Feature/OPED
Year 2020: Glimmer of Hope for Nigeria Amid Recession and Pandemic
By Timi Olubiyi, PhD
The year 2020 has been fully eventful world over for governments, businesses, and livelihoods particularly with the novel coronavirus (COVID-19) which has continued to ravage the global economy leading to shocks and recession.
The COVID-19 recession is a major ongoing global economic crisis and many countries (advanced and emerging) have been impacted.
According to reliable data, leading economies like the UK, France, Italy, Belgium, Canada, Germany, Denmark, Spain, Russia, the US, and Japan as well as emerging economies, have all suffered a devastating economic decline which has left them recessed as a direct result of the pandemic.
However, the UK’s recession is by far the worst of any of the world’s major economies even though France and Germany are almost out of recession.
In comparison, the UK had a 20 per cent downturn in GDP throughout the first quarter which is the worst since records began in 1955.
Significantly, so far, the COVID-19 pandemic has had far-reaching consequences more on the emerging economies, particularly African countries.
The World Bank predicted that overall sub-Saharan Africa’s economy would shrink by 2.1 per cent to 5.1 per cent during 2020.
In the same vein, Nigeria’s economy has officially nosedived into a recession for the second time in the last five years. However, the impact has been visible even before the official pronouncement, with the increase in the inflationary levels and rise in food insecurity, including deficit in health care, education, among others in the country.
Unfortunately, these shortfalls are likely to surge concurrently with a spike in the prevalence rate of crimes and criminality, especially if measures are not drastically taken to forestall a reversal of the trend.
The recession might worsen the already alarming poverty and unemployment rates in the country and could lead to an economic depression if the attendant negative implications are not addressed with holistic government policies, spending, and economic stimulus packages.
Agreeably, a recessed economy comes with a contraction of the Gross Domestic Product (GDP) growth for at least two consecutive quarters and this was unavoidable because the Nigerian economy has been somewhat pressured from March 2020 as a result of the novel coronavirus and the attendant consequences particularly the lockdown and border closures.
According to the Nigerian Bureau of Statistics (NBS) report, the first quarter of the year 2020 showed a slow-paced growth of 0.68 per cent as GDP contracted by 1.87 per cent when compared to the fourth quarter of 2019.
However, the economy shrank in the second quarter of the year as the GDP fell by 6.10 per cent, compared with the growth of 1.87 per cent in Q1.
On Saturday, November 21, 2020, the NBS released the latest GDP numbers and it showed that the nation’s economy recorded a contraction of 3.62 per cent in the third quarter of 2020.
Despite the contraction witnessed so far in the year, commendation needs to go to the government for being able to close the contraction gap from 6.10 per cent to 3.62 per cent within just a quarter, it gives a glimmer of hope.
Even though the contraction and slide into recession was a long-awaited reality considering the quivering economy and the multi-impact of the novel coronavirus pandemic, which includes a significant downturn in consumer activity, food insecurity, low disposable income, weak consumer spending, inflation, high unemployment, a decline in crude oil demand and drop in price, shrinking government revenue, forex volatility, and the general lull in business and economy activities in the country among others.
Already, the COVID-19 pandemic is life-threatening and a huge health risk, however, the socio-economic impact has been devastating, with many workers facing job losses, job cuts, salary cuts, and redundancy.
This, coupled with the recession, it is evident that businesses, particularly SMEs, will struggle and many Nigerians will more than likely slip further below the poverty line as the majority are in the informal business sector.
In my view, negative GDP growths and decline in economic activities have been a global issue due to the pandemic, however, as a nation, the over-reliance on importation and its value chain has grossly contributed to the current realities in the country.
This portends a stiff climate for businesses, households, and livelihoods. However, the government can encourage consumer spending with policy responses and also stimulate investments particularly foreign direct investments and inflow of strategic funds for infrastructure investment and development to assist in the reversal of the trend.
As a people, we must invest in capital expenditure expenses and strategic infrastructure to reflate the economy.
More so, to cushion the effect of the impact of the recession, harmonization of both fiscal and monetary policy is essential. The economic stimulatory measures targeted at taxpayers to save their businesses from collapse should be strengthened by the government.
