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Nigeria May Slide Into Another Recession Soon — Finance Minister

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Zainab Ahmed, minister of finance, says unless Nigeria achieves a very strong third quarter 2020 economic performance, the country may slide into recession.

Ahmed disclosed this at the opening of a five-day interactive session on the 2021-2023 Medium Term Expenditure Framework (MTEF), and Fiscal Strategy Paper (FSP), held on Thursday in Abuja.

The interactive session was organized by the house of representatives committee on finance, chaired by James Faleke, the lawmaker representing Ikeja federal constituency.

Ahmed, who was represented by Clement Agba, the minister of state for finance, said the COVID-19 pandemic had put further pressure on Nigeria’s foreign exchange.

He said the COVID-19 pandemic resulting in the crash of global oil prices among other economic factors had adversely affected the nation’s economy, with the Gross Domestic Product growth for Q2 most likely to be negative.

The World Bank had in July warned that the collapse in oil prices resulting from the COVID-19 pandemic was expected to plunge the Nigerian economy into a severe economic recession, the worst since the 1980s.

The global bank had stated this in its latest Nigeria Development Update.

Agba had read out a written presentation by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, titled ‘Draft 2021-2023 MTEF/FSP: Presentation to the House Finance Committee.’

The minister said the Nigerian economy faced serious challenges in the first half of 2020 with the microeconomic environment significantly disrupted by the pandemic.

The document partly read, “The impact of these developments is about 65 percent decline in projected net 2020 government revenues from the oil and gas sector, with adverse consequences for foreign exchange inflows into the economy.

“Nigeria is exposed to spikes in risk aversion in the global capital markets, which will put further pressure on the foreign exchange market as foreign portfolio investors exit the Nigerian market.

“Nigeria’s Q2 GDP growth is in all likelihood negative, and unless we achieve a very strong Q3 2020 economic performance, the Nigerian economy is likely to lapse into the second recession in four years, with significant adverse consequences.

“In response to the developments affecting the supply of foreign exchange to the economy, the Central Bank of Nigeria adjusted the official exchange rate to N360/USD1, and more recently to N379/USD.

“The disruptions in global trade and logistics would negatively affect Customs duty collections in 2020.

“The COVID-19 containment measures, though necessary, have inhibited domestic economic activities, with a consequential negative impact on taxation and other government revenues.

“Consequently, the projections for Customs duty, stamp duty, Value Added Tax, and Company Income Tax revenues were recently reviewed downwards in the revised 2020 budget.

“Customs revenue has generally performed close to target over the last few years, exceeding the target in 2019.”

While noting that there had been some improvement in Company Income Tax and VAT remittances, the minister said the Federal Government expected significant improvements in VAT collections with the new VAT rate of 7.5 percent.

The minister said, “Over the past five years, actual revenue performance averaged 61.4 percent.

“Some of our reforms are yielding positive results, with significant improvements between 2018 and 2019. We believe we can do more to improve revenues, especially remittances from GOEs, possibly up to N1tn per annum.”

Speaking on the key assumptions of the MTEF/FSP, the minister, among others, said, “Inflation, however, is expected to remain above single-digit over the medium term, given the structural issues impacting on the cost of doing business, including the high cost of distribution.”

On the management of the fiscal crisis, the minister noted that fiscal measures were being instituted to improve government revenue and entrench a regime of prudence, with emphasis on achieving value for money.

“The goal of fiscal interventions will be to keep the economy active through carefully calibrated regulatory/policy measures designed to boost domestic value addition, de-risk the enterprise environment, attract external investment and sources of funding, etc.,” the minister stated.

The minister noted that the draft 2021-2023 MTEF/FSP was prepared against the backdrop of a global recession and heightened global economic uncertainty.

The document further read, “The medium-term outlook for Nigeria suggests that fiscal risks are somewhat elevated, largely due to COVID-19 related disruptions, which have exacerbated structural weaknesses in the economy.

“Nigeria faces significant medium-term fiscal challenges, especially with respect to its revenues, which, if not addressed, could snowball into a debt sustainability crisis.”

Already, Nigerians are becoming agitated by the rising debt profile of the country, with the National Assembly raising concerns over external loan agreements between Nigeria and global bodies, especially the China Export-Import Bank.

