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Government ends FX provision for mining companies in Sierra Leone. Here’s why

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Sierra Leone Petroleum Regulatory Agency has revealed that the country will no longer provide foreign exchange for mining companies and other large businesses to import oil as of June 1.

The stand was made known in a statement signed by Finance Minister Dennis Vandy on Thursday. The government accused the mining companies of “stockpiling diesel fuel”.

The policy directive is part of the government’s approach to mitigating the ongoing crisis in the country’s petroleum downstream sector, which has largely been attributed to the Russia-Ukraine conflict.

The statement also revealed that forex support by the Bank of Sierra Leone for petroleum product imports was estimated at $24 million in the first quarter of this year, and mainly benefited mining companies and other major commercial users.

“This situation is potentially getting serious as there is evidence that mining companies are stockpiling diesel fuel, constraining supply to the ordinary citizenry and small businesses,” The statement said.

According to the finance ministry, out of a total of 61,545,694 liters of diesel fuel uplifted by the OMCs between January and March, mining companies and other end-users uplifted 32,539,167, accounting for around 53 percent.

“This implies that while the government provides concessions to these agencies, they also enjoy non-pass-through costs as they are also heavily subsidized by the meager resources of foreign support by the Bank of Sierra Leone with the aim of cushioning the retail market,” The statement concludes.

Russia’s invasion of Ukraine in February has affected oil prices so much that prices soared to a 14-year high of $140 a barrel on March 7. The many effects of the war are felt across the world.

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Nigeria’s central bank raises interest rate to 24.75% amid soaring inflation

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Governor Olayemi Cardoso of Nigeria’s central bank has announced that the bank has increased its monetary policy rate by 200 basis points, to 24.75% from 22.75%, as part of its ongoing tightening measures to combat skyrocketing inflation.

This comes after the bank boosted rates by 4 percentage points last month in an attempt to contain pricing pressures, marking the highest rate hike in almost 17 years.

The committee did not convene under Cardoso’s leadership until February, thus this decision was only the second since he entered office in September of last year.

In the aftermath of the removal of subsidies on petrol products in May last year, Nigeria’s economy is experiencing a cost of living crisis that has left millions of people struggling to satisfy their basic requirements. Annual inflation is above 30%, the worst level in nearly three decades.

At a press conference, Cardoso stated that while members of the Monetary Policy Committee (MPC) were still certain that the tightening cycle was necessary to control inflation, they also believed that price pressures had started to ease as of May.

“Considerations of the committee at this meeting focused on the current inflationary pressures and the need to anchor inflation expectations as well as ensure sustained exchange rate stability,” he said.

The value of the naira appreciated by 12% by the end of last week’s trading activities, and has been on the rise so far this week also, exchanging lower than 1,400 per $ on Tuesday.

Recent measures like the removal of subsidies and the double depreciation of the naira have been defended by the government as necessary to boost economic growth and draw in investment, but they have incited public ire and, in some cases, desperation.

More tightening is anticipated in the upcoming two MPC meetings, according to David Omojomolo, Africa economist at Capital Economics, before policymakers back off and maintain stable interest rates.

“We expect Governor Cardoso’s desire to bring the inflation crisis to a close and also strengthen the naira will lead to more tightening,” said Omojomolo.

Following the increase, Nigeria’s sovereign foreign dollar bonds saw an increase. Tradeweb data shows that the 2029 note saw the biggest jump, rising 1.4 cents against the dollar to 97.9 cents at 1344 GMT, its highest level in over two years.

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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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