Category: Business

A strong US dollar has major implications for global economies, especially for Nigeria and other countries in Sub-Saharan Africa, the International Monetary Fund (IMF), has said.

According to the Fund in its External Sector Report, the effect is larger and more persistent for emerging market economies.

It noted that the effects of a strong dollar spread via trade and financial channels with real trade volumes in emerging economies declining more sharply, with imports dropping twice as much as exports.  

“Emerging market economies also tend to suffer disproportionately across other key metrics: worsening credit availability, diminished capital inflows, tighter monetary policy on impact, and bigger stock-market declines,” the Fund said.

The implication, the Bretton Woods Institute notes, is that an appreciation of the US dollar impacts the current account of the countries.

The current account captures the change in saving-investment balances of countries. As a share of gross domestic product, current account balances (saving minus investment) increase in both emerging market economies and smaller advanced economies, because of a depressed investment rate (there is no clear systematic response for saving).

The report notes that while “exchange rate depreciation and accommodative monetary policy facilitate the external sector adjustment for advanced economies, in emerging market economies, the fears of letting the exchange rate fluctuate and lack of monetary policy accommodation magnify the increase in the current account.

“The external sector adjustment in emerging market economies is further hindered by their heightened exposure to the US dollar through trade invoicing and liability denomination.”

To navigate the effect of a strong dollar, emerging market economies must come up with policies that anchor inflation expectations or more flexible exchange rate regimes.

“More anchored inflation expectations help by allowing more freedom in the response of monetary policy. After a depreciation, a country can run a looser monetary policy if expectations are anchored. The result is a shallower initial decline in real output. In turn, emerging market economies with more flexible exchange rate regimes tend to enjoy a faster economic recovery owing to a sizeable immediate exchange rate depreciation.

“Flexible exchange rate regimes can be supported and facilitated by domestic financial market development that helps lessen the sensitivity of domestic borrowing conditions to the exchange rate. Sustained longer-term commitments to improving fiscal and monetary frameworks help anchor inflation expectations.

This includes ensuring a well-balanced mix of fiscal and monetary policies, enhancing central bank independence, and continuing to strengthen the effectiveness of communications,” the Fund said. 

For the IMF, policymakers should go beyond using precautionary policy tools, such as global safety nets, which are important in addressing global financial market cycles and their spillovers.

“In emerging market economies with severe financial frictions and balance sheet vulnerabilities, macro-prudential and capital flow management measures could help mitigate negative cross-border spillovers,” the report said.

The central parity rate of the Chinese currency renminbi, or the yuan, strengthened 10 pips to 7.1456 against the dollar on Friday, according to the China Foreign Exchange Trade System.

In China’s spot foreign exchange market, the yuan is allowed to rise or fall by two per cent from the central parity rate each trading day.

The central parity rate of the yuan against the dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.

The National Agency for Food and Drug Administration and Control (NAFDAC) has warned fruit hawkers to desist from using calcium carbide to ripen fruits.

This is just as it cautioned the illegal hawking of drugs in the open market across the country, saying anyone arrested will be prosecuted thoroughly.

The agency said that many drug hawkers had knowingly or unknowingly become merchants of death who expose essential and life-saving medications to the vagaries of inclement weather which degrade the active ingredients of the medicine and turn them into poisons thus endangering human lives.

Speaking on the eradication of the menace in Lagos, NAFDAC’s Director General, Professor Mojisola Adeyeye, said there is an urgent need to stem the dangerous tide of drug hawking and ripening of fruits with calcium carbide.

According to her, the looming danger and health implications of these two nefarious activities by some unpatriotic and unscrupulous citizens in our country cannot be allowed to continue.

Speaking on “dangers of drug hawking and ripening of fruits with calcium carbide”, the NAFDAC DG said the existing collaboration with journalists towards mobilizing, educating, sensitizing, and concertizing will play a frontline role in the concerted efforts to eradicate the menace of drug hawking and ripening of fruits with calcium carbide in Nigeria. 

The DG also noted that the menace of drug hawking poses a serious challenge to the healthcare delivery system in the country and this underscored NAFDAC’s resolute determination to totally eradicate the illicit trade.