Perhaps, the government might need to consider more pragmatic palliatives such as social and fiscal policy palliatives, concessions on import trades, duties, and port charges waiver to reduce the value chain disruption.
At this time, cutting taxes to increase and improve disposable income needs to be considered. From observation, most SMEs run their businesses on loan facilities and the current situation will impede on their capacity to service these loans effectively, so government intervention is required to forestall massive business shut down.
Key sectors like manufacturing, maritime, aviation, education, hospitality, financial services, and the creative industry, need target bail-outs, relief, and supports to stimulate the economy to avoid business closures and huge job losses.
Further to this, to assist and support these real sectors and businesses at this time, regulators and tax authorities can also come up with critical policy actions and economic palliatives to keep businesses in operation.
Point of note is that if these efforts are not rightly channelled, we might be heading for a long haul which might be depressing.
In fact, the headline inflation or (Consumer Price Index) was 13.71 per cent year-on-year as at the month of September 2020, according to data from the NBS, up from 12.20 per cent in February 2020 (It stood at 14.23 per cent in October 2020).
Food prices remain a major driver of inflation in Nigeria especially with the rise in the composite food index. Consequently, priority attention and adequate policy response by the CBN monetary policy committee is required to address and stem the growing inflationary trend.
Nigeria derives close to 85 per cent of her foreign revenue from crude oil exports according to data from the Federal Ministry of Finance.
As a result of the price shocks occasioned by COVID-19, crude oil receipts have gone down and are no longer able to sustain the economy. Therefore, a thorough expansion of the revenue base is crucial at this time.
As a nation, we can leverage and emulate the United Arab Emirates which diversified their economy by reducing dependence on oil receipts from 100 per cent to only 35 per cent by considering investments and expansion of their non-oil sector- particularly service, tourism, real estate, and smart industries.
In Nigeria, some sectors can be considered to diversify our revenue base, they include – agriculture, transportation, information technology, and digital economy, If put in place it will reduce millions of dollars if not billions spent yearly on importing basic goods and food commodities that can grow locally.
Further attention should equally be given to our trade policy and SMEs which are the bloodline of most economies.
Trade policy refers largely to standards, goals, rules, and regulations that pertain to trade relations between countries. Basically, it governs international trade and encompasses imports, exports, tariffs, duties, etc.
Having and strengthening a strong trade policy will help create millions of jobs, grow local industries, and expand the economy.
In simple terms, it will help with the industrialization of the country and rejigging the economy in the long term. Though the ease of doing business initiative is essential, the rule of law and efficient legal and regulatory system is also required for simple contractual disputes to be resolved.
Investors, both local and international, will not likely consider investing in a country where simple contractual disputes take between 2 to 15 years to resolve.
In conclusion, the anti-corruption drive of the government needs to be stiffened, so that all social intervention, strategic plans, policies, and economic stimulus packages can be managed judicially. Good luck!
How may you obtain advice or further information on the article?
Dr Timi Olubiyi is an Entrepreneurship and Small Business Management expert with a PhD in Business Administration. He is a prolific investment coach, business engineer, Chartered Member of the Chartered Institute for Securities & Investment (CISI), and a financial literacy specialist. He can be reached on the Twitter handle @drtimiolubiyi and via email: [email protected], for any questions, reactions, and comments.
By Tony Ogunlowo
‘Titanic’ can mean something that is very big, gigantic or enormous and it was also the name of a ship that sank on its maiden voyage.
When the Titanic sank in 1912 it sank due to a number of avoidable factors: a ship deemed unsinkable that wasn’t fitted with watertight compartments, a ‘unprofessional’ seasoned captain who was apparently bullied into going at full speed through known ice-berg strewn waters, lack of common binoculars for the deck watch and the unavailability of enough life boats for all the passengers.
This all put together, as they say, was a recipe for disaster. Red flags were ignored.
Translating this to President Tinubu’s modern-day Nigeria, the avoidable factors that can sink the country are way too obvious.
