VenturesNow

Nigeria’s headline inflation rate spikes by 1.72% to hit 25.80% in August

Published

8 months ago

September 15, 2023

Nigeria’s headline inflation rate increased to 25.80% in August and 24.08% in July in the latest report by the official state data source, the National Bureau of Statistics (NBS).

The August 2023 headline inflation rate shows an increase of 1.72% points when compared to the July 2023 headline inflation rate.

The headline inflation rate was 5.27% points higher on an annual basis than the rate, which was 20.52% in August 2022. This demonstrates that when compared to the same month the year before, the headline inflation rate rose in August 2023. (i.e., August 2022).

The Food inflation rate spiked to 29.34%, up 2.35% points from the previous month’s reading of 26.98% and 6.22% points from the reading of 23.12% for the same time in 2022.

According to the NBS, price increases in oil and fat, bread and cereals, fish, fruit, meat, vegetables, and potatoes, as well as yam and other tubers, vegetables, milk, cheese, and eggs, are to blame for the rise in food inflation on an annual basis.

Food inflation is likely to continue on an upward trend as the year ends, based on higher demands for food supplies for end-of-year celebrations.

At the sub-national level, Kogi, Lagos, and Rivers states led the chart with 31.50%, 29.17%, and 29.06%, respectively, for the annual rate of inflation for all goods in August 2023, while Sokoto (20.91%), Borno (21.77%), and Nasarawa (22.25%) had the lowest annualised rate of inflation for headline items.

The three states with the biggest annual increases in food prices were Kogi (38.84%), Lagos (36.04%), and Kwara (35.33%), whereas the three states with the slowest annual increases in food prices were Sokoto (20.09%), Nasarawa (24.35%), and Jigawa (24.53%).

The sharp rise in inflation rates has been linked to the depreciation of the official exchange rate and the effects of the elimination of petrol subsidies on consumer costs.

While the two policies have been lauded by economists and multilateral bodies like the International Monetary Fund (IMF) and the World Bank, their immediate effects on Nigerians remain brutal, as evident in the inflation figures.

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VenturesNow

IMF, DR Congo agree on final review of loan deal

Published

3 hours ago

May 9, 2024

Ifeoluwa Dada

The International Monetary Fund (IMF) says it has achieved a staff-level agreement with the Democratic Republic of Congo (DRC) over the final assessment of a $1.5 billion loan program.

The fund however emphasized the importance of the DRC effectively handling the funds obtained from a modified mining agreement. This brings Congo closer to successfully fulfilling an IMF program for the first time. Prior agreements have been disrupted due to concerns regarding the absence of openness and clarity in its extensive mining industry.

“Performance under the (three-year) program has been generally positive, with most quantitative objectives met and key reforms implemented, albeit at a slow pace,” the Fund said in a statement.

Upon receiving approval from the IMF board, the accord will enable the release of a final instalment of approximately $200 million. The IMF has highlighted the need for the world’s leading cobalt provider, which is also the third-largest copper producer, to include the beneficial effects of the recently modified Sicomines joint venture with Chinese businesses in its updated budget law for 2024.

“In addition, mechanisms will need to be put in place or reinforced to ensure the proper use and governance of these funds,” the Fund said.
President Felix Tshisekedi advocated for revising the 2008 infrastructure agreement with Sinohydro Corp and China Railway Group, aiming to enhance the advantages for Congo. A contract was executed in March.

“The IMF is concerned about the mechanisms for using this money and has asked for it to be paid into the public treasury accounts rather than being managed by an agency as has been done in the past,” a finance ministry official, who requested anonymity, told Reuters.

As part of the IMF program, Congo was required to disclose mining contracts. Last week, Congo finally revealed the updated terms of the Sicomines agreement, which state that the Chinese side will invest approximately $7 billion in infrastructure, contingent upon high copper prices.

According to a 2023 report by Congo’s national auditor, just $822 million out of the projected $3 billion for infrastructure investments was distributed under the earlier version of the agreement.

The amended agreement still contains provisions that Congolese and international civil society organizations perceive as unfavourable to Congo. One of the benefits that Sicomines enjoys is the exemption from tax payments until the year 2040.

VenturesNow

Nigerian govt proposes VAT increase, new sharing formula

Published

10 hours ago

May 9, 2024

Ifeoluwa Dada

Nigeria’s presidential committee on fiscal policy and tax has argued for the necessity of raising the value-added tax (VAT) rate.

Taiwo Oyedele, the chairman of the committee, revealed during the policy exposure and impact assessment session that the VAT revenue-sharing formula will be reassessed.

Oyedele stated that the committee has suggested increasing the allocation of VAT money to state and local governments from the existing 85% to 90%. As to section 40 of the VAT Act, the federal government receives 15% of the tax revenue, while states receive 50% and local governments receive the remaining 35%.

According to him, the suggested new sharing arrangement implies that the committee is suggesting a decrease in the federal government’s portion from 15% to 10%.

“We are proposing that the federal government’s portion should be reduced from 15% to 10%. States’ portion will be increased but they would share 90% with local governments,” he said.

He explained that the new sharing formula for VAT is in favour of the lower tier of government because it is a tax generated at the state level.

“In 1986, we had sales tax collected by states. The military came up with VAT in 1993 and stopped sales tax so they said it would collect VAT and return 15 per cent as cost of collection and that is the 15 per cent charged today came about. But we think it is too much,” he said.

The tax expert added that the burden of VAT should be on the ultimate consumer.

“So we must make it transparent and neutral and this is what over 100 countries where they have VAT are doing,” Oyedele said.

He stated: “Nigeria’s economy is more than 50% in services and if I just stop at this, many states will be broke because VAT collection will go down by more than 50% and it won’t even fly.

“So we therefore need to adjust the VAT rate upward. We would ensure that it doesn’t affect businesses. The only thing is to look at basic consumption from food, education, medical services and accommodation will carry zero percent VAT. So for the poor and small businesses, no VAT.”

Oyedele said other consumers will pay a bit more.

“We have spoken to businesses about it and they won’t increase the product price. We want to make sure when we do VAT reform, no one will increase the price of commodities. We will work the mathematics with the private sector,” he explained.

Oyedele also said each state should not be granted exclusive custodianship of their collections– because it would likely result in chaos.

The Nigerian government has been undertaking comprehensive reforms of the nation’s monetary and fiscal policies since the inception of the Bola Tinubu administration. As a consequence, the central bank and the tax advisory council led by Oyedele have implemented audacious new policies.