Report: Nigeria Recorded N29.2trn Financial Transactions in February

Dike Onwuamaeze

The total value of monetary transactions in the Nigerian economy through four major payment systems grew by 1.84 per cent to N29.40 trillion in February 2022, from N28.871 trillion that was recorded in January 2022.
The volume recorded in February 2022 was also higher by 42.24 per cent than N20.67 trillion recorded in February 2021 year-on-year basis.

These were revealed in a presentation made by the Chief Executive Officer of the Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, at the Lagos Business School’s (LBS) Executive Breakfast Session of March 2022, a copy of which was obtained by THISDAY at the weekend.

He predicted that the value of transactions would maintain the upward trend in March.
Rewane said the values of transactions executed via cheques, point of sale (PoS), NIBSS Instant Payment (NIP) and the NIBSS Electronic Fund Transfer (NEFT) were N259.81 billion, N575.81 billion, N27.182 trillion and N1.385 trillion respectively in the month of February 2022, while values recorded in January 2022 were N237.26 billion, N573.72 billion, N26,645 trillion and N1.415 trillion for cheques, POS, NIP and NEFT respectively.

Only the values of transactions executed through NEFT recorded a marginal decline of N29.85 billion
He said: “No seasonality effect among payment channels except cheques and NEFT. We expect the upward trend to continue in March on inventories build-up ahead of the Easter holiday.”

The CEO of FDC also stated that Nigeria was marching towards a fiscal cliff even thought that it has not gotten there yet.  
According to him, “Nigeria’s debt ratios are rising but still within the acceptable limit. But total factor productivity is declining amid increasing risk of a debt cliff.”
Rewane, however, stated that the federal government was standing in a precarious fiscal position, which had been worsened by the increased fiscal deficit of N8.9 trillion.

He said that, “President Muhammadu Buhari has submitted N3 trillion supplementary budget to National Assembly (NASS) to make additional provision for fuel subsidy of N2.557 trillion. The initial subsidy provision was N500 billion.  Compared to an estimated annual subsidy payment of N3 trillion, this will create a shortfall of N2.5 trillion, increasing the fiscal deficit to N8.9 trillion.”

He also noted that the current fiscal reality compelled the government to start scouting for funds on all fronts.
“Government is trying to raise revenue by introducing taxes such as sugar tax of N10 per liter excise duty on all carbonated, non-alcoholic and sweetened beverages; a digital tax of 6.0 per cent on turnover for non-resident e-commerce businesses as well as removing tax shelter on government treasury bills and securities. This will mostly affect the banks, pension funds and insurance.  The total tax shelter approximated at N200 billion,” Rewane said.

He observed that the current drive to strengthen the fiscal position of the government would have significant implications for corporate organisations, investors and consumers as well.

The implications for corporate firms, he said, would “increase the effective tax rate on companies’ income; significant reduction of affected companies profit after tax. The companies to be affected include banks, insurance firms and Pension Fund Managers (PFAs).”

The economist also said investors would suffer, “a lower profit after tax (PAT) implies a reduction in dividend payments, which will prompt rotation of portfolios from affected companies and lower investment and spike a fall in the national savings rate.”

Rewane noted that the prevailing rally in oil prices has had no corresponding increase in government revenue for reasons such as pipeline vandalism and theft, the counter trade transactions and oil production sharing contract.
He pointed out that the prevailing macroeconomic outlook would most likely deprive consumers of smiles on their faces as the current reduction in food prices inflation would sadly be temporary while living costs would be climbing up.

He said: “Domestic airfares went up by 100 per cent on higher jet fuel prices, spare part imports and forex scarcity.  A Lagos – Abuja returns ticket now selling for over N100,000; rent payments up by an average of 20 per cent as landlords discount for inflation,” adding that “perhaps it is still too early to be happy.”