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According to the National Bureau of Statistics (NBS), Company Income Tax (CIT) revenue increased in Q2 2022.¹ CIT revenue was N714.40 billion in Q2 2022, an increase of 29.53 percent on a quarter-on-quarter basis from N551.53 billion recorded in Q1 2022. On a year-on-year basis, CIT collections in Q2 2022 increased by 51.34 percent from Q2 2021. Local payments amounted to N634.01 billion (88.8 percent), while Foreign CIT payments contributed N80.39 billion (11.3 percent) in Q2 2022. The CIT revenue from local payments relative to foreign sources shows that local organisations remit more CIT payments than foreign organisations. Regarding local CIT revenues, manufacturing had the highest contribution in the period under review with 27.6 percent, followed by information & communication with 24.6 percent, and financial and communication with 15 percent. The rising CIT revenue is a positive development, as it contributes to non-oil revenue, which will help move the country’s dependence on oil revenue as the mainstay of the economy. Furthermore, this increase in CIT revenue can partly be attributed to the continuous utilisation of the recently implemented TaxPro Max (digital tax payment platform), a digital tool Federal Inland Revenue Services (FIRS) developed to enhance the digitalisation of filing of taxes and transaction convenience. Hence, the coverage and awareness of the platform need to be strengthened, as digitalisation of tax administration is key to efficient and effective tax collection, as it is more convenient and transparent and makes monitoring easier

Nearly one year after the launch of the eNaira project, the governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, at the Grand Finale of the eNaira Hackathon, announced the commencement of the second phase of the project¹. In October 2021, the CBN introduced the eNaira wallet to enhance financial inclusion. As of August 2022, the eNaira wallet has been downloaded about 840,000 times, with around 270,000 active wallets (including over 252,000 consumer and 17,000 merchant wallets) created. Moreover, there have also been over 200,000 transactions valued at N4.4 billion on the platform. The second phase aimed to improve financial inclusion by enrolling the unbanked and underserved through offline channels. With the eNaira wallet, Nigerians can conduct transactions on their mobile phones by using the Unstructured Supplementary Service Data (USSD) code*997. For a population with over 50 million active bank accounts, the registration for the eNaira wallet is relatively low in proportion to the country’s economic size. Therefore, it is imperative for CBN to collaborate with fintech organisations in planning and organising events targeted at securing the masses’ confidence in the eNaira. Consequently, the downloads and registration on the platform should increase with improved confidence and clarity on the advantages of using the wallet. Hence, an appropriate private sector collaboration could also ensure wider acceptance of the eNaira for economic activities.

In the second quarter (Q2) of 2022, Nigeria’s Gross Domestic Product (GDP) grew by 3.54 percent (year-on-year) in real terms, which is an improvement compared to the 3.11 percent growth recorded in the previous quarter (2022Q1).² The aggregate real GDP stood at N17.29 trillion in the second quarter of 2022, a slight decline (-0.37%) compared to N17.35 trillion recorded in Q1 2022. At the disaggregate level, services accounted for 57.35 percent of the GDP, the agricultural sector accounted for 23.24 percent, and the industrial sector contributed 19.4 percent. In addition, the non-oil sector contributed 93.67 percent to the nation’s GDP and grew by 4.77 percent in real terms during the reference quarter (Q2 2022). The oil sector contributed 6.33 percent and contracted by 11.77%. The data suggest that the non-oil sector has to grow at a higher rate to compensate for the contraction in the oil sector to attain a GDP growth rate of 3.4 percent in 2022, as the International Monetary Fund (IMF) projected. As a result, the government needs to introduce reforms that would improve the business environment, which would support the growth and expansion of the non-oil sector. 

This study examined the impact of exchange rate volatility on manufacturing output in the ECOWAS, using time series data spanning from 1970 to 2019. The study employed panel data analysis to examine the relationship between exchange rate volatility and manufacturing output among all the ECOWAS countries. GARCH was used to establish the existence of volatility; Dumitrescu & Hurlin Granger non-causality test for causality direction between manufacturing and exchange rate, while Panel fixed, and random effect model was used to assess the magnitude of the effects of exchange rate volatility on manufacturing output in ECOWAS. The result of the volatility test from GARCH confirmed the presence of volatility in Exchange rates across all the countries in ECOWAS. Furthermore, the random effect model results showed that exchange rate volatility has a positive and significant impact on manufacturing output in ECOWAS. Based on the findings of this study, it is therefore recommended that exchange rate policies such as floating exchange rates and exchange rate sterilized intervention that will pave the way for competitiveness should be formulated by monetary authorities in ECOWAS.

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Nigeria is the economic powerhouse of Africa. As the largest economy of the continent at US$ 440,777 (in 2021, using the World Bank’s atlas method for calculations) and the most populous country at 211 million (in 2021), it has a significant potential and critical role to play in economic revival of the entire continent. Undoubtedly, Nigeria can provide an added momentum to the process, with its growing middle class, expanding labour force and market opportunities.

