By Udeme Clement
The Central Bank of Nigeria (CBN), after its
Monetary Policy Committee (MPC) meeting
declared that hard time awaits Nigeria’s
economy, saying the Federal Government
targets N66.1bilion revenue from stamp
duties. Olu Ajakaiye, a professor of
Economics, past President, Nigerian Economic
Society and the Chairman, African Centre for
Shared Development Capacity Building, speaks
on CBN’s assessment of the economy
The CBN said that hard time awaits
Nigeria’s economy. Does it mean the
economy is going to collapse?
The CBN is showing true assessment of our
economy, as Nigeria is still import
dependent. We depend on import for
production and consumption goods, so the
capacity to produce is adversely affected.
Now manufacturers need import of capital
and intermediate goods to produce. Also,
traders are making consumption import
dependent. Most items you buy in the
markets are not produced in Nigeria, but the
economy will not collapse since we still
depend on informal trading and agriculture up
to 60 percent.
Government targets N66.1billion from stamp
duties on deposits of N1.000 and above .
How do you see this method of taxation?
This type of policy can affect the cost of
finance services. For instance, getting loan
now requires high interest rate, so with N50
stamp duties on deposits, the interest rate
may increase, because banks will still pay
Valued Added Tax (VAT) on what they collect.
So, imposing stamp duties will increase the
cost of finance services on what producers
pay. The positive side is increase in revenue
generation for government to reduce
borrowing from external sources. But on the
whole, it is an empirical question.
The forex crisis is still persisting, as CBN
said Bureau de Change (BDC) operators must
get forex from autonomous markets. What is
the economic implication of this for small
scale producers?
CBN is trying to conserve forex, in order to
boost production. The thinking is that when
you conserve forex and make it available for
domestic production, it will help government
to create jobs. But, we must not forget that
the BDC have a role to play in making forex of
small amount available to producers for
urgent needs. For example, if a manufacturer
is on the production process and a machine
breaks down, he can quickly get forex of small
amount from BDC to repair the machine
without waiting to carry out all the processes
of getting forex from the official window.
Therefore, if the official window can’t meet
such emergency need and BDC is completely
removed, the flexibility for small amount will
be a challenge.
In that case, why is CBN restricting BDC
from accessing forex from its official
window?
The argument now is that BDC operators
have moved away from that primary role of
providing small amount of forex to producers
into other areas not acceptable to the apex
bank. For example, BDC getting forex from
the official window market and selling to
people who do not use it for the intended
purpose of enhancing production. Now,
what the CBN can do is to make arrangement
for manufacturers who need small amount
urgently to access it without waiting for the
processes of getting forex from official
window. The apex bank must provide a
window for such emergency need of
producers.
If CBN cannot provide a window for
emergency need and manufacturers are
compelled to patronise BDC operators who
will now source forex from autonomous
market, it means exchange rate for
manufacturing may be higher than what they
obtain from official window. So,
manufacturers will use that forex from BDC
to set their own prices from the higher rate,
instead of setting prices on the lower rate of
forex from official .
http://www.vanguardngr.com/2016/01/n66-1bn-target-for-stamp-duties-cost-of-finance-services-will-skyrocket-economist/

But these are not the best method of funding our bloated and arithmetically incorrect budget.

Why steal from the masses to fund the economy? Is there any country that uses this method to generate revenue, what happened to the tax and Vat we pay, is it not enough strain on people's purses already?

Buhari and Apc must be stopped.

It is well with Nigeria.

We must find 1050 before we can send 1,000 to kids in school it is not good enough Central Bank should make it 10,000 and above.

Pidggin:
Why steal from the masses to fund the economy? Is there any country that uses this method to generate revenue, what happened to the tax and Vat we pay, is it not enough strain on people's purses already?

Most countries have multiplicity of taxes. Nigeria is one of the most under taxed country in the world. In the UK , if you earn above £80000 , government will take £35000 from it. You will still pay vat and home taxes. The only reason there is corruption in Nigeria is that people don't pay enough tax. If you paid enough tax even if Goodluck was your uncle you would barricade is house and ask for him to be arrested.

All these just to fund Buhari 1,7 billion food and fayemi 750million website, it's well Nigerian

There is nothing we will not see