Index

The recently released GDP for the fourth quarter of 2021 shows that the real GDP grew by 3.98 per cent in the fourth quarter, this is higher by 3.87 per cent  than the 3.98 per cent in the same quarter of 2020. This is the third quater in 2021 that the real GDP grew above its 2020 counterparts. It is also the fifth consecutive time that th real GDP has grown positively since the exit of the COVID-19 enginered 2020 recession in Nigeria, when the GDP contracted by 6.1 per cent. However, this growth rate has shown diminishing rates from the third quarter. In other words, this is the lowest rate in the last three quarters. In monetary terms, real GDP increased to N20,329.06 billion naira in the fourth quarter, compared to N19,550.15 billion and N18,543.05 billion naira in the last quarter of 2022 and the thirq quarter of 2021, respectively.

In the same way, the nominal GDP grew by 13.11 per cent to N49,276.02 billion in the fourth quarter from N45,113.45 billion recorded in the third quarter of 2021. This figure is also higher than the N43,564.00 billionor or 10.07 per cent recorded in the fourth quarter of 2020 (see figure 1 below). The release of the fourth quarter GDP growth rate completes the four quarters for the year 2021. On the average, real GDP grew to 3.40 per cent in 2021, compared to the negative growth rate of 1.92 per cent in 2020. Similarly, nominal GDP growth rate averaged 13.92 per cent in 2021 as against 5.63 per cent in 2020. This is the strongest growth since the geginning of this present administrtation.

The non-oil sector is the main driver of 2021 GDP, having contributed about 92.76 per cent on the average in the years and about 94.81 per cent in the fourth quarter and growing by 4.73 per cent in the quarter under review. Although lower than 5.44 per cent recorded in the third quarter of 2021, it was very high compared to the 1.69 per cent recorded in the same quarter in 2020. The federal government’s investment in the agricultural and service sectors would have paid off as the two sectors contributed significantly in the basket of the non-oil sector. The highest performing subsectors in the quarter were the financial and insurance (24.14 %), transportation and storage (29.72%), water supply, sewerage, waste management and remediation (28.84%). The oil sector has continued its downward trend in GDP despite the increasing price of the barrel of oil. This could be a reflecting lower oil output as the average daily crude oil production stood at 1.50 million barrels per day (MBs/P), down from 1.57 MBs/D and 1.56 MBs/D in the third quarter of 2021 and fourth quarter of 2020, respectively.

This growth is however fragile, given the unending high inflation eating away the purchsing power of Nigerians. As at January, 2022, the inflation rate ws 15.63%. This is worsend by foreign exchange shortages and the administrative control over the exchange rate allocation, and the consequent incessant depreciation in the value of the naira. There is the need implement policies that will reduce the inflation. There most be a way out of the problems in the agricultural sector while also encouraging more the service sector. Diversification away from the only source of foreign exchange is key to further economic growth.

Following the recent passage of a bill into law by the Rivers State government empowering the state to collect VAT from businesses domiciled in the state, and the subsequent insistence by the Federal Inland Revenue Services (FIRS) to collect VAT, the River State government has obtained an order from the court validating their stand to collect VAT for now, from business in Rivers State, and restraining the FIRS from collecting same and personal income tax (PIT) due the state. Based on this, the Lagos State government has also asked the FIRS to stop giving demand notices for payment of VAT and to render accounts of all VAT collected in the state 2021, within seven days.

VAT is an offshoot of the sales tax which had been in operation under Federal government Legislated decree No.7 of 1986, administered by the states and the Federal capital territory, and abrogated by the Value Added Tax Decree 102 of 1993 which came into force in 1994 (Omesi and Nzor, 2015). The confinement of sales tax, now VAT under the exclusive list has been a subject of controversy, challenged and won at various times in the court by states. The main reason for the challenges is that, the legislation either as a sales tax or VAT is out of tune with the 1999 constitution. VAT is a consumption tax, and should be location-specific. VAT comes at a price to states, therefore proceeds of VAT should be channeled at addressing the socio-economic prices of consumptions in the originating states. It is useless for instance, taking the proceeds of alcohol VAT from Lagos to address issues in Kano where alcohol is prohibited. It makes no meaning therefore to pool VAT together and share at agreed date with other federating units and the federal government, who have different times and methods of attending to issues in their states. For these reasons, the courtroom invalidated the VAT Act and empowered the states to impose, demand and gather VAT inside their states, in the matters involving the Registered Trustees of Resort House owners and Managers Affiliation of Lagos v. A.G. Federation, in Ukala v. FIRS, in A.G. Rivers v. F.I.R.S.

