It gets worse before it gets better
Government says President Tinubu’s uncomfortable reforms are now paying off…
Good morning, Big Brains. If you are a TBD reader living in Lagos, I have a little word of advice for you as you get ready to hit the road. Please carry your powerbank in your bag because the traffic situation caused by the repair works going on in the major parts of the island won’t be ending anytime soon. You’ll need your phone to stay sane through the chaos.
- Margaret
Word count: ~1500
Reading time ~6 mins
Let’s get into today’s edition:
The Senate Chief Whip Admits That The Cyber Security Levy Was Hurriedly Implemented As Tinubu Suspends It
Kenyans Protest As Government Increases Taxes
“Inflation Rate Bound To Reduce Soon” - CBN Governor, Olayemi Cardoso
Manufacturing Exports Getting Slower As Revenue Drops By 166% to ₦778 Billion
The Big Deal
The Senate Chief Whip Admits That The Cyber Security Levy Was Hurriedly Implemented As Tinubu Suspends It
RIP to the cyber security levy and judging by Nigerians’ reaction, it will not be missed. President Bola Ahmed Tinubu has ordered the suspension of the cyber security levy that was earlier announced by the Central Bank of Nigeria (CBN) to avoid making life harder for Nigerians. Yesterday, we reported that the Socio-Economic Rights and Accountability Project (SERAP), BudgIT and 136 concerned Nigerians were taking CBN to court “over its failure to withdraw the patently unlawful ‘Circular’ directing all banks and other financial institutions to deduct from customers’ account a ‘cyber security levy’.” Although the date for the hearing of the suit was not decided, the hearing may never happen seeing as the levy has now been suspended.
The Chief Whip of The Senate, Senator Ali Ndume, admitted that the levy was rushed and they didn’t have enough time to pay attention to the “nitty gritty of the issue until the CBN made the announcement”. He also added that the president had no intention of putting any burden on the citizens. According to him, President Tinubu is a “listening, responsive, and reactive person,” who is concerned with the affairs of the citizens.
But who was supposed to bear the cost of the suspended levy?
The Chairman, Senate Committee on National Security and Intelligence, Senator Shehu Umar Buba, clarified on Sunday that the cybersecurity levy announced by the Central Bank of Nigeria (CBN) was never targeted at individuals or ordinary bank customers. According to him, the tax was specifically for financial institutions and telecom companies because they're the most vulnerable targets for cybercrime.
However, the President’s reason for suspending the levy contradicts Senator Buba’s idea of who was supposed to pay what. The President reportedly suspended the levy to ease the economic burden off the citizens. The big question: if the levy was truly supposed to be paid by financial institutions and telecoms, why would the president be concerned about overburdening the citizens? While the answer remains unclear, the suspension indicates that the cybersecurity levy would most likely be reformed and the lapses that were criticised by Nigerians would be corrected before the suspension ends.
“Inflation rate bound to reduce soon” - CBN Governor, Olayemi Cardoso
According to Financial Times, inflation in Nigeria is at 33.2%, the highest in thirty years. Food prices are even higher, at 40%, which is especially hard for poorer citizens who spend more of their money on basics like rice. However, Olayemi Cardoso, the chairman of Central Bank of Nigeria, recently told Financial Times that they'll do whatever they can to control the rising inflation.
The Minister of Budget and Economic Planning, Senator Abubakar Bagudu, also claims that despite the current economic reality of Nigerians, the reforms the president has been making since he was sworn into office (including the removal of fuel subsidies and increasing the Monetary Policy Rate to 24.75%) have started paying off.
He noted that while some changes were tough on Nigerians, they've produced positive results by helping the economy grow. He said the federal, state, and local governments are now able to support the country's economy. He also mentioned that these changes have made foreign investors interested in Nigeria again. President Tinubu said in March that his government has gotten $30 billion in commitments from foreign investors to help Nigeria's economy, which matches what the Minister said.
But Nigerians are still struggling with high living costs. Even though the economy is growing, it hasn't made life cheaper yet. We can only hope that this is truly a “it gets worse before it gets better” kind of situation.
Manufacturing Exports Getting Slower As Revenue Drops By 166% to ₦778 billion
The money earned from exporting manufactured goods dropped by 166% to ₦778.4 billion from the ₦2.1 trillion generated in 2019, showing lower demand for Nigerian products globally.
According to a recent report by the World Bank, Nigeria's revenue from exporting goods has been slowing since 2019. In 2020, because of COVID-19, it dropped significantly to ₦960.7 billion. There was a small uptick in 2021, reaching ₦1.15 trillion. However, in 2022, it fell to ₦781.1 billion, and in 2023, it dropped even more to ₦778.4 billion. The World Bank says this decline in foreign trade can be attributed to bad roads and inefficient transport, among other issues.
The Chairperson of the Manufacturers Association of Nigeria Export Promotion Group (MANEG), Odiri Erewa-Meggison, said “the cost of doing business in Nigeria has increased by more than 300 percent.” She mentioned the increased electricity tariff , which is currently being protested by the National Labour Congress (NLC), as one of the biggest challenges business owners are facing because it makes it more expensive to produce goods.
She also added that the government needs to step in to help because exporters need things like affordable loans which is currently impossible to access. In March, the Central Bank of Nigeria (CBN) increased the Monetary Policy Rate (MPR) to 24.75%, making lending rates higher than usual at the expense of business owners and regular consumers in Nigeria.
Why does this matter?
Nigerian business owners are going through what is probably their hardest year in business. With this 166% dip in export revenue, it is evident that many Nigerian producers are finding it harder to compete globally. Several businesses that used to export have closed down and more are expected to shut down operations if the country’s economy does not improve. Even multinational companies are moving their business out of Nigeria because of these challenges, increasing the rate of unemployment and worsening the economy of the country.
Kenyans Protest As Government Increases Taxes
Nigerians are not the only Africans protesting against increased taxes, Kenyans are too. The Kenyan government is stirring up controversy with plans to introduce new taxes through a proposed law. If passed, these taxes could affect daily life for many Kenyans. For starters, the price of bread may rise as it would no longer be exempt from value-added tax (VAT). Mobile money transfers, airtime, and data could also become pricier as the government aims to collect an extra $2.4 billion in taxes starting July.
And that’s not even the worst part - a new motor vehicle tax was also proposed in Kenya’s 2024 Finance Bill which could potentially make motorists pay up to $750 per year just to keep their vehicles on the road. This isn't the first time the Kenyan President has proposed such controversial taxes. In March, he signed off on a law allowing the government to collect a housing levy from workers and non-salaried Kenyans.
These proposed taxes haven't gone down well with many, with politicians and human rights activists calling them “burdening” , a word that resonates with Nigerians facing similar challenges. In response, the opposition is threatening nationwide protests if the government moves forward with these tax plans. If Kenyans are anything like Ghanians, who kicked back against their government’s proposed 15% tax on power in February, or Nigerians, the proposed taxes would be suspended before they even take effect.
This Week’s Big Question
“If you could have one superpower as a Nigerian, what would it be?”
Favour’s response - “Invisibility. Because that’s the only way I can avoid the constant billing from everybody.”
You can also share your response here and if it’s as interesting as Favour’s response, we’ll feature it in the next edition.
The Big Picks
Melinda Gates Quits Gates Foundation, To Get $12.5bn: Yesterday, Melinda French Gates said she's stepping away from the big charity foundation she started with her ex-husband, Bill Gates, co-founder of Microsoft.
EFCC Vows To Clampdown On Businesses, Others Charging In Dollars: The Economic and Financial Crimes Commission (EFCC) is getting more serious about stopping businesses and citizens from transacting in dollars.
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