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Recently released Budget Implementation Report shows that gross total revenue generated in the third quarter of 2020 (Q3 2020) declined by 3.07 percent relative to the previous quarter. Specifically, gross total revenue fell to N1.88 trillion in Q3 2020 from N1.94 trillion in the preceding quarter.¹ Further disaggregation shows that gross oil revenue fell to N813.59 billion in Q3 2020 from N1.02 trillion in the previous quarter while gross non-oil revenue grew to N1.07 trillion in Q3 2020 from N921.53 billion². The decline in total gross revenue was driven by a 20 percent fall in gross oil revenue which outweighed a 15.7 percent increase in gross non-oil revenue. Going forward, government revenue is expected to recover by 2022 as the oil market stabilizes and tax receipts from non-oil sectors increase with improved economic activities. However, a large share of the economy remains informal with implications on the size of tax revenue raised. Even for businesses in the formal economy, a sizeable number of businesses continue to evade tax, leading to leakages in the system. Consequently, informality and tax evasion will have to be addressed using technology to improve data collection and monitoring of firms.

Data from the National Bureau of Statistics (NBS) indicates improved performance in total volume and value of electronic banking transactions in Q4 2020. Total volume of e-payment transactions for the period under review was 3.46 billion valued at ₦356.47 trillion¹. This is a 24.6 percent and 11.4 percent increase in transaction volume and value respectively, relative to the previous quarter of 2020. Disaggregation by types of payment channels shows that online transfers accounted for 64.3 percent and 33.7 percent of total volume and value in the period under review. Real-time gross settlement (RTGS) accounted for just 0.04 percent of volume but 31.7 percent of value, while National Electronic Funds Transfer (NEFT) accounted for 1.4 percent of volume and 27 percent of value. Consistent growth in total digital financial transactions could signify a positive trend for the country’s financial inclusion goals. It is however important that such growth ultimately translates to extending banking services to excluded segments of the population.

The detrimental health consequences of tobacco use have been recorded over many decades. The Royal College of Physicians’ report in 1962, followed by the US Surgeon-General’s report in 1964, established a causal relationship between tobacco use and lung cancer. Since these seminal studies, thousands of scientific studies have established that smoking is not only bad for the lungs, but has a detrimental impact on nearly all organs in the body.

In response to the reports by the College of Physicians and the Surgeon General, many governments, especially in high-income countries, have implemented measures to discourage the uptake and use of tobacco products. These interventions include smoke-free policies, counter-advertising, warning labels on cigarette packs, the banning of tobacco advertising, promotion and sponsorship (TAPS), and, since 2012, plain packaging. Studies have shown that these interventions reduce the attraction of tobacco, and discourage its uptake. However, the single most effective intervention is an increase in the excise tax on cigarettes. Tax increases that increase the retail price of cigarettes make cigarettes less affordable, discourage their use, and improve health outcomes. As well as decreasing tobacco use, an increase in the excise tax increases government revenue.

In 2003, after three years of negotiation and an even longer period of preparation, the World Health Assembly unanimously adopted the WHO Framework Convention on Tobacco Control (FCTC). The FCTC recognises that the tobacco epidemic, which is responsible for 8 million premature deaths each year, is a global problem and requires a global response. The FCTC came into force in February 2005 and has been ratified by 180 countries and the European Union. Nigeria ratified the FCTC in October 2005. By ratifying the FCTC, Nigeria committed itself to adopt evidence-based policies, as described in the FCTC, to reduce tobacco use.

The COVID-19 outbreak began in December 2019 in the Wuhan city of China and has continued to spread globally. As of this writing, 28.2 million cases have been recorded globally with 910,000 deaths. Aside the health impact, the pandemic has led to an unprecedented disruption in economic activities, initiating a sudden demand, supply, and financial shock. The mitigation strategies put in place by governments across the world to curb the virus as well as the uncertainty associated with the pandemic has led to a reduction in the consumption of non-essential commodities. Meanwhile, disruptions to global supply chains in a closely connected world as well as the reduced demand have necessitated a slowdown in production. Furthermore, investors have become more risk averse with the prices of risk assets falling to levels experienced in the 2007-20008 global financial crisis.   To counteract the fall in private sector demand, stabilize the financial system, and ensure economic recovery, governments and central banks across the world have deployed a range of policies and programmes. Central banks are cutting policy rates and providing direct liquidity to the financial system. Federal and sub-national governments are providing tax relief, cash transfers, and employee retention schemes to alleviate the burden on affected individuals and businesses. Africa is not left behind as governments have increased spending plans (about 1.9% of their GDP) and central banks are adopting more accommodating monetary policies.