The courtroom in 2019 also upheld the powers of the Lagos State Authorities to cost and gather Consumption Tax from motels, eating places and occasion centres throughout the state in the matter within the Registered Trustees of Resort House owners and Managers Affiliation of Lagos v. A. G. Federation & Others. While declaring certain sections of VAT, 1993 as inconsistent with the constitution, the court held that FIRS has no power to impose consumption tax on a facility under the residual energy and unique competence of states. This matter has been upheld by the latest ruling between the Rivers State government and the FIRS, in which the states except Katsina, argue that they could go ahead to collect VAT within their jurisdictions.

The conflicting directives from the states, especially Lagos, and the insistence of FIRS on collecting VAT has left businesses in confusion of whether to maintain their VAT compliance with the FIRS or direct it to the states, or suspend it until the Supreme Court puts paid to the matter. Any attempt to pay now may also put a business in the wrong side of the law, and result to double payment. This may mean accumulated tax, and a heavy burden on businesses when the case is finally led to rest. VAT, as stipulated by the new Rivers State law to be filed before the 20^th of every month, failure of which will attract fines. Whether the fine will still subsist if the case ends will determine how heavily indebted a business is or not. In any case, it is important that every VAT payer should be prepared to embrace the outcome. This is the cause of the uncertainty that businesses face in the ongoing VAT imbroglio between the States and the feral on VAT control.

It is in the best interest of both tiers of government to suspend VAT enforcement until the Supreme Court decides.

The average annual inflation rate for the year which ended December, 2021 16.95 per cent in 2021. This is higher than 13.25 per cent recorded in 2020 by 27.92 per cent. The rise in 2021 inflation was driven by food inflation which rose by 26.16 per cent from 16.17 percent in 2020 to 20.40 per cent in 2021. Similarly, the eight periods of consistent monthly decline in inflation rate in the country seems to have ended. This is as a result of the increase in in the monthly inflation rate from 15.40 per cent in November to 15.63 per cent in December 2021. This rate is the highest in the last two months.  This figure is however, lower by 0.13 percent point than 15.75 per cent rate recorded in December 2020 (NBS, 2022).

As usual, the increase in the inflation in the month of December was driven by a continued rise in food inflation, which moved to 17.37 per cent in December 2021 from 17.21 per cent in November but lower than 19.56 per cent in December 2020 by 2.19 percentage points. The rise in the food inflation was caused by increases in prices of Bread and cereals, Food product, such as meat, fish, potatoes, yam and other tuber, soft drinks and fruits, etc. As usual, the urban areas contributed more to the high inflation in the month of December, 2021, given their conspicuous consumption and larger population in the cities. The urban areas’ inflation rate for December 2021, was 16.17 percent (year-on-year), while the twelve-month year-on-year average for the month of December 2021 is 17.52 percent. The corresponding monthly and yearly average rates for the rural areas in the same month are 15.11 per cent and 16.40 percent, respectively.

Although, the increase in inflation rate in December is always foreseen, given the high purchases associated with the December yuletide period. There is every tendency that the rate may subsist or increase in this year as the petroleum sector is completely deregulated. The Lagos state government has also unveiled Consolidated Informal Transport Sector Levy, to harmonize the existing levies in the state. With the levy, every bus driver will pay a daily amount of N800 daily or N288,000 annually to the covers of the state government, in addition to other levies paid to the NURTW. Electioneering periods in Nigeria are periods of inordinate spending, not channeled to investment. All these may cause undue increasing pressure on inflation in this year.

Nigeria is already facing a mixture of high unemployment rate, poor income levels, high poverty rates and inequality gaps, couple with the rising inflation, etc. These threats mean a depletion of the income of mostly those whose marginal propensity to consume is high thereby leading to unstable consumption pattern. For instance, consumer spending in Nigeria decreased to N12,319,481.04 million in the second quarter of 2021 from N13,032,211.07 million in the first quarter of 2021. In other words, Nigerians will face a nosediving consumption spending this year.