Nigerians have long enjoyed the benefits of fuel subsidy. Costly as it is to maintain it’s enabled the economy to keep running by keeping the cost of things low. It’s removal, as can be seen, has created a domino effect, as the experts predicted, resulting in the prices of even the basic commodities skyrocketing as everyone passes on the additional costs.
With inflation currently at 32.7% and still rising, things are only going to keep on getting more and more expensive. As a result, the new minimum wage of N70,000 will have less purchasing power than the previous 2021 minimum wage of N30,000. If fuel subsidy removal was meant to boost the economy it has done the opposite and will stagnate any efforts to kickstart it.
The governments inability to control corruption or severely punish corrupt officials which is robbing the country’s coffers of billions and billions of Naira every year is a stumbling block for development.
If a corrupt government official who built 750 houses with stolen funds or an ex-governor accused of misappropriating N80 billion are allowed to walk around freely, supposedly on bail, without fear of eventual conviction it questions the message the government is sending out to future looters: if the culprits were in Russia or China the outcome will be totally different.
Even though an austerity economic policy may seem harsh like it was designed to rob Peter to pay Paul, it should be short, sharp hardship with green pastures in the foreseeable future – not ever! A good start will be to cut down on the number of foreign loans being obtained every year as their repayment can take a huge chunk out of the country’s annual income.
The new tax laws are long overdue and it should include that VAT earned in a state stays in that state: so, if your state doesn’t generate any VAT (- such as from the sale of alcohol products) you don’t get to share in what other states have collected.
Insecurity in the country is not something that started yesterday. Previous governments have blood on their hands for not nipping these insurrections in the bud before they grew to become monstrosities. You don’t pat yourself on the back, like the Nigerian Army likes to do believing you have the threat ‘under control’ – you eliminate the threat completely using what ever means necessary.
Unless the order (given by ‘Somebody’) is not to destroy them completely and to quote the late Sani Abacha,”…any insurgency that lasts more than 24 hours, a government official has a hand in it..”, no wonder Boko Haram continues to flourish and bandits like Turji Bello continue to taut the government. When the armed robber Lawrence Anini did something similar in 1986 he was fished out within months, tried and executed.
As I’ve written before the Nigerian Police Force is long past its sell by date and considering the ever growing population of Nigeria with its associated acts of anti-social behaviour its time to seriously consider devolving the NPF into state-run outfits. The growing popularity of state-run security outfits, such as Amotekun, proves this is feasible and effective.
Considering the fact the country is going through severe economic hardship the President, himself, should curb frivolous spending where possible: no more new Presidential yachts or planes ( – that includes the new one for the VP), a cap on ridiculous-no-real-job SA and SSA appointments and most important of all a cap on ALL politicians salaries and perks (which is to say if politicians are patriotic enough they’ll agree to a pay cut, forgo some of their benefits and pay for their own jaunts abroad).
Implementing the Steve Oronsaye Report which recommends merging and closing of ministries etc that has been passed over by every President since President Goodluck commissioned it in 2011 will cut government operating costs even further. This should not just be at Presidential level but extended to all the states: this will not just streamline the bloated and largely inefficient civil service but will also weed out ghost workers and white elephant project.
The ‘japa’ movement which the government is trying to discourage should be allowed to continue. It’s morally wrong for a government that can’t provide suitable employment for its citizens to try and prevent them from seeking opportunities abroad : ‘japa’ is not just limited to Nigerians, it’s a worldwide phenomenon.
People, British, American, Filipinos, are migrating worldwide to where ever there are opportunities for them to prosper. That’s the way the world works now: nobody is going to stay in a ‘sh*t-hole’ country if there are no opportunities for them to grow. Scr3w patriotism! It’s every man for himself! So, if a country can’t provide adequate employment opportunities people will pack their bags and ‘japa’! And if you restrict them from leaving the country what are they going to do? Get up to mischief – 419, cultism, kidnapping!
These same people send money back to their home countries all the time: Nigerians in diaspora in 2023 alone sent home more than $19.5 Billion Dollars. This is a huge injection of foreign currency for a country that desperately needs it.
