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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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Kenya, Uganda settle oil import dispute

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In an effort to patch things up between the two neighbours, Kenya will permit Uganda’s landlocked state oil company to import petroleum products through its port of Mombasa, the country’s energy ministry said on Thursday.

After decades of receiving their cargo through affiliated firms in Kenya, Uganda has been looking for alternative ways to import petroleum products, including through a port in Tanzania. According to Solomon Muyita, a spokesman for Uganda’s ministry of minerals and energy, the first shipment under the new arrangement is scheduled for May.

“Kenya has agreed to give us a licence, UNOC (Uganda National Oil Company) is now free to import through Mombasa,” he said.

According to reports, UNOC would use the Kenya Pipeline Company to transport the goods, so Kenya would still profit from the agreement, according to Kenyan Energy Minister Davis Chirchir.

In 2022, Uganda imported petroleum products valued at $1.6 billion, the majority of which came from the Gulf. Kenya serves as the import gateway for about 90% of the goods.

It declared in November that it would transfer all exclusive petroleum product supply rights to a division of the international energy trader Vitol, which would subsequently supply UNOC.

According to what the government said at the time, using Kenyan companies to import oil had “exposed Uganda to occasional supply vulnerabilities” whereby Ugandan retail companies were viewed as secondary whenever there were supply disruptions changing retail prices.

The two African nations that make up the Great Lakes are partners in a variety of fields, including trade, infrastructure, energy, education, agriculture, and military security.

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No plan to increase taxes, Nigeria’s revenue chief says

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The head of Nigeria’s revenue agency, Zacch Adedeji, has reaffirmed that there is no plan for the introduction of new taxes in the country.

Adedeji, who is the Chairman of the Federal Inland Revenue, made the position known when the Chief Executive Officer of Guinness Nigeria Plc, Adebayo Alli, led the management team of the company on a visit to the Revenue House in Abuja.

He was quoted as saying, “the President gave a directive that he wants a single digit tax in the country, meaning that the maximum number of taxes we will have after the work of the Presidential Committee on Fiscal Policy and Tax Reforms will be nine taxes,” in a statement signed by the Special Adviser on Media to the FIRS chairman, Dare Adekanmbi.

“For us at FIRS, we have responded to that directive. We want to grow the pie such that even if we are taking the same percentage of the bigger pie, the result will be huge.

“By God’s grace, we will not introduce additional taxes nor increase any form of tax. We are only determined to increase the pie. We have restructured our operations at FIRS in such a way that we are now effectively carrying out our duty of assessing, collecting and accounting for taxes. We used to have functional types of taxes, but we have identified that the only customers we have are the taxpayers.”

He stated that by restructuring “our operations based on our customers, using their turnover as the basis to categorise them into large, medium, and small,” FIRS has enhanced its customer relations. He continued by saying that President Bola Tinubu wanted to increase Nigerians’ purchasing power in order to promote growth and increase businesses’ capacity for productivity through the recently implemented consumer credit scheme.

The Nigerian government has been working to overhaul the nation’s monetary and fiscal policies since the start of the Bola Tinubu administration. This has resulted in the central bank and the Oyedele-led tax advisory council implementing daring new policies.

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