The shrinking middle class and the resultant drop in consumers’ purchasing power will manifest in the form of high inventory of unsold finished products. The demand for durable goods will continue to be weak as consumers continue to give priority to food and other basics. The alternative for consumers may be to patronize cheap alternatives as well as demand for products with multiple uses. These actions will affect brand loyalty.  FMCGs should leverage the models operated by telecom brands who now provide financial services to their customers. They should explore different product lines, innovate products that serve multiple needs, design products that are cheaper so as to retain their market edge, drive patronage, production, turnover and profit margins.

Good news to everyone in Nigeria as the federal government has finally shelved the idea of removing petroleum subsidy, at least for now. The minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, has announced the resolve of the federal government to jettison its earlier plan to remove subsidy on petroleum products which was billed to commence by July this year. This was corroborated by the Minister of State for Petroleum Resources, Chief Timipre Sylva, who stated at a different forum that subsidy paid on the pump price of petrol would remain for now. The suspension follows threats by labour unions in the country to embark on strike to make sure that the any of such implementation is reversed.

The federal government initially planned to remove subsidy on petroleum products from July. This was in line with the provisions of the passage of the Petroleum Industry Act (PIA), that all petroleum products should be deregulated. According the National Executive Council (NEC), the removal of subsidy will see a pump price of fuel rise from the current N162 to about N400. Given the ripple effect of previous increase in the pump price, the cost of transportation would have led to the hike in the price of other products, thereby increasing inflation, a situation that would have further depleted the income of consumers.

for the plan to hold, the government has to seek the intervention of the national assembly to suspend a portion of the PIA, as well as present a budget for the approval of subsidy to the national assembly, to cover subsidy payment from July till a time deemed appropriate for its eventual removal. This will help government not to breach a constitutional as well work towards removing when the people would have made significant arrangements for absorbing the shocks that will come with the removal, such that the impact and consequences will not add to hardship.

The government should use this period to put in measures such as deployment of an alternative to the Premium Motor Spirit (PMS) and also the roll out of enhanced refining capacity in the country, including the 650,000 barrels per day Dangote Refinery and also the rehabilitation of the four national refineries that have a combined capacity of 450,000 barrels per day. Manufacturers should as work out strategies to absorb the expected cost such that the burden of such increase will not be completely transferred to the consumers.

In an attempt to rid the nation of illegal telecoms systems, the NCC has uncovered about 1300 illegal masks and towers in the nation’s capital, Abuja. According to the Federal Capital Territory (FCT) Department of Outdoor Advertisement and Signage (DOAS), 126 of these illegal towers without documentation have been demolished, while a few others who met the requirements have been regularized. However, the DOAS have also written to the NCC to decommission those that are far from meeting the regulatory standards

This finding shows that many illegal masks and towers through which a significant number of Nigerian’s currently receive mobile connectivity, exist throughout Nigeria. There are therefore many companies, unknown to law, competing with other telecom firms in Nigeria, in an era of insecurity. While the known firms in the industry may not be exonerated from this illegal installation of masks and towers, the DOAS has mapped out strategies to raise a huge amount of money from this. In order words, there is room for the regularization of these illegal masks and towers, but such would have to come through the payment of fines. These illegal operators should therefore note and prepare to pay such fines or see such illegal masks and towers demolished.

The Nigerian communications commission (NCC) has set new mobile international rate (ITR) for voice services paid by overseas telecom carriers for terminating international calls on local networks in Nigeria at $0.045. The new rate which shall take effect from January 1, 2022, is the floor price or the minimum that can be charged for ITR services. The essence of charging this new rate in the U.S. dollars is to enable Nigerian operators to receive an increasing rate in Naira terms should there be naira devaluation. The new ITR is denominated in dollars to help the local operators. Being denominated in Naira, the existing ITR had multiple negative impacts on local operators which was further exacerbated by episodes of devaluation of naira which ultimately left Nigeria from being a net receiver with respect to international minutes to a net payer.