So, just like the Titanic the warning signs are there and the inevitable that will happen should they be ignored. The question is which way is President Tinubu going to go. This is what I call the ‘Titanic Wahala’, ignore the obvious and the proverbial will hit the fan, sooner or later.
Feature/OPED
From Rental Shifts to AI Innovations: The Evolving Landscape of South Africa’s Property Sector
By Waldo Marcus
The past year has been challenging for property investors, with a sluggish economy slowing residential rental escalations in most regions in 2024.
Rental escalations are likely to be applied cautiously in 2025 to avoid vacancies, particularly given the potential for a decline in demand for rental properties as tenants, motivated by lower interest rates, migrate to property owners.
Lower rental returns will see investors looking at alternative ways to generate improved income from their investments. Short-term holiday rentals have impacted rental prices in tourist destinations, with higher rental income achieved in peak holiday times, pricing out consumers looking for long-term rental property. This trend, especially in the Western Cape, has some lobbyists calling for stricter regulations to protect consumers from inflated rental prices and a lack of affordable rental supply. SA Tourism has requested better transparency from platform providers. The risk for bond providers is that investors are financing these properties based on current tourism trends and rental income, which relies heavily on the success of platforms like Airbnb.
Consumption changes are driving commercial property growth
The commercial property sector grew in 2024 and this positive trajectory is expected to continue in 2025 as interest rates are lowered. Property developers are focusing on convenient neighbourhood retail and merging with online retailer needs. In urban areas, convenience and easy access are prioritised, while larger developments are succeeding in rural, underserved areas.
Industrial properties, particularly logistics and warehousing in the Western Cape, KwaZulu-Natal and Gauteng, continue to outperform other commercial sectors. Secure and well-serviced industrial parks are in demand and expected to grow. However, traditional industrial areas around Johannesburg and the Pretoria CBD face a value collapse due to security risks and inadequate infrastructure maintenance to service the nodes.
ESG is likely to become a high-value agenda item for commercial property investors in 2025 to ensure compliance and reduce operating costs. The latest SAPOA Operating Cost Report reveals that 29% of operating expenses go to electricity costs and 23% to property taxes.
The risk of leakages
Water shortages are the next big challenge, posing a significant risk to property owners. Government and municipalities must act before it becomes another catastrophic reality like Eskom. Addressing water shortages is a dual challenge requiring both the building of and better maintenance of water infrastructure, including sewage treatment plants, and longer-term, the creation of additional reservoirs to keep up with population growth and mitigate climate change risks.
Leakages extend beyond water. Revenue leakages include missed recoveries, escalations, lease changes, and renewal options, to name a few. Increased regulatory requirements have resulted in more time being spent on compliance, and this is not expected to ease. Regulatory and compliance changes and demands on property-related companies remove valuable focus and resources from internal due diligence and processes to prevent revenue and recovery leakages. We predict more organisations will invest in technology resources to identify revenue leakages and focus on tools to drive operating costs down.
The Revolution of AI in the Property Sector
Technology – particularly AI – has become indispensable to the property sector, from AI-powered marketing and presentation tools to automated management systems. While these advancements streamline operations and enhance decision-making, they also introduce new challenges, particularly in data security and risk management.
As we move into 2025, property companies must carefully consider the appropriate balance between AI and human expertise. By striking this balance and implementing robust data protection measures, organisations can harness the power of AI while preserving their brand authenticity and competitive edge.
The Necessity of diversity in Decision-Making
Property investment is a complex and often high-stakes endeavour. As a fixed asset with emotional and financial implications, property valuations and transactions can be challenging. Recent shifts in market perception have further complicated the landscape, with divergent opinions on property’s potential as a wealth generator or alternately, a financial drain.
To navigate this complex market, accurate and reliable data is essential. Mitigating bias and leveraging diverse perspectives allows investors to make more informed decisions. Access to neutral, data-driven insights from respected sources can help uncover hidden opportunities and avoid costly mistakes.
As the property market evolves, tools and information available to investors must also adapt. Companies of all sizes are increasingly recognizing the importance of accurate, accessible, and representative data. They are investing in reliable external data sources to gain a competitive edge and make more strategic decisions.
