New Players in GDP Growth

Fri, Apr 25, 2014
By publisher

BREAKING NEWS, Business Briefs

THE Nigerian Communications Commission, NCC, has expressed satisfaction in its contributions to the growth of the nation’s economy. The recently published report of a rebased Gross Domestic Product, GDP, shows that the nation’s telecoms sector was a significant contributor to the country’s economy in 2013.

Nigeria’s rebased GDP for 2013 released by Yemi Kale, statistician-general of the federation, had indicated an 89 percent jump in the estimated size of the economy. According to the new rebased data, the size of the Nigerian economy is now estimated at N80.22 trillion for 2013.

The rebased GDP data showed that the telecommunications and information services sector was currently contributing 8.68 percent to the Nigerian economy, equivalent to N6.97 trillion of the total GDP estimated at N80.22 trillion. This compares with N364.4 billion in the 2012 non-rebased GDP time series. This figure indicates that the sector is a fast growing contributor to the nation’s GDP.

The new GDP data now include previously unaccounted-for industries such as telecoms and information technology, music, online sales, airlines and film production. The telecoms sector has thus been identified as a major contributor to the economy in terms of investment inflow as well as its positive impact on other sectors of the economy such as agriculture, commerce and industry, oil and gas and education.

Indication has emerged that the NCC is targeting a higher contribution of the industry to the country’s GDP. Part of the initiatives and programmes already in place in the telecoms and communications services industry that will make the sector to improve upon its performing status in years to come, according to the commission, is making  the 3.5 GHz spectrum bandavailable in 27 states and the Federal Capital Territory for sale to the public.

The NCC said, “The spectrum is available in 27 states and Abuja, the capital territory, with all the states having 25 MHz bandwidth, except for Abuja that has only 20 MHz bandwidth. The spectrum is expected to be licensed on a state by state basis in the states where it is available, which means that winners of the spectrum licence will operate within the state or states where the licence is situated.”


CPAN on Cost of Cement

THE Cement Producers Association of Nigeria, CPAN, has petitioned the presidency over the high cost of the commodity in Nigeria. In a letter addressed to the presidency, David Iweta, CPAN president, said that the price of cement in countries that have attained sufficiency in cement production, like Niger, is N500.00 per 50kg bag, while cement in Nigeria is still selling at 300 percent above what same product is selling in other countries like Egypt, China, Taiwan, India, Japan, Norway, Turkey, Indonesian, Pakistan, Iran and Iraq.


He said this was why local manufacturers constantly declared annual profit after tax in the region of N120 billion to N130 billion in the past three years. Iweta said the international best practice for cement manufacturing is for investors to earn internal rate of return, IRR, in the region of 25 percent, but experience has revealed that Nigerian cement investors are earning over 150 percent IRR in cement investment such that investors recoup their investment within a two- year period.

“By this token, all such local manufactures claiming large investments have since recovered them. It is regrettable that the price of the product is hovering within N1, 800 to N2, 000 per bag. Based on the foregoing, he said that CPAN has strongly recommended that Mr. President should revisit this strategy by allowing unexhausted licenses to be fully utilised and consider granting more licenses and abolish the introduced levy of 20 percent with 15 percent duty but retain the five per cent duty and five per cent value added tax, VAT, on imported cement. This will force the local cement manufacturers that are hiding under the high cost of imported cement  which attracts 45 per cent extra cost comprising  duty, levy, NPA, NIMASA fees  in addition to cost of freight in the region of $50.00 per metric ton,” he said.

According to Iweta, the total extra cost paid on imported cement is in the region of N900.00 per bag. “Imported cement will sell for N1, 000 per 50kg bag if the federal government retains duty and VAT at five per cent each on imported cement. The local manufacturers are still in a better position to make N500.00 profit per bag owing the fact that they make use of free local limestone and could sell cement for N500.00 per 50kg bag.”

Tackling Water Problem in Nigeria

THE World Bank has approved a credit facility of $250 million for Nigeria to increase access to water supply services. The credit facility from the International Development Association would also help the Nigerian government to improve the financial and management viability of existing utilities.

Jim Yong Kim, World Bank President
Jim Yong Kim, World Bank President

According to a statement from the bank, the funds will target the poor urban population living in state capitals and their surroundings, and will benefit some two million people. It said that the credit would support the Third National Urban Water Sector Reform Project and respond to the federal government’s goal of developing more effective mechanisms for social service delivery, particularly water service, as a means of addressing inequality in income and opportunities.

The funds would help to rehabilitate and build the water delivery infrastructure and institutional systems needed to expand access to water supply services for people in selected cities in Bauchi, Ekiti, and Rivers states. A portion of the project is performance-based and will include incentives for improving the performance of water supply institutions in the three states.

According to the statement, the second project component will provide technical and financial assistance to state governments and water utilities in Kano, Gombe, Benue, Jigawa, Ondo, Abia, Bayelsa, Anambra, and Plateau states to help prepare them for large water supply investments that can be financed in the future.

Marie Francoise Marie-Nelly, World Bank country director for Nigeria, said the ministry of water resources would also benefit from the strengthened capacity to monitor and benchmark the water sector’s performance, and accordingly, increase accountability from the states for their performance. “Today’s project builds on past experience, which has shown that building water infrastructure without strengthening the capacity of the institutions responsible for managing water supply to the targeted areas does not lead to sustainable results,” she said.

Compiled by Anayo Ezugwu

— May 5, 2014 @ 01:00 GMT