VAT collection on the rise

E kaaro o, Ututu Oma, Barka da Safiya - Good morning, and a warm welcome to ThinkBusiness Nigeria, your Monday – Friday dose of commentary, contexts, and insights on business and economic news that matter to you.

It looks like the strike planned by the Nigeria Labour Congress (NLC) will go ahead today as announced. The two-day warning strike is planned for today and tomorrow. The strike has been called in response to the removal of fuel subsidy and the delay in the arrival of palliatives and non-adjustment of salaries.

Please let me know what happens in your area.

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Markets

• The benchmark NGX All-Share Index (ASI) increased by 751.95 (1.11%) points to close at 68,279.14, representing a week gain of 3.22%, 4-week gain of 4.5%, and an overall year-to-date gain of 33.22%. Dangote Sugar Refinery led the gainers with 10% share price appreciation closing at NGN 66.55 per share, followed by National Salt Company (+9.98%), John Holt (+9.92%) and Oando (+9.91%).

• Oil prices edged higher on Monday on expectations that OPEC+ would keep supplies tight and speculation that the US Federal Reserve will cease its aggressive interest rate hike campaign. Brent crude futures for November inched 44 cents higher to US $89 a barrel while the U.S. West Texas Intermediate crude (WTI) October futures rose 37 cents to US $85.92.

• Naira was mixed at both the I&E Window and on the streets. At the I&E exchange, Naira depreciated by 0.95%, closing at N747.87 to the US dollar. On the streets, was up by 0.11%, reaching a value of N914 against the US dollar.

• US natural gas futures eased to $2.65/MMBtu due to a larger-than-expected increase in gas storage last week and the anticipation of reduced demand in the upcoming weeks

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National Headlines

• The most awaited judgement in Nigeria’s history arrives tomorrow – The Presidential Election Petition Tribunal (PEPT) for the February 2023 elections announced that it will deliver its judgement tomorrow. This is arguably the most anticipated judgement in Nigeria’s history. There are two main petitions brought before it by the former Vice President, the People’s Democratic Party presidential candidate Abubakar Atiku and the presidential candidate of the Labour Party Peter Obi. The tribunal is led by Justice Haruna Tsammani.

• VAT collection on the rise – Q2 2023, Nigeria’s Value Added Tax (VAT) collections reached N781.35 billion, according to the latest data by the National Bureau of Statistics (NBS), 10.11% higher than Q1 2023. Nigeria’s VAT receipts divided into local, foreign, and import shows receipts of N512.03 billion, N142.63 billion, and N126.69 billion, respectively.

• Nigeria requires N2.3 trillion investment annually for infrastructure – The Federal Government has requested the help and support of UK NIAF (United Kingdom – Nigeria Infrastructure Advisory Facility) for the design of a 20-year infrastructure masterplan. It comes as the government says it requires an annual investment of N2.3 trillion to meet the country’s infrastructure demand and gap.

• ENI sale to Oando – ENI, Italian oil giant, has announced that it will sell its wholly owned Nigerian Agip Oil Company (NAOC) Ltd to Oando, Nigeria’s leading energy company listed on the Nigeria Stock Exchange and the Johannesburg Exchange. The deal is a continuation of the divestment pattern by global oil companies from Nigeria’s onshore exploration businesses. NAOC holds interests in OML 60, 61, 62, and 63. For Oando, this is second time lucky as this deal have the on the table for almost a decade. Oando is expected to complete the expansion plans and reach peak production in 2026. It currently accounts for 4% of Nigeria’s oil production.

Global Headlines

• Black Sea Grain deal revival stalls – The Russian president Vladmir Putin met with his Turkish counterpart Recep Tayyip Erdogan in Sochi to revive the black sea grain deal that allows Ukraine to export grain yesterday, but the meeting failed to make tangible progress. President Putin insists that the West has not met any of Russians demands for the deal to go through – allowing exports of Russia’s food and fertilizer. The initial one-year deal was reached July 2022. Since it expired two months ago, there have been efforts to revive the deal. Meanwhile, most of the infrastructure for the purpose have been hit by the Russians, with Ukraine accusing Russia of destroying 220,000 tones of Ukrainian grains in a recent assault.

• Sick man of Europe – It is China in Asia, and now it is Germany in Europe. Germany, the largest economy in Europe is expected to record a -0.3% growth in 2023, according to latest estimates from the International Monetary Fund (IMF). Indeed, the IMF estimates that Germany is the only major economy expected to decline this year. Growth stagnated in Q2 2023, following a decline of 0.1% in Q1 2023. A slow German economy have implications for economies in Europe, just as its exports to China, the country’s largest trading partner has slowed and weighed on its growth.

This Week

• On Thursday, September 7, 2023, the National Bureau of Statistics (NBS) is expected to release the Nigeria foreign trade statistics for Q2 2023. The first quarter shows that Nigeria’s export slightly increased by 2% while imports stood at N5.56 trillion, with petrol accounting for 79.4% of total imports in the review quarter.