It is a popular belief that the start of a new year presents new opportunities for individuals and businesses... and so it is for 2021. Following the 2020 unexpected economic shock brought about by the pandemic, resulting in many business failures, a fall in oil price and a general disruption, many entrepreneurs are looking to create new ventures by strengthening planning strategies.
Nigeria started the year with an increase in the rate of general and food inflation. The Consumer Price Index measured the increased rate of food and core inflation at 20.7% and 16.47% respectively - an increase of 1.49% and 0.79% when compared to the previous month. It is evident that the country is still reeling from the impact of the Covid-19 pandemic and the 2019 ban on importation.
The issue of insecurity in the country is yet another cause for concern. Barely a month into the new year, the ever-pressing case of insecurity persists in the Northern sector of Nigeria. The country has witnessed an increase in kidnapping, terrorism and the killing of herdsmen/farmers. An example is the kidnapping of the Kankara schoolboys, which is yet to be resolved.
The significance of these events is directly felt in the economy through the decline in the rate of potential foreign investors in the country.
Moving on from the negatives, we will look into the events in the financial sector. Top on the list is the Finance Act which was signed into law on 31 December 2020 with an effective date of 1 January 2021. The Act highlights several adjustments in Tax and legislation, Personal Income Tax Act, Value Added Tax Act, Nigeria Export Processing Zone Act, Oil and Gas Export Free Zone Act, Federal Inland Revenue Service (Establishment) Act and many others. This Act further makes provision for ease of doing business in Nigeria and managing tax compliance policies.
On 5 March 2021, the Central bank of Nigeria, released a circular introducing the “Naira 4 Dollar Scheme”. The significance of the scheme is the incentive of N5 for every dollar remitted by Nigerians living in the diaspora. This is a short-term objective aimed at improving the inflow of foreign reserves of the country as the scheme is valid until 8 May 2021.
Finally, but not least, is the new allocation of Covid-19 vaccines. Since the beginning of March, the Government has made conscious efforts to import vaccines into the country and this represents a ray of hope to the Nigerian front line and older population to whom it is first aimed at. However, this will not be sufficient if considering that the median age of the country is 18.4 years.
In summary, the journey to recovery is still slow in the country and some of these first-quarter highlights will persist in the coming quarters.
We, at OVAC Group, remain your pragmatic partners in business and growth. Please visit our website at www.ovacgroup.com for more information on all our services.