The new ITR floor rate makes it unlawful for any local networks in Nigeria to charge below the fixed rate. Thus, no licensee shall charge and/or receive effective rate per minute below determined ITR floor rate. Therefore, all networks in Nigeria shall therefore put into consideration all payment discounts, volume discounts and any other concession so as not to go below the fixed ITR. However, operators are free to negotiate a rate above the floor and this will be entirely left to commercial negotiation between the operators and international carriers/partners.

The NCC had engaged Messrs’ Payday Advance and Support Services Limited to undertake a cost-based study of voice MTR that is most suitable for the Nigerian telecommunications industry, given the challenges faced by the local operators as a result of the denomination of ITR in Naira. Based on different parameters as well as regulatory measures such as international experience, cost model results, the state of competition in the sector and the Nigerian macro-economic environment, in addition to the information provided by the stakeholders, the NCC arrived at the present cost-based ITR of $0.045 for voice services paid by overseas telecom carriers for terminating international calls on local networks in Nigeria.

The recently released GDP for the fourth quarter of 2021 shows that the real GDP grew by 3.98 per cent in the fourth quarter, this is higher by 3.87 per cent than the 3.98 per cent in the same quarter of 2020. This is the third quater in 2021 that the real GDP growth has suppased its 2020 counterparts. It is also the fifth consecutive time that th real GDP has grown positively since the exit of the COVID-19 enginered 2020 recession in Nigeria, when the GDP contracted by 6.1 per cent. However, this growth rate has shown diminishing rates from the third quarter. In other words, this is the lowest rate in the last three quarters. In monetary terms, real GDP increased to N20,329.06 billion naira in the fourth quarter, compared to N19,550.15 billion and N18,543.05 billion naira in the last quarter of 2022 and the thirq quarter of 2021, respectively.

In the same way, the nominal GDP grew by 13.11 per cent to N49,276.02 billion in the fourth quarter from N45,113.45 billion recorded in the third quarter of 2021. This figure is also higher than the N43,564.00 billionor or 10.07 per cent recorded in the fourth quarter of 2020 (see figure 1 below). The release of the fourth quarter GDP growth rate completes the four quarters for the year 2021. On the average, real GDP grew to 3.40 per cent in 2021, compared to the negative growth rate of 1.92 per cent in 2020. Similarly, nominal GDP growth rate averaged 13.92 per cent in 2021 as against 5.63 per cent in 2020. This is the strongest growth since the geginning of this present administrtation.

The non-oil sector is the main driver of 2021 GDP, having contributed about 92.76 per cent on the average in the years and about 94.81 per cent in the fourth quarter and growing by 4.73 per cent in the quarter under review. Although lower than 5.44 per cent recorded in the third quarter of 2021, it was very high compared to the 1.69 per cent recorded in the same quarter in 2020. The federal government’s investment in the agricultural and service sectors would have paid off as the two sectors contributed significantly in the basket of the non-oil sector. The highest performing subsectors in the quarter were the financial and insurance (24.14 %), transportation and storage (29.72%), water supply, sewerage, waste management and remediation (28.84%). The oil sector has continued its downward trend in GDP despite the increasing price of the barrel of oil. This could be a reflecting lower oil output as the average daily crude oil production stood at 1.50 million barrels per day (MBs/P), down from 1.57 MBs/D and 1.56 MBs/D in the third quarter of 2021 and fourth quarter of 2020, respectively.

This growth is however fragile, given the unending high inflation eating away the purchsing power of Nigerians. As at January, 2022, the inflation rate ws 15.63%. This is worsend by foreign exchange shortages and the administrative control over the exchange rate allocation, and the consequent incessant depreciation in the value of the naira. There is the need implement policies that will reduce the inflation. There most be a way out of the problems in the agricultural sector while also encouraging more the service sector. Diversification away from the only source of foreign exchange is key to further economic growth.

There is a new Android malware named ‘AbstractEmu’, attacking android devices, this is reported by the Nigerian Communications Commission (NCC). If the malware gains access to smartphones, it takes complete control of infected smartphones and silently modifies device settings while simultaneously taking steps to evade detection.