BIG STORY

JUST IN: Many Missing As Truck Plunges Into Lagos River

Gbemileke Ajayi

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Many people have been declared missing after a truck fell off the Berger bridge into the Epe river in Lagos State on Friday night.

As at the time of filing this report, the number of persons in the truck was unknown.

However, the Lagos State Emergency Management Agency (LASEMA) confirmed the incident on Saturday.

Head, Public Affairs of LASEMA, Nosa Okunbor, said search and rescue operations are ongoing.

More to come.

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BIG STORY

‘Jail Me But Set Him Free’ — Foreign Activist Writes Buhari Over 13-Year-Old Sentenced For Blasphemy In Kano

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Piotr Cywinski

Piotr Cywinski, director of Auschwitz Memorial in Poland, says he is ready to be imprisoned in Nigeria so that Umar Farouq, a 13-year-old boy sentenced for blasphemy, can regain freedom.

A Sharia court in Kano had convicted Farouq for “using disparaging language on Allah” during a disagreement with his friend.

In a letter dated September 25 and addressed to President Muhammadu Buhari, Cywinski sought pardon for Farouq.

He said if Buhari is unable to facilitate the teenager’s release, he and 119 volunteers would serve a month in a Nigerian prison on Farouq’s behalf.

“I permit myself to write to you personally about a young boy named Omar Farouq, who was convicted recently in a Sharia court in Kano State in north-west Nigeria after being accused of blasphemy used during an argument with a friend,” he said.

“I wish to request the pardon of this 13-year-old boy. Regardless of what he said, he cannot be treated as fully aware and responsible, given his age.

“If it turns out that the words of this child absolutely require 120 months of imprisonment, and even you are not able to change that, I suggest that in place of the child, 120 adult volunteers from all over the world, gathered by us myself personally among them should each serve a month in a Nigerian prison.

“In total, the price for the child’s transgression will be the same, and we will all avoid the worst.

“If you agree to grant clemency, or to the above proposal in lieu of punishment, I will make an attempt to provide financial help for the boy’s proper education. This way, instead of a destroyed young man, Nigeria will gain an aware and educated young citizen.

“You will undoubtedly agree with the statement that human rights begin with the rights of the child. I kindly ask you to consider my proposal favorably.”

Cywinski’s request came days after the United Nations Children’s Fund (UNICEF) appealed to the Kano state government to reverse the jail sentence.

Auschwitz Memorial preserves the remains of the German Nazi concentration and extermination camp, where children were imprisoned and murdered.

Adolf Hitler, the late leader of Nazi Germany, reportedly oversaw the killing of 6 million Jews.

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Don’t Join Nationwide Strike, FG Warns Civil Servants

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Folasade Yemi-Esan, head of the civil service of the federation, has warned workers under the federal government not to join the planned strike by labour unions across the country, scheduled to begin on Monday.

The Nigeria Labour Congress (NLC), Trade Union Congress (TUC), and its affiliate unions had enjoined workers to embark on an indefinite strike, pending when the federal government reverses the price of petrol and electricity tariff.

In a statement on Friday, Yemi-Esan said the federal government is in talks with the labour unions towards ensuring that all agitations by the workers are resolved.

She, however, added that the workers cannot embark on the industrial action because there is a court injunction restraining them from doing so.

“Sequel to the call by the Labour Unions for workers to embark on industrial action from Monday, 28th September 2020, the Office of the Head of Civil Service of the Federation (OHCSF) wishes to inform all public servants that the Federal Government team is currently engaging with the Labour Unions with a view to resolving all contentious issues and avert the planned industrial action,” she said.

“Furthermore, it is important to note that there is a court injunction granted by the National Industrial Court (Suit No. NICN/ABJ/253/2020) on 24th September 2020, restraining the Nigeria Labour Congress and Trade Union Congress of Nigeria from embarking on any form of industrial action pending the hearing and determination of a Motion on Notice.

“Accordingly, all officers on Grade Level 12 and above and those on essential services are hereby strongly advised to be at work to perform their official duties.”

In two separate rulings, the National Industrial Court had restrained the labour unions from embarking on the strike.

Meanwhile, other unions such as the National Union of Banks, Insurance and Financial Institutions Employees (NUBIFIE), the Joint Action Front (JAF), Judiciary Staff Union of Nigeria (JUSUN), aviation unions, among others, have declared their interest to join in the strike.

 

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