In the last 20 years, Nigeria’s economic growth has mostly been positive, peaking at an impressive 15.3% in 2002, with periods of mild recession in 2016 (-1.6%) and 2020 (-1.8%). The country has witnessed a steady decrease in poverty since 1995, however, the poverty ratio remains high at 39.1% (2018) of the population living below the poverty line of $1.90 a day. Performance varies markedly between the northern and southern regions. While the poverty level stands at around 30% in the South, it hovers above 60% in the North, with states, such as Zamfara and Sokoto, with poverty rates above 80% (in 2020). Human capital underdevelopment is also prevalent in these high poverty regions, signalling a connection between poor education, poor health access and poverty. This is reflected in the disparities in Human Development Index, with Lagos at 0.686 (2019) – a medium human development and comparable to that of Morocco, and Yobe, Sokoto and Kebbi states at 0.368, 0.340 and 0.339, respectively – a low human development and comparable to that of Somalia.

Pressing Economic Challenges
When we look at the overall performance of the Nigerian economy, it becomes apparent that there are structural and institutional challenges that need to be addressed. Nigeria’s economy is oil dependent with 90% of exports is attributable to fossil fuels. Although brings substantial revenue to the State, this makes the country excessively vulnerable towards external economic shocks in the form of the fluctuation of the international price of oil and, secondly, inhibits the country’s ability to diversify its economy, create new employment opportunities and advance structural economic transformation to reduce poverty. At the same time, the services account for 46% of GDP (in 2020),
though largely dominated by the informal sector, which limits state revenue and negatively affects proliferation of decent jobs. Agriculture continues to be important, contributing about 24% of GDP, but it is concentrated around subsistence farming. Poor productivity in the service and agricultural sectors inhibits strong and inclusive growth as well as structural economic transformation. The oil sector which accounted for 8.8% of the GDP between 2010-2020, contributed about 60% of the government revenue in the same period. Recent revenue shortfalls have increased deficit, raising public debt from 27.6% of GDP in 2019 to 35% in 2021. With the COVID-19 pandemic, the revenue
problem is aggravated, and fiscal sustainability is emerging as a major concern to the long-term growth.

A closer look at some aspects of Nigeria’s economic development and related indicators reveals pressing challenges. First, the largest economy in the continent ranks 18th in Africa in terms of per capita income. This is not only the result of sheer population size but an indication of the prosperity (or lack thereof) of the population and contributions of citizens to the national wealth. By enhancing productivity of labour, through training and technological catch up, the GDP per capita of Nigeria could be improved. Second, being extractive sector-driven economy, Nigeria has inherent rigidities in terms of absorbing labour in the national economy. This is because, extractive sectors by their nature are capital intensive and generate relatively small employment opportunities. Third, as the Nigerian economy is dependent on natural capital and export of raw or unprocessed commodities, it is subject to the vagaries of external shocks- be they economic, political or health related. Due to the COVID-19 pandemic, Nigeria’s economy is expected to face the most severe recession in decades: GDP dropped by nearly 4% in 2020 and the recovery for 2021 and 2022 has remained sluggish, particularly when compared with the growth rate of the population. As a result, the gains in poverty reduction achieved after several decades have started to reverse. Some estimate puts that extreme poverty is expected to increase with the number of poor likely to grow by 15-20 million by the end 2022. Finally, as with most economies of Africa, these are the results of weak economy-wide productive capacities and lack of structural economic transformation.

PCI of Nigeria or where does Nigeria stand in its productive capacity development?

Using UNCTAD’s innovative productive Capacities Index (PCI), it is possible to measure Nigeria’s performance and capacity to grow and develop. With its eight components – Natural capital, Human capital, Energy, Private sector, Institutions, Structural change, ICT and Transport – the PCI draws a broad multidimensional picture of countries’ domestic capacities. Nigeria’s PCI estimates revealed serious gaps and limitations which need to be urgently addressed. On the overall composite index Nigeria’s score was at 21.65 in 2018 (prior to the COVID-19 pandemic), and it positions the country at 185th place in the world and 44th in Africa – which is not reflective of its economic might and national aspirations. With the exception of Natural Capital and Private Sector components, Nigeria fares low in other key components, such as Human Capital, Energy, Transport, ICT, Institutions, which are critically important for accelerating inclusive and sustainable growth as well as kick-starting the process of structural economic transformation.

What is the way forward?
The development challenges Nigeria faces call for a new policy approach and the formulation and implementation of new generation development policies centred on the fostering of productive capacities. This should signal a shift away from short-term, sector and project specific interventions. The analysis of Nigeria’s PCI clearly indicates an urgent need to refocus policy interventions and national development strategies towards fostering domestic productive capacities, which will enable structural transformation and economic diversification. Furthermore, they will ensure that the country participates in value added segments of the global economy, rather than serves as a commodity supplier.

