Is a Fitch downward revision of Nigeria’s economic outlook a kiss of Death???
The increasing external sector vulnerability due to falling external reserves, fiscal imbalances and lower interest rates has triggered a revision of Fitch’s outlook from stable to negative. The ratings agency also noted that administrative controls was not a substitute for currency adjustment. This has become all the more topical as the eight French-speaking West African countries have adopted the Eco for the CFA franc and more recently Ghana has also opted to be included in the currency arrangement. These developments could make the external outlook more fragile.
CBN slashes transaction costs as USSD charge pits Banks against Telcos:
The CBN, in a bid to boost financial inclusion and make financial services more accessible to Nigerians, has announced a slash in bank and ancillary charges. The value of electronic payments rose by 32% to N138.67 trillion in 2018 and has grown by over 200% to reach N424.371 trillion (September 2019). The cut in the fees commission income will increase the velocity of circulation. The issue of the USSD charge has put Telcos at loggerheads with banks. A resolution of this seeming intractable dispute has become a necessity to align the interest of the Telcos with the banking system.
A Nobel-prize-winning approach to poverty alleviation
Nigeria wears the unenviable badge of poverty capital of the world. According to the World Bank, over 92 million Nigerians live consume less than $1.90 per day. President Buhari’s administration has set an objective of lifting 100 million Nigerians out of poverty in the next 10 years. To achieve this, it is investing in infrastructure and other measures to drive GDP growth from around the current 2.3% to 4-5%. However, the 2019 Nobel prize winners in Economics – Esther Duflo (the youngest and second woman to win the award), Abhijit Banerjee and Michael Kremer – may have successfully tackled the issue of poverty and provide a real-world blueprint for countries like Nigeria to adopt.
In this edition of the FDC bi-monthly publication, the FDC Think-Tank analyzes these issues and their implications on businesses and the economy at large.
Enjoy your read!