Nige­ri­ans’ in­comes will shrink in 2020 – Re­wane

The Punch - - BUSINESS & ECONOMY - ‘Femi Asu

The dis­pos­able in­comes of Nige­rian con­sumers will be squeezed by the pro­posed in­crease of Value Added Tax and elec­tric­ity tar­iff this year, an eco­nomic and fi­nan­cial ex­pert, Mr Bis­marck Re­wane, has said.

Re­wane, who is the Man­ag­ing Director/ Chief Executive Of­fi­cer of Fi­nan­cial De­riv­a­tives Com­pany Lim­ited, said the VAT hike (from five per cent to 7.5 per cent) would lead to higher com­mod­ity prices.

he said other chal­lenges would in­clude low in­come per capita (cur­rently at $2,236), high in­come in­equal­ity and ris­ing poverty rate in the coun­try.

he spoke at the De­cem­ber edi­tion of the LBS Break­fast Ses­sion on Tues­day.

“2019 was a year of po­lit­i­cal trep­i­da­tion and grow­ing un­cer­tain­ties. Some Nige­ri­ans are happy to see the back of 2019 while oth­ers are pleased with the slow eco­nomic progress,” he said.

Ac­cord­ing to Re­wane, 2020 will be a year of eco­nomic im­pon­der­ables at both the global econ­omy and do­mes­tic mar­kets.

he said, “For Nige­ria, con­sumers will groan about the hike in VAT, the restora­tion of toll­gates and cost-re­flec­tive elec­tric­ity tar­iffs.

“The good news is that the pay­ment of the new min­i­mum wage and the ar­rears would of­fer some suc­cour to work­ers.

“In­vestors would also keep a close watch on the stock mar­ket and the im­pact of gov­ern­ment poli­cies on their port­fo­lio strat­egy.”

Com­ment­ing on mon­e­tary pol­icy out­look, he said the ris­ing in­fla­tion and de­plet­ing ex­ter­nal re­serves would com­pel the Cen­tral Bank of Nige­ria to main­tain sta­tus quo on the Mon­e­tary Pol­icy Rate, also known as the bench­mark in­ter­est rate.

he said the CBN would only con­sider in­ter­est rate cut “when in­fla­tion en­ters a sus­tained down­ward trend and falls be­low the tar­geted up­per limit of nine per cent.”

Ac­cord­ing to him, the apex bank will con­tinue to em­ploy un­ortho­dox mea­sures to stim­u­late lend­ing as eco­nomic growth be­comes a stronger con­sid­er­a­tion.

Re­wane said the CBN would con­tinue in its ag­gres­sive in­ter­ven­tion at the for­eign ex­change mar­ket at the ex­pense of ex­ter­nal re­serves, adding that it would likely im­pose more forex re­stric­tions rather than de­value the naira in the face of grow­ing ex­ter­nal im­bal­ances.

FDC an­a­lysts, on the other hand, in their lat­est bi-monthly up­date, said the con­tin­u­ous de­pre­ci­a­tion of the naira could be at­trib­uted to the ab­sence of forex in­ter­ven­tions by the CBN.

They said, “Fur­ther de­pre­ci­a­tion of the naira is likely to oc­cur in light of de­plet­ing ex­ter­nal re­serves, which could limit the CBN’S abil­ity to in­ter­vene in the forex mar­ket,”

They added that fur­ther de­pre­ci­a­tion of the naira could trans­late to higher prices.

Photo: Four Sea­son Legacy

•L-R: Chief Executive Of­fi­cer, Four Sea­son Legacy, Dr Olabisi To­fade; Director, Mrs El­iz­a­beth Ebi; Chair­man, Dr James Fadel; Di­rec­tors, Mrs Ade­tumi Uzon­wanne; and Mrs Adeola Lawal, dur­ing the pre­sen­ta­tion of Nige­ria Dream Homes by the com­pany in La­gos… re­cently.

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