attendees were taken aback by the Arrizo 5’s seamless integration of petrol and CNG technology.

This appeals to those looking for sustainable and budget-friendly commuting options.

The sedan’s advanced safety features, plush interiors, and fuel efficiency made it a strong contender for those prioritizing both style and sustainability in a vehicle.

This year’s Lagos International Trade Fair saw an unprecedented turnout, with thousands of visitors exploring the diverse offerings from local and international brands.

Chery’s display not only highlighted the brand’s innovative automotive designs but also underscored its commitment to Nigeria’s automotive market.

The foot traffic at the Chery stand was a testament to the brand’s growing appeal, as well as Nigeria’s evolving automotive landscape, where demand for high-quality, dependable vehicles continues to rise.

Engagement with visitors

Beyond showcasing vehicles, Chery’s team engaged with visitors to explain the unique benefits of each model and answer questions.

This helped create a personal and informative experience for everyone who stopped by.

From live demonstrations to interactive sessions, Chery provided an immersive experience that helped attendeesj job understand the full scope of features each model offers, strengthening the brand’s connection with potential customers and automotive enthusiasts.

Carloha’s Sales Director, Mr. Joseph Omokhapue, says to make Chery ownership easy and affordable, highlighted their exclusive offers: a 6-year free service plan, 6-year/200,000 km warranty, and flexible auto financing options.

“These benefits are at the core of Carloha’s commitment,” he said, adding, “With fair pricing, nationwide 24/7 parts and service support, our customers can enjoy their Chery vehicles with complete peace of mind.”

Railway

NRC increases trips on Abuja-Kaduna route from four to six

Published

9 hours ago

November 14, 2024

Trends Admin

NRC increases trips on Abuja-Kaduna route from four to six

The Nigerian Railway Corporation (NRC) has announced an increase in the number of trains on its Abuja-Kaduna Train Service (AKTS) route in response to rising demand based on its customer feedback.

A statement signed by the NRC Deputy Director of Public Relations, Yakub Mahmood, on Wednesday, said the number of trains had been increased to six from four, running Monday to Friday during peak periods.

This development, it added, aimed to enhance customer satisfaction by making commuting more convenient and accessible on the route as well as tackling complaints of ticket racketeering.

The statement quoted the acting Managing Director of the NRC, Ben Iloanusi, as saying that a five-month trend analysis revealed a 22 per cent increase in new passengers registering on the ticketing platform for the Abuja-Kaduna route.

The surge, he said, showed a growing preference among Nigerians for train travel as a comfortable, reliable, and safe commuting option.

The statement read, “The Nigerian Railway Corporation, reaffirming its commitment to responding to customer demands, improving customer satisfaction, and tackling complaints of ticket racketeering, has increased the number of train services from four to six from Monday to Friday when demand tends to peak on its AKTS route.”

The NRC also noted that similar trends had been observed on the Lagos-Ibadan, Warri-Itakpe, and Port Harcourt-Aba routes, with efforts already underway to enhance services along these routes as well.

The acting MD assured Nigerians of the increased presence of NRC senior management across all train service routes to drive continuous efficiency and tackle the issue of ticket racketeering head-on.

“Our valued customers are encouraged to use NRC ticket platforms online to take advantage of the increased services and avoid patronising ticket racketeers.

“Additional information can be obtained from the NRC website, www.nrc.gov.ng,” it stated.

The expanded services on the Abuja-Kaduna route, it said, followed similar enhancements on the Lagos-Ibadan route, which now includes additional trips on Fridays and Saturdays to accommodate increasing demand.