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Jackson Hole Economic Policy Symposium and Policy Imperatives for Developing Economies

An unprecedented wave of monetary tightening across global central banks may linger longer than anticipated. More than 94 countries raised interest rates in 2022 at record highs in a bid to curb inflation. The policy thrust, however, is throwing up new challenges. These include possible recession, slowing growth, and stagflation. High inflation is growth-retarding. Also, high interest rates could increase the marginal propensity to save and further reduce consumer spending. In Nigeria, this could be compounded by several legacy constraints that have kept economic progress subdued for several decades, including mounting insecurity and macroeconomic instability.

Telecoms Tax, Saviour or Villain?

To an already stretched Nigerian consumer who is gasping for survival, any suggestion of a new tax payment is a kiss of death. This is why the hint of an excise tax (on calls and data) was an unwelcome development. The FGN has now suspended the tax as it looks for new ways to fund the burgeoning fiscal deficit which is 5.5% of GDP.

Policy makers have two minds about the telecom sector in Nigeria. It is seen as a catalyst of growth and an engine of financial inclusion, but also as a fat cash cow to be milked. This is because, according to the EIU, “Nigeria is the third-largest telecommunications market in Africa (after South Africa and Egypt) measured in terms of subscribers. Subscriptions in both the mobile and fixed broadband segments have grown markedly over the past decade. This has led to a sharp rise in the sector’s economic performance. In the first quarter of 2022 its contribution to GDP amounted to 12.8%, up from 8.5% in 2012”.

In this edition of the FDC Bi-monthly publication, FDC Think-Tank analyzes the new challenges facing central banks, the telecom tax regime, and other major economic events in Nigeria.

Do enjoy your read!