Cerebral flight compounds capital flight in a post-COVID transition
Brent lost 6% in one day just as global markets tumbled as a result of growing concerns with the global economic recovery. This coincides with a sharp fall of the Naira in the parallel market to N445/$ after a brief rally last week. It was always known that with the opening of the international airspace and resumption of flights, the pressure on the naira will build further. In addition, the sharp drop in oil prices comes with mixed feelings. It means a fall in government revenue, a wider fiscal deficit and lower forex receipts. On the other hand, the removal of petroleum subsidies now means that lower oil prices will translate to a fall in the pump price of petrol in the coming months.
Cost Reflective Tariffs: NERC throws the Poor a lifeline?
The Nigerian Electricity Regulatory Commission (NERC) is now hinging future reviews of electricity tariffs on service-based principles, which only allow for tariff reviews after customer consultation and a commitment to increasing the number of hours of power supply daily. Cost-reflective tariffs will now be implemented in line with progressive taxation principles. In this regard, the rich will pay more while there would be no tariff increases for the poor and most vulnerable.
Is COVID-19 making the Grass look a lot Greener?
In search of greener pastures, Nigerian professionals have engaged in cerebral flight to compound capital flight as external sector weakness persists. It is estimated that no less than 327,000 Nigerians or Americans of Nigerian extraction live in the US and remit millions of dollars annually. With COVID-19 further weakening the Nigerian economy and its employment prospects, many more Nigerians are likely to ponder upon towing that path. However, with COVID-19 also decimating the economies of many advanced economies and hitting Diaspora remittances really hard, many are beginning to reconsider.
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.