Building domestic economy-wide productive capacities requires special attention to be paid to building institutions which will govern the rules of economic conduct. This is needed to make it attractive for business to invest, develop and operate. For this, improvements in the quality of human capital are also necessary, and only possible through the implementation of an adequate educational policy able to cater for the needs of the market and one which anticipates changes and shifts in the assortment of output of the national economy. Lastly, a focus on infrastructure development - that is transport, energy, and ICT -is imperative, as it facilitates economic interactions. The challenges are significant, the opportunities available, and the success within reach.

About the authors

_{Mr. Paul Akiwumi, Director, Division for Africa, LDCs and Special Programmes, UNCTAD}

_{Dr. Chukwuka Onyekwena, Executive Director, Centre for the Study of the Economies of Africa, Abuja, Nigeria}

This article was first published on Businessday

Data from the Central Bank of Nigeria (CBN) shows that as of 17th August 2022, the official exchange rate of Naira to the US dollar was N420.83 for a dollar suggesting a N5.15 depreciation compared to the N415.68 reported at the end of the previous month (July).² This fall in value of the domestic currency can be attributed to the shortage of foreign currencies in the country, arising from the demand for foreign currency (most especially the US dollar) which is higher than the supply. The preference for foreign-made products over locally produced products and the low production capacity of domestic firms contribute in part to the high demand for foreign currency. The high demand for foreign currency is also due to people's involvement in speculative purchases by saving dollars to fund education or relocation expenses. While the RT200 FX programme of the CBN is contributing to an increase in the supply of foreign currency, the demand for foreign currency exceeds the supply and, in turn, contributes to the continuous depreciation of the domestic currency both in the official and parallel exchange markets. Thus, there is a need for the government to support domestic firm production capacity to reduce importation. Also, exporting firms need to be provided with financial and technical assistance to increase exportation and expand the sources of foreign currency. There is a higher likelihood that firms that benefited from government support would use official channels in remitting their export proceeds. The supply of foreign currency should increase with effective execution and monitoring of these interventions, resulting in a more stable domestic currency, Naira.

Data governance frameworks, structures and implementation approaches are all institutionally driven. Building an African data economy that benefits citizens and businesses requires the existence of responsible, sustainable and robust data governance institutions. From institutions that create or make relevant national and international data governance laws, regulations, standards and policies, institutions that monitor compliance and enforcement to available laws and regulations, institutions that generate evidence-based research to inform and maintain data governance mechanisms, institutions that apply data governance frameworks to their data processing pipelines to institutions that facilitate findable, accessible, interoperable and reusable (FAIR) data principles, data governance institutions define and shape data ecosystems. In Africa, there is a dearth of literature on these data governance institutions. This is mainly because robust data governance ecosystems are lacking.

This article was Written by Damian O. Eke

Africa is quickly becoming the new data frontier in the face of continued increase in the deployment of digital technologies. A proportionate data governance ecosystem is, however, still lacking. The available governance ecosystem is characterised by a lack of relevant institutions or in most cases non-functional institutions for effective data governance implementation. As part of the bid to understand how to create a functional and responsible data governance ecosystem that can play a vital role in Africa's competitiveness in the global data economy, this report explored the questions; what are the institutional gaps impeding responsible and sustainable data governance in Africa and what are the peculiar institutional capacity needs of existing institutions? To answer these questions, we used a multidimensional research approach to study five African countries namely Nigeria, Morocco, Kenya, Mauritius and South Africa. In this study, we identified clear institutional gaps and capacity needs that require significant attention.

According to the National Bureau of Statistics (NBS), Nigeria’s inflation rose to 19.64 percent in July 2022, from 18.60 recorded in June, 2022.1 This is 2.27 percentage points higher than 17.38 per-cent recorded in July 2021. The report also shows that on a month-on-month basis, the Headline inflation rate in July 2022 was 1.82 percent, which was 0.001 percent higher than the rate record-ed in June 2022, which was 1.816 percent. In the period under review, food inflation was 22.02 percent, core inflation was 16.26 percent, rural inflation was 19.22 percent, and urban inflation was 22.09 percent. The increase in inflation is due to monetary and structural factors. The persis-tence of structural issues such as high dependence on importation and insecurity lowers the im-pact of an increase in the monetary policy rate in taming inflation. For example, the insecurity in food-producing states has been responsible for the shortages in the supply of food in the country and contributes partly to rising food prices. Hence, there is a need to address prevailing security challenges to guarantee food security and increase food supply in the country to keep inflation under control. In addition, the government needs to strengthen social protection programmes to help poor and vulnerable households avert malnutrition and ensure continued access to housing and transportation.