This AbstractEmu is distributed via Google Play Store and third-party stores such as the Amazon Appstore and the Samsung Galaxy Store, as well as other lesser-known marketplaces like Aptoide and APKPure. So far, a total of 19 Android applications that posed as utility apps and system tools like password managers, money managers, app launchers, and data saving apps have been reported to contain the rooting functionality of the malware. The apps include All Passwords, Anti-ads Browser, Data Saver, Lite Launcher, My Phone, Night Light and Phone Plus, among others.

The rooting malware although rare, and very dangerous. It operates by using the rooting process to gain privileged access to the Android operating system, the threat actor can silently grant itself dangerous permissions or install additional malware – steps that would normally require user interaction. Elevated privileges also give the malware access to other apps' sensitive data, something not possible under normal circumstances.

Once installed in a device, it leverages one of five exploits for older Android security flaws that would allow it to gain root permissions. It also takes over the device, installs additional malware, extracts sensitive data, and transmits to a remote attack-controlled server. It can also modify the phone settings to give app ability to reset the device password, or lock the device, through device admin; draw over other windows; install other packages; access accessibility services; ignore battery optimisation; monitor notifications; capture screenshots; record device screen; disable Google Play Protect; as well as modify permissions that grant access to contacts, call logs, Short Messaging Service (SMS), Geographic Positioning System (GPS), camera, and microphone.

Although the app has been removed from the Google Play Store, the other app stores are likely distributing them. Consequently, to mitigate the risks. The NCC creates a two-fold advisory include:

• Users should be wary of installing unknown or unusual apps, and look out for different behaviours as they use their phones.
• Reset your phone to factory settings when there is suspicion of unusual behaviours in your phone.

This is the second malware reported by the NCC since October. The first was Flubot.

Similarly, the NCC also alerted of an advanced persistent threat (APT), an Iranian hacking group known as Lyceum (also known as Hexane, Siamesekitten, or Spirlin) targeting telecoms, Internet Service Providers (ISPs) and Ministries of Foreign Affairs (MFA) in Africa with upgraded malware in a recent politically motivated attacks oriented in cyberespionage. The hacking group is known to be focused on infiltrating the networks of telecoms companies and ISPs. Between July and October, 2021, Lyceum was implicated in attacks against ISPs and telecoms organisations in Israel, Morocco, Tunisia, and Saudi Arabia. Lyceum has been linked to campaigns that hit Middle Eastern oil and gas companies in the past. The APT is also responsible for a campaign against an unnamed African government's Ministry of Foreign Affairs. The group appears to have expanded its focus to the technology sector.

There are various ways through which the lyceum group could attack its target. Lyceum's initial onslaught vectors include credential stuffing and brute-force attacks. Once a victim’s system is compromised, the attackers conduct surveillance on specific targets. Lyceum will attempt to deploy two different kinds of malware: Shark and Milan (known together as James). Both malwares are backdoors. Shark, a 32-bit executable written in C# and .NET, generates a configuration file for domain name system (DNS) tunneling or Hypertext Transfer Protocol (HTTP) C2 communications. Milan is a 32-bit Remote Access Trojan (RAT) that retrieves data. These two malwares are able to communicate with the group’s command-and-control (C2) servers. The APT maintains a C2 server network that connects to the group's backdoors, consisting of over 20 domains, including six that were previously not associated with the threat actors.

The malwares usually target individual accounts at companies of interest, once these accounts are breached, they are used as a springboard to launch spear-phishing attacks against high-profile executives in an organization. The suggests that not only do these attackers seek out data on subscribers and connected third-party companies, but once compromised, threat actors or their sponsors can also use these industries to surveil individuals of interest.

There are however ways to guard against this kind of threats. The NCC therefore re-echo ngCERT reports that multiple layers of security in addition to constant network monitoring is required by telecom companies and ISPs alike to stave off potential attacks.

Specifically, telecom consumers and the general public are advised to:

• Ensure the consistent use of firewalls (software, hardware and cloud firewalls).
• Enable a Web Application Firewall to help detect and prevent attacks coming from web applications by inspecting HTTP traffic.
• Install Up-to-date antivirus programmes to help detect and prevent a wide range of malware, trojans, and viruses, which APT hackers will use to