The lingering effects of high interest rates
Persistently high interest rates raised the cost of credit and placed additional pressure on already strained consumers and businesses. They also dissuaded residential property acquisitions, leading to fewer home loan applications and a decline in the transfer of both bonded and unbonded properties in 2024. Lightstone data reveals that first-time buyer volumes slumped by 20% in 2023.
While welcome, the first two interest rate cuts will take time to filter through to residential property acquisitions. Encouragingly, demand from first-time home buyers appears to be recovering slowly with ooba Home Loans noting a rise in applications to 49.6% in September 2024, the highest reading since November 2022. We expect residential property sales to accelerate in 2025 as interest rate relief starts to filter through, albeit at a slower pace in dysfunctional municipalities.
Individual investors are increasingly choosing to maintain smaller portfolios and using tax-efficient structures such as companies and trusts. TPN anticipates that this trend will persist into 2025. Demand for buy-to-let properties has risen since late 2021, particularly in the Western Cape, followed by the Eastern Cape and Tshwane. Although this trend is expected to continue, it may slow down around mid-2025 as demand shifts from rental properties to ownership.
Municipal performance linked to property value creation
Service delivery quality, infrastructure and the maintenance of that infrastructure impact the value of property types. Well-run municipalities will continue to attract investment. Since 2020, semigration has highlighted the successes and failures of provinces and cities, resulting in decreased revenue collections for some of South Africa’s largest municipalities.
Safety and security continue to influence where South Africans choose to live and work, impacting both the residential and commercial property landscape. Mixed-use developments, secure estates, sectional title properties, and commercial parks offering efficient ways to provide enhanced security, service delivery, productive infrastructure, and maintenance spending will continue to be in demand.
An important consideration that will become increasingly significant in 2025 is the quality and accessibility of the lifestyle available in certain areas. Well-maintained and safe parks, public spaces, beaches, dams, lakes, and other recreational facilities will make these areas more appealing to tenants, businesses, and investors.
The outlook for property KPIs
Residential vacancies are expected to increase in the latter half of 2025 due to lower interest rates and improved consumer confidence. Office and retail vacancies are likely to remain stable in the first half of 2025 but will decrease should business confidence improve and if GDP targets are met. Industrial property vacancies will remain low as demand remains strong, especially in the Western Cape and infrastructure development nodes in Gauteng and KwaZulu-Natal.
Rental escalations for commercial and residential properties will improve in the first half of 2025. Investors will be keen to enhance their returns after a period of sluggish economic performance with slightly healthier consumers offering the opportunity to grow rental income strategically.
The good standing of both commercial and residential tenants is expected to continue to improve as landlords use stricter vetting and collection strategies.
Rental property gross yields will, on average, stay the same as property values are expected to increase in line with rental income. The challenge for investors will be to keep operating costs down to maintain or improve net yields.
A favourable outlook for residential housing market
The outlook for the residential housing market is more favourable for 2025 than it has been for the past few years with the property market offering good value overall. The interest rate will likely be cut by a further 50bps by the third quarter of 2025, offering further relief for household finances and renewed activity at both the lower and upper ends of the market. More investments could see an increase in rental property supply and even a potential decline in rental demand as more consumers shift from renting to buying. We expect continued demand for well-managed rental properties.
Waldo Marcus is a Director at TPN from MRI Software
Ever wondered where to find trendy fashion, cutting-edge tech, or stylish home decor at unbeatable prices? Look no further than Temu.
What is Temu?
Temu, an online marketplace sensation, has taken the world by storm with its vast array of products, competitive prices, and user-friendly platform.
Since its 2022 launch, it has quickly become a global sensation, boasting hundreds of millions of downloads and catering to over 80 markets. Now, Nigerian shoppers can experience the Temu magic firsthand.
This guide will walk you through the Temu shopping experience, ensuring a smooth journey from product discovery to delivery.
Step 1: CREATE AN ACCOUNT TO UNLOCK SMART SHOPPING
The registration process
Joining Temu is super easy! Whether you prefer the traditional approach or the convenience of social media, Temu has you covered. For the classic signup, simply visit temu.com or download the mobile app, enter your email or phone number, create a strong password, and confirm your details. It’s as easy as that!
