Realigning FCCPC’s Regulatory and Fiscal Incentives

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Realigning FCCPC’s Regulatory and Fiscal Incentives – The year 2023 ended with the announcement that the Federal Competition and Consumer Protection Commission (FCCPC), Nigeria’s antitrust watchdog fined British American Tobacco (BAT) US $110 million. It was the largest fine recorded by the watchdog. It was widely welcome for two major reasons. It was seen as a victory against big businesses. Second, due to bias against tobacco, it was widely acknowledged as a positive development that could help clip the wings of BAT and the tobacco industry in Nigeria. 

It is therefore understandable that many would have missed a critical point and the implications, as explained by the Executive Vice Chairman Babatunde Irukera. The agency generated N56 billion in 2023, virtually all from a single fine. How and why should an agency’s revenue for the year be from a single firm? Regulatory and fiscal incentives matter and is it at play here? In the era of Internally Generated Revenues (IGRs), how do we ensure that fiscal and regulatory incentives align? Should the fine not be determined by a third party? Should the case not be adjudged by a third party? The current pattern inadvertently provides the FCCPC the incentives to go after big businesses that have the funds to pay or foreign companies that have global reputation to maintain. Will 2024 revenues be from another big and or foreign business? If it focuses on big and or foreign businesses for the purpose of revenues, it may inadvertently become predatory and not systematic application of competition rules and regulations across all industries. 

Data, Poverty, and Corruption – Yes, the three go together, and this weekend has demonstrated that. Any casual observer of the Nigerian situation, including the World Bank that provided the funding, knows that the Nigerian government does not have the data of the most vulnerable people in Nigeria. The federal government started this under President Buhari. It has now come to light that it was a conduit for corruption. There is no evidence that all the distributions under Trader Moni and conditional cash transfers were backed with data. Surprisingly, President Bola Ahmed Tinubu continued with the policy. The other point is that no poor country can share itself out of poverty. In a poor country, poverty alleviation means more poverty, and not less, because we are sharing from a little and reducing pie. Nigeria, with the largest number of poor people one earth does not need conditional cash transfers but jobs for income growth across all levels. Now, it is very clear that the absence of data of poor people have led to billions of Naira finding their way into private accounts. Those ones have simply solved their “poverty” problems. You cannot legislate people out of poverty, and you cannot share out of poverty. The government knows this, and these schemes have always been about corruption.  

Global

India To Continue Its Strong Growth Pattern In 2024 – Yes, I’m still fascinated with India, and I have more reasons to do so. India is expected to outperform every other major global economy this year with an expected economic growth of 7.3% on the back of strong manufacturing and services sectors. What is most impressive is that the expectation of global growth is 2.9% in 2024. It thus means that India’s economic performance this year is expected to be more than double the global average. India, like most economies is currently affected by three global economic uncertainties. First is the geopolitical tensions of the Russia / Ukraine and the Israel / Hamas war, compounded by the US / China trade and technology tensions. Second is the tightened financial conditions that saw interest rates and costs of debts reached levels last seen decades ago. Third, rise in prices and global inflation since 2022 that reached a peak of 11.5% in Q2 2022 following spike in energy and food prices but has started to tail off late 2023. But unlike most countries, the world’s largest populated country is bucking the trend.

Apple faces another antitrust lawsuit in the US – The US department of justice is in the final stages of investigating Apple for potential antitrust violations, focusing on how Apple is likely abusing its dominant position. The focus is on how Apple is using its control over its hardware and software to create barriers for consumers who want to switch to other brands and for competitors looking to effectively way to compete. Specifically, the Justice Department is examining Apple's integration of the Apple Watch with the iPhone, exclusivity of the iMessage service, and limitations imposed on other financial firms in offering payment services like Apple Pay. In repones, Apple’s shares declined. This case specifically targets Apple’s business model – exclusive integration of its devices. Competitors have alleged that Apple denies them access to key features, such as the Siri virtual assistant, leading to claims of anticompetitive practices. Apple also faces regulatory hurdles elsewhere, including in Europe. 

US markets’ bull run: good things come to an end? – The US stock market closed the first week of 2024 flat with 0.2% gain, the worst week since late October 2023. The S&P 500, an index of some of the largest companies in the world, ended its nine-week bull run while the Nasdaq 100, an index of many large technology companies, recorded growth after five consecutive days of losses. Market analysts continue to watch the different data indicators released or soon to be released by the government. 10-year treasury yields reached 4%, while non-farm payrolls showed a gain of 216,000 in December. Focus will shift to consumer inflation data due next week, which is expected to provide indication on the worlds ‘largest economy’s output and price dynamics. Interest rate is currently 5.5%.