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Nigeria may be headed for another recession as economy slows in Q2 2018

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The Nigerian economy has slowed for the second consecutive quarter this year, raising fears the nation may soon be heading for another economic recession.

According to the Gross Domestic Product (GDP) figures released by the National Bureau of Statistics (NBS) on Monday, the rate at which the nation’s economy grew in the second quarter of 2018 slowed to 1.50 percent from 1.95 percent recorded in previous quarter.

The GDP growth rate is the rate at which the value of all goods and services produced within a country’s border in a given period is rising.

Nigerian economy had officially slumped into recession in the second quarter of 2016 after recording negative GDP for two consecutive quarters, according to NBS.

Nigeria, which relies on crude oil for 70 percent for its revenue and over 90 percent for its export earnings, slumped into its worst economic woes since 1987 by recording five consecutive negative GDP growth rates from -0.67 percent in Q1 2016 to -0.91 percent in Q1 2017.

The nation’s annual growth rate turned positive in Q2 2017 with GDP growth rate of 0.72 percent and sustained the positive trajectory for five quarters till Q2 2018.

The economy would enter another recession when the GDP figures turn negative for two consecutive quarters.

Read Also: Nigerian stocks hit 10-month low on Dangote drop, election risk

The data indicated that the oil GDP contracted by -3.95 percent from 14.77 percent in Q1 2018, while non-oil GDP grew by 2.05 percent from 0.76 percent in Q1 2018.

Last week, the Statistician-General of NBS, Yemi Kale, had attributed the downturn to the clashes between farmers and herdsmen in some parts of the country.

The International Monetary Fund (IMF) had projected that the nation’s economy would grow from 0.8 percent in 2017 to 2.1 percent in 2018 and 2.3 percent in 2019 on the back of an improved outlook for oil prices.

According to the global monetary authority, the forecast “reflects improved prospects for Nigeria’s economy” and supported by the increase in commodity prices like crude oil.

With the GDP figures for the two quarters, the nation now has an average GDP of 1.73 percent for the first half of 2018.

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Nigeria’s inflation increases to a record 28-year high in May

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According to official figures released on Saturday, Nigeria’s annual inflation reached a record 28-year high of 33.95% in May, exacerbating the hardships that have stoked popular ire against President Bola Tinubu’s economic reforms.

Inflation increased for the eighteenth consecutive month, up from 33.69% in the previous month.

Tinubu’s measures, which primarily cut energy and gasoline subsidies and devalued the naira twice in a single year, have increased price pressure.
Labour unions, who asked for a new minimum wage through an industrial strike that was called off after two days, have maintained that the reforms disproportionately affect the poor and have left millions of people facing the biggest cost-of-living crisis in decades.

The National Bureau of Statistics data indicated that in May, food and non-alcoholic beverages remained the main drivers of inflation.

The majority of Nigeria’s inflation was driven up by food prices, which increased to 40.66% from 40.53% in the previous month. Analysts say the major causes of Nigeria’s inflation are rising food prices and a declining value of the naira.

The report read, “In May 2024, the headline inflation rate increased to 33.95% relative to the April 2024 headline inflation rate which was 33.69 per cent. Looking at the movement, the May 2024 headline inflation rate showed an increase of 0.26 per cent compared to the April 2024 headline inflation rate.

“On a year-on-year basis, the headline inflation rate was 11.54 per cent points higher compared to the rate recorded in May 2023, which was 22.41 per cent. This shows that the headline inflation rate (year-on-year basis) increased in May 2024 when compared to the same month in the preceding year (i.e., May 2023).

For the third time this year, the central bank increased interest rates in May in reaction to the ongoing increase in inflation. Rates will remain high for as long as it takes to reduce inflation, according to Governor Olayemi Cardoso.

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Nigerian court voids tax evasion charges against executives of Binance

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A Nigerian court dismissed tax evasion charges against two executives of Binance on Friday, following the appointment of a local agent by the largest cryptocurrency exchange in the world to represent it in all legal proceedings about the accusations.

The accusations of tax evasion were refuted by Binance, Tigran Gambaryan, an American citizen who oversees financial crimes compliance for the company, and Nadeem Anjarwalla, a regional manager for Africa and a native of Kenya.

The court’s ruling, according to Binance, demonstrated that Gambaryan was “not a decision-maker at Binance and does not need to be held for Binance to resolve issues with the Nigerian government.”

“We await the court’s ruling on this, discharging Tigran from this matter completely,” a Binance spokesperson said.

Last month, an Abuja court determined that Gambaryan, who is representing Binance, might potentially face trial in the tax evasion case. When its executives were invited to Nigeria and then detained as part of an anti-crypto campaign, Binance CEO Richard Teng accused the country of setting a dangerous precedent in May. The company is opposing the proceedings because it allegedly evades taxes and launders money.

Binance and its executives, Gambaryan and Nadeem Anjarwalla, a British Kenyan who works as Binance’s regional manager for Africa, are accused of four counts of tax evasion. Failing to register for taxes with Nigeria’s Federal Inland Revenue Service is one of the allegations.

Anjarwalla departed the nation in March, but Gambaryan has been detained since February. The two executives were dropped from the tax evasion lawsuit by Nigeria’s Federal Inland Revenue Service, but they and Binance are still accused of money laundering.

Binance declared that the allegations ought to be withdrawn. Both Anjarwalla and Gambaryan refute these accusations as well.

Nigeria has laid the blame for its currency problems on Binance. The country’s currency sank to a record low as a result of persistent dollar shortages, and cryptocurrency websites became the preferred means of trading the naira.

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