Economy
KPMG Lowers Nigeria’s Economic Growth Forecast to 2.65%
By Adedapo Adesanya
The local subsidiary of the global consultancy firm, KPMG Nigeria, has cut down its forecast for Nigeria’s economic growth rate for this year.
In its Flashnotes for August 2023, the firm now put Nigeria’s expected growth at 2.65 per cent, in contrast to an initial forecast of 2.85 per cent, the consultancy said in its latest commentary.
This came as the National Bureau of Statistics (NBS) released the country’s GDP for the three months through June (Q2 2023).
In the KPMG report signed by its chief economist (a former head of the NBS), Mr Yemi Kale, the downward review of the projection was done after it figured out that the country could not attain the estimated target initially set amid headwinds in the economy, including subsidy regime and a weakening of the Naira, which has shot up the Dollar exchange rate.
It also blamed muted government investment in the economy in Q2 and Q3 2023, with the new administrations at the federal and state levels settling in Q3 2023.
KPMG noted that the country needed a minimum 3.3 per cent growth for the second half of the year to keep alive the dream of 2.9 per cent growth for 2023.
“Q2 2023 is the quarter where the impact of subsidy removal, FX unification, and other reforms of the new administration had its major impact on squeezing household consumption demand and firms’ costs of operations as well as reduced private investment,” it said.
According to the NBS, Nigeria’s GDP expansion rate grew to 2.51 per cent in Q2, affected by further drops in oil production level and a host of economic reforms that are taking their toll on disposable income and compounding a cost-of-living crisis.
Growth was driven by the services sector, which grew by 4.42 per cent. The agricultural sector reversed its first Quarter 2023 contraction, growing by 1.50 per cent compared to -0.90 per cent in Q1 2023 and 1.20 per cent in Q2 2022.
Industry, which had reversed its seven-quarter-long contraction, growing by 0.31 per cent in Q1 2023, returned to contraction in Q2 2023, recording -1.94 per cent. Accordingly, the non-oil grew by 3.58 per cent in Q2 2023, compared to 2.77 per cent in Q1 2023, while the oil sector, which has contracted since Q1 2020, further declined by -13.43 per cent in Q2 2023 compared to -4.21 per cent in Q1 2023 and -11.77 per cent in Q2 2022.
KPMG expects oil production in Nigeria, the continent’s top producer, to shrink tighter in August and September as it did in July.
“If this trend continues for the remaining two months of Q3 2023, we will have a situation where non-oil sector growth and oil sector growth underperform,” the report noted.
“Finally, with rising inflation in the first month of Q3 2023 and our expectation of further increases in inflation for the rest of the year, the pressure on nominal to real GDP will be higher, thereby curtailing higher real GDP growth in Q3 2023,” it added.
By Adedapo Adesanya
The Nigeria Customs Service (NCS) is seeking a reduction in import duty exemptions, which rose to N34 trillion, limiting its ability to increase its revenue generation threshold.
The Comptroller-General of the Customs Service, Mr Adewale Adeniyi, disclosed that the value of import duty exemption certificate approvals increased to that level in 2025, describing the policy as one of the major factors restricting its revenue generation.
At an investigative session of the Senate Committee on Finance with revenue-generating agencies in Abuja on Monday, Mr Adeniyi explained that government fiscal policies have continued to impact the revenue-generating capacity of the Customs Service, both positively and negatively.
“The NCS would have generated significantly higher revenue over the years if not for government-approved import duty waivers and other external factors affecting collections,” he said.
He added that the Import Duty Exemption Certificate scheme, introduced in March 2020, accounted for about N34 trillion in approvals in 2025, with nearly 60 per cent covering duty-free importation of military hardware due to Nigeria’s prevailing security challenges.
Other government-backed duty waivers, he noted, covered the importation of Compressed Natural Gas (CNG), electric and hybrid vehicles, healthcare equipment and medical supplies, industrial machinery and manufacturing inputs, as well as food import intervention programmes.
While acknowledging the impact of the waivers on Customs revenue, Mr Adeniyi argued that fiscal policy should not be assessed solely on the basis of revenue generation but also on its broader economic and social objectives.
He, however, urged the federal government to establish stronger monitoring mechanisms to ensure beneficiaries of duty waivers deliver the intended economic outcomes, including lower consumer prices, increased local production and improved healthcare access.
The committee also expressed displeasure over the absence of several heads of government agencies invited to the hearing, including the Nigerian Civil Aviation Authority (NCAA), Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Industrial Training Fund (ITF), and the Federal Medical Centre (FMC), Jabi.
The Chairman of the Senate Committee on Finance, Mr Sani Musa, warned that the affected chief executives must appear at the committee’s next sitting or face severe sanctions under the Senate’s rules.
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By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange rose by 0.40 per cent on Monday, July 13, buoyed by buying interest in 11 Plc, Central Securities Clearing System (CSCS) Plc and UBN Property Plc, which offset the profit-taking in Food Concepts Plc, the parent company of Chicken Republic.
11 Plc gained N20.69 to end at N227.64 per share compared with last Friday’s price of N206.95 per share, CSCS Plc grew by N1.83 to N91.48 per unit from N89.65 per unit, and UBN Property Plc added 1 Kobo to sell at N1.81 per share versus N1.80 per share.
On the flip side, Food Concepts Plc depreciated by 24 Kobo to close at N2.45 per unit, in contrast to the preceding session’s N2.69 per unit.
As a result, the market capitalisation increased by N9.2 billion to N2.587 trillion from N2.578 trillion, and the NASD Security Index (NSI) improved by 15.33 points to 4,311.67 points from 4,296.34 points.
Yesterday, the volume of securities traded by investors surged by 615.9 per cent to 9.1 million units from the previous 1.3 million units, and the value of securities rose by 997.1 per cent to N320.4 million from the preceding session’s N29.2 million, while the number of deals decreased by 12.5 per cent to 28 deals from last Friday’s 32 deals.
At the close of trades, Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units worth N6.5 billion, and CSCS Plc with 73.9 million units exchanged for N5.2 billion.
GNI Plc also closed the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
