In Nigeria’s economic space, 2019 has been an eventful and historic year. Being an election year, the uncertainty that enveloped the economic and the business sectors early this year was thrilling and unpredictable as the ‘Nostradamus’ in the business circle, including domestic and foreign investors kept their fingers crossed.
Real GDP grew from 1.89% in Q1 of 2018 to 2.10% in the first quarter* of 2019, which was the strongest first-quarter growth since 2015 and 1.94% in Q2 2019 and 2.28% in Q3 2019.
Stock market heralded the year at over 30,000 points and witnessed a shift as telco companies MTN and Airtel got listed on the stock market pushing the general activities in the market marginally. However, on a year to date basis, the market has declined by over 15%.
Meanwhile, there has been a continuous uptick in headline inflation particularly food inflation as inflation increased by 11.85 per cent (year-on-year) in November 2019 with food sub-index at a high of 14.48%. According to policymakers, in the coming months, this figure is expected to climb even further.
Following pressure mounted on the presidency by the Nigeria Labour Congress declaring an indefinite warning strike, the president Muhammad Buhari in April signed into law the implementation of the N30, 000 minimum wage. The bill now makes it mandatory for employers of labour in both public and private organisations to pay N30,000 as minimum wage.
In what the federal government described as the smuggling and dumping of goods and a lack of adherence to ECOWAS rules, the Buhari-led administration in August approved the closure of the border. Like a tree struggling to reinforce and solidify its roots, Buhari refused to renege on his decision until till there is restoration in the compliance to the rule of origin, agreed packaging standards and the dismantling of warehouses around the borders by neighbouring countries.
The CBN also came up with new policies in line with their mandate to bank the unbanked, boost financial inclusion and generate more revenue for the country.
The apex bank in October directed all banks to exclude individuals and local corporates from investing in open market operations auctions effective October 23rd, 2019. This is expected to leave only banks and foreign investors as participants at the auction moving forward.
Also In an attempt to increase lending to the real sector of the Nigerian economy, the central bank of Nigeria asked deposit money banks to maintain a minimum loan to deposit ratio of 65%, up from the initial 60% with a deadline of Dec 31, 2019. The apex bank said failure to meet the minimum threshold would result in a levy of additional cash reserve requirement 50% of the lending shortfall implied by the LDR.
Still in the spirit of financial inclusion, the apex bank in December issues adjustments to its electronic banking policies which included the revised charges on electronic funds transfer. According to the new rule, EFTs below N5,000 would incur a charge of N10, transfers of N5,001 and N50,000 would incur N25, while transfers above N50,000 would attract N50. ATM bank charge has also been revised to N35 from N65 when you use other banks’ ATM.
The president also presented a finance bill which seeks to amend 7 different tax laws and is expected to take effect by January 2020, note however that this is yet to be approved. The bill is expected to raise the country’s value-added tax from 5% to 7.5%. Buhari says the additional revenues will be used to fund health, education and infrastructure programmes.
The Central Bank of Nigeria clarified that the N50 stamp duty imposed on bank customers is to be charged per transaction and not per volume of N1,000. Hence, irrespective of the amount, the sum of N50 is to be charged provided such a transaction is N1000 and above. Following the president’s presentation of the 2020 budget to the national assembly in October,
On Tuesday, December 17, 2019, President Muhammadu Buhari signed the $34.62 billion (N10.59 trillion) 2020 appropriation bill into law to return Nigeria’s budget circle Jan to Dec, a feat that has been a herculean task for each successive administration in the last 20 years.
With this landmark achievement in budgeting cycle the year 2019, would go on record as a memorable one making it the 4th time post-democracy that Nigeria would commence a fiscal year with the running of the appropriation bill from day one.
