Opinion

COVID-19: Sub-Saharan Africa’s 1st recession may be in 25 years –World Bank

The World Bank Group says Coronavirus (COVID-19), is taking Sub-Saharan Africa towards its first recession in 25 Years.

The bank stated this in a statement where it explained that growth in Sub-Saharan Africa had been significantly impacted by the COVID-19 outbreak, and was predicted to fall sharply from 2.4 per cent in 2019 to -2.1 to -5.1 per cent in 2020.

The bank stated that it based its forecast on the latest Africa’s Pulse, the World Bank’s twice-yearly economic update for the region.

COVID-19 Spillovers: Are the Proposed Economic Stimulus Measures Enough?

Globally, countries are responding to the unprecedented economic challenges brought by COVID-19.  In Nigeria, the CBN recently announced some stimulus measures to support the real sector given COVID-19 spillovers. Some of the measures announced include the reduction of interest rate to 5.0% from 9.0% and a one-year moratorium on all CBN intervention facilities. The apex bank also created a ₦50.0bn targeted credit facility to support households and SMEs as well as a special credit support of ₦1.1tn for the manufacturing and the healthcare sectors respectively.

Petrol Price Reduction to ₦125/Litre… Laudable yet Questionable

Reeling from the current disruptions caused by the COVID-19 pandemic, fiscal and monetary policymakers are announcing measures to support the economy. The FG through the Petroleum Products Pricing Regulatory Agency (PPPRA) reduced the price of petrol for the first time since 2015 to ₦125.0/litre from ₦145.0/litre, effective March 19, 2020.

Coronavirus: Coordinated action, key to stability in global economy – IMF

The Managing Director, International Monetary Fund (IMF), Kristalina Georgieva, says as COVID-19 (Coronavirus) spreads, increased coordinated action is key to boost confidence and provid stability to global economy.

She said this in a publication titled “Policy Action for a Healthy Global Economy”, part of a special blog series on the response to the coronavirus.

Georgieva said that while quarantining and social distancing was the right prescription to combat COVID-19’s public health impact, the exact opposite was needed to secure the global economy.

Telecoms: Diving into Nigeria’s New SIM Card Policy

According to press reports last week, the Federal Government of Nigeria (FGN), via the Minister of Communications and Digital Economy, issued a directive to the regulator of the telecommunications sector, the Nigerian Communications Commission (NCC), to revise the policy on SIM card registration and usage. The Minister stated that the policy update was based on the need to combat the spate of insecurity in Nigeria. In our view, this will have a neutral effect on telecoms companies (telcos) earnings in the near-term.

The Petroleum Industry Bill (PIB) …So Much Noise, So Little Substance

Nigeria’s legacy of inaction in passing urgent reforms is perhaps best captured by the Petroleum Industry Bill (PIB). The Bill is over a decade in waiting since the original version was put forward by the Executive in 2008. The most recent update was the split of the comprehensive Bill into four parts in 2015 to ease passage. The new versions are the Petroleum Industry Governance Bill (PIGB), Petroleum Host and Impacted Community Bill (PHICB), Petroleum Industry Administration Bill (PIAB) and Petroleum Industry Fiscal Bill (PIFB).

Nigeria in the New Decade: Nothing Ventured, Nothing Gained

The Nigerian economy suffered mixed fortunes in the past decade. In the first half of the decade, an average growth of 6.1% drove unemployment to a low of 5.1%. This was on the back of peak oil prices and stable oil production, which supported oil revenues and a strong exchange rate. In turn, inflation was relatively low, averaging 10.7%, due to a strong currency. However, fiscal and structural reforms were on the backburner while fiscal buffers meant to smoothen budget spending during harsh times were emptied.

Power Sector Tariff Review: Laudable but Success Rests on Effective Implementation

Following the updated Multi-Year Tariff Order (MYTO) as at year-end 2019, the Nigerian Electricity Regulatory Commission (NERC) approved an upward review (starting January 1, 2020) of electricity tariffs paid by consumers across the country. The adjustment was in line with the bi-annual review provided in the MYTO 2015 (as amended). The new update covers an estimated tariff shortfall of ₦534.4bn for 2020, which the government would cover. Hence, implementing the recommended tariff change would ease the burden of electricity subsidies on government’s finances.

2020 Macroeconomic Review & Outlook: At the Cliff's Edge

The global economy faces more turmoil in 2020, but we remain largely optimistic in our outlook, given the continued attempts to find a lasting resolution to the Sino-US trade war. More so, supportive fiscal and monetary policies across major economies, together with structural realignments, should steer the global economy away from a recession, and thus bolster investors' appetite for risk assets.

Moody’s Negative Outlook… A Reflection of Current Realities

Nigeria suffered an outlook downgrade from stable to negative by Moody’s. Increasing fragility in public finances and sluggish growth prospects, which pose great risks to government's fiscal strength and external position were the main concerns. However, the rating agency affirmed the B2 long-term local and foreign currency issuer ratings, the B2 foreign currency senior unsecured ratings, and the (P) B2 foreign currency senior unsecured MTN programme rating.

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