Data from the World Bank Poverty and Shared Prosperity report shows that Nigeria’s poverty level has further increased in the wake of the COVID-19 pandemic. More specifically, 79 million Nigerians live in extreme poverty, accounting for 20 percent of the people living in poverty in SSA. COVID-19 and its associated economic crisis are enabling factors of the high poverty headcount². Data from COVID-19 phone surveys in Nigeria suggests that about 85 percent of households experienced higher food prices, with half reducing their food consumption as a coping strategy². The upward trend in poverty is expected to continue owing to the difficulty in generating adequate broad-based economic growth, inability to create jobs, and high population growth rate. As a result, private sector innovativeness and talent should be fostered in way that creates new opportunities for young people. The government on the other hand should utilize the policy landscape to support the private sector and enforce population control measures.

The Monetary Policy Committee (MPC) has voted to retain the monetary policy rate (MPR) at 11.5%¹. Other parameters remain unchanged; for instance, the cash reserve ratio (CRR) was maintained at 27.5% while liquidity ratio remains at 30%. The committee’s decision to take a holding position is expected to be supplemented by various ongoing government intervention programmes. These programs are intended to facilitate employment generation and stimulate recovery/growth in various sectors of the economy post-pandemic. While this decision might be suitable for now, it is important for the MPC to closely monitor the evolving economic situation in the country, especially in view of rising inflation rate and foreign exchange fluctuations which have an impact on the value of the Naira. Close monitoring and a proactive approach, will ensure that the measures put in place yield the desired outcome of stimulating growth.

Inflation rate for February 2021 rose for the 18^th consecutive month to its highest rate since February 2017.¹ SGeoffrey Johnson Obipecifically, inflation rate increased to 17.33 percent in February 2021 from 16.47 percent in January 2021. The food sub-component of inflation rose to 21.79 percent from 20.57 percent while core inflation stood at 12.38 percent from 11.85 percent in the review period.² Disaggregated data by states shows that Kogi (24.73 percent), Bauchi (22.92 percent) and Ebonyi (20.45 percent) recorded the highest inflation rates within the review period. The continuous rise in the prices of food supplies is as a result of the interplay of several factors including sustained insecurity in areas where foods are grown, rising transportation costs, and high import costs linked to the depreciation of the naira. As such, addressing the rise in prices will require a multipronged solution including ensuring the safety of farm workers and enhancing productivity in the sector through the adoption of innovative farming and processing technologies.

In this study, we document successful cases of effective synergies in countries that, like Nigeria, display a significant presence of the tobacco industry and face similar challenges to trade regulation but were still able to implement higher tobacco tax policies and other tobacco control measures, while reducing the level of illicit trade. The key lesson is that measures to reduce illicit tobacco trade needs to be amalgamated with tobacco taxation, and each can be addressed in its own respect with appropriate strategies. Moreover, Nigeria has not reached the phase where tobacco tax should be a concern for the tobacco industry. With the new tax policy introduced in 2018, this amounts to 16.4 percent excise tax burden in overall, which is still significantly lower than the 75 percent excise tax burden on tobacco products recommended by the WHO. Our analysis of price trends in Nigeria and differential with neighbouring countries show that there has not been significant perturbation in the Nigerian tobacco market to create an arbitrage opportunity.

Total Nigeria merchandising trade stood at N9.12 trillion in the fourth quarter of 2020, representing an 8.9 percent increase relative to the preceding quarter and a 9.9 percent decrease relative to the corresponding quarter of 2019.¹ For the fifth consecutive quarter, Nigeria recorded a negative balance of trade with the import component of trade accounting for 65 percent while export component of trade accounted for 35 percent. Crude oil accounted for 78.93 percent of Nigeria’s export while manufactured goods accounted for 64.56 percent of total imports. Nigeria’s major export trading partner is India (17.12 percent) while China (28.28 percent) accounted for most import to Nigeria. Improvements in foreign trade is expected to continue as economic activities in our major trading partner countries increase. However, diversifying the export base to include other goods such as agricultural commodities, textiles, and manufactured goods is pertinent. To achieve this, ensuring standardization of commodities and setting competitive freight charges will unlock the opportunities in external trade.