For social media savvy, link your Google, Apple, or Facebook account and skip the hassle of creating a new login. With Temu’s streamlined process, you can spend less time logging in and more time exploring the incredible deals awaiting you.
Mobile app vs. desktop: Which platform offers the best shopping experience?
Both the mobile app and desktop website offer a seamless shopping experience. However, for a truly dynamic and interactive shopping journey, we recommend the mobile app. You will enjoy real-time price alerts, exclusive mobile deals, and easy order tracking.
For a more deliberate shopping experience, the desktop website is the perfect choice. With larger screens and easy-to-use comparison features, you can take your time and make informed decisions.
Step 2: BROWSING AND SHOPPING LIKE A PRO
Navigating Temu’s vast selection
Temu offers a vast selection of over 200 product categories, from fashion and tech to home goods and beauty.
To get started, simply use the search bar function to find specific items or explore categories, and refine your search with filters for price, colour, size, and more. Sort items by relevance, price, or newest arrivals to find the perfect products.
Temu’s ranking system highlights popular and trusted products, often based on customer reviews and sales trends. To make informed choices, compare prices, features, and reviews before purchasing.
Best-selling products
Temu’s best-selling products are constantly updated based on real-time sales data.
Other metrics beyond rankings
Temu goes beyond traditional product rankings, focusing on the performance and quality of its providers. By considering factors like historic ratings, repurchase records, follower numbers, and new product releases, consumers can make informed decisions. This approach not only empowers buyers but also incentivises providers to deliver high-quality, diverse products and build strong customer relationships.
Providers can earn recognition directly on their product pages by ranking highly in categories like Top Sales, Top Rated, Top Repurchased, Top Followed, or New Arrival. These rankings are based on the provider’s performance over the past 30 days and are updated daily to ensure the most current information is displayed to consumers.
Finding your perfect fit
Temu provides detailed size guides to help shoppers find the perfect fit, particularly for clothing and accessories. These guides often include measurements, comparison charts, and sometimes even virtual fitting tools to make your online shopping experience seamless.
Save more, shop smart
Simplify your shopping and maximise your savings with Temu. All discounts are displayed directly on product pages. For the best deals, explore the platform’s Lightning Deals. To ensure satisfaction, pay attention to details, read descriptions, verify measurements, understand features, and consult seller ratings and reviews.
Step 3: PLACING AN ORDER
Shopping safely and securely
Temu offers a variety of payment methods, including popular credit cards and digital wallets like Visa, Mastercard, American Express, Maestro, Discover, JCB and Diners Club. To prioritise your security, the platform employs advanced security measures, adhering to strict industry standards to protect your information.
Step 4: FAST AND RELIABLE DELIVERY
Hassle-free delivery, every time
Temu prioritises customer satisfaction by providing real-time order tracking and reliable shipping options, including free standard shipping and express delivery. The platform guarantees on-time delivery and offers full refunds for damaged or undelivered orders.
At the moment, Temu is in partnership with local logistics firms, such as Flyt Express, SKYNET, and Speedaf to make delivery to Nigerian shoppers on time.
Step 5: AFTER-SALES SERVICE – BEYOND THE PURCHASE
Returns and exchanges made easy
Temu provides a seamless return process with its Purchase Protection Program. If you’re unsatisfied with a purchase, log into your account, select the item, provide a reason, and submit a return request. Temu will provide a prepaid shipping label.
You have a 90-day return window for most items. Once processed, you can choose a refund to Temu credit or original payment. For exchanges, return the item and place a new order. Temu also offers refund policies for no updates and no deliveries. Check Temu’s specific return policy for the latest information.
Beyond shopping: A greener future
Temu is committed to sustainability. By shopping on Temu, you contribute to a greener future. The platform’s Tree Planting Program and combined shipping initiatives help reduce environmental impact.
Smart shopping simplified
Temu has transformed online shopping, offering a wide range of affordable products and a user-friendly experience.
Follow these simple steps to easily navigate the platform and discover your next favourite find. If you need assistance, Temu’s customer support team is available 24/7.
So, shop with confidence on Temu!
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