“Many drug hawkers are knowingly or unknowingly merchants of death who expose essential and life-saving medicines to the vagaries of inclement weather which degrade the active ingredients of the medicine and turn them to poisons thus endangering human lives”

She stressed that most of the drugs sold by the illiterate and semi-literate drug hawkers are counterfeit, substandard or expired, and therefore do not meet the quality, safety, and efficacy requirement of regulated medicines”

“Drugs are sensitive life-saving commodities which should not be sold on the streets or inside motor parks or open markets just like any other article of trade”

“I wish to warn that any drug hawker arrested by NAFDAC will be prosecuted and will face a jail term. No offender will be spared from facing the full wrath of the Law,” Adeyeye said.

The Federal Inland Revenue Service (FIRS) has announced a total tax revenue collection of N5.5 trillion for the half-year period of January to June 2023.  This is the highest tax revenue collection ever recorded by the Service in any first six months of a fiscal year.

Executive Chairman of FIRS Mr. Muhammad Nami, stated this while presenting the 2023-2024 tax revenue outlook to the National Economic Council meeting Thursday in Abuja.

The presentation, which contained FIRS’ 2023 Half-Year Collection Report, showed that the Service achieved over one hundred percent of its target for the first-half of the year when compared with a mid-year target of N5.3 trillion.

According to the report, tax revenue collected from the oil sector from January to June 2023, stood at N2.03 trillion, as against a target of N2.3 trillion; while non-oil tax collection stood at N3.76 trillion, as against a target of N2.98 trillion.

Mr. Nami, in his presentation, further stated that the Service collected a total of N1.65 trillion tax revenues in June 2023. This sum is the highest tax revenue collected by the Service in any single month.

Speaking of what he described as “a good head start, despite stubborn headwinds,” Mr. Muhammad Nami, attributed the excellent performance to improved voluntary tax compliance enabled by the automation of FIRS’ tax administrative processes.

“This is a good head start as we work towards meeting our target for the year. And it was achieved despite stubborn headwinds such as the impact of the currency redesign and 2023 General Elections on the economy in the first and second quarters of 2023”, said Mr Nami.

“This half-year performance was achieved as a result of improved voluntary tax compliance by taxpayers, the continued improvement of automation of our tax administration processes, including the updated VAT filing processes; as well as our dogged engagement with stakeholders in both the formal and informal sectors of the economy.”, he concluded.

Commenting on the outlook for the remainder of the year, the FIRS Executive Chairman gave assurances that the country should expect “better days ahead” in terms of tax revenue collection.

“We believe that the performance in the second half of the year would be better considering the continuing improvement to our tax administration processes and the positive impact of the current government’s policies on the economy,” said the Executive Chairman.

It would be recalled that the Service achieved a total collection of N10.1 trillion in the year 2022, being the highest tax collection ever made by the FIRS in a single year.

In a bid to ease the pains associated with the high cost of petrol, the Nigerian Institute of Transport Technology (NITT), says it has built workshops across the country to assist Nigerians convert their petrol-powered vehicles to auto gas.

Director-General of the institute, Dr Bayero Salih-Farah, who disclosed this at a news conference on Thursday in Zaria, Kaduna, said the institute has been working on the project for a year now and is ready to commence the conversion in the next two to three weeks.

Salih-Farah explained that the institute has been working in partnership with some manufacturers of the conversion kits which would be used at its workshops to enable Nigerians to have cheaper conversion from PMS to auto gas.

“We have sensitised relevant stakeholders across the country at different fora on the need for Nigerians to migrate from the use of PMS to gas.

“Gas is very cheap than petrol, it is also cleaner and convenient; Nigerians will be able to save a lot of money when they convert their vehicles from petrol to auto gas.

“The cost of transport will come down drastically because the money required to refill a tank using an auto gas will be 40 per cent lower than the money required filling a tank using petrol,’’ he said.

He said the use of auto gas would also reduce environmental pollution in the country substantially, and appealed to Nigerians to take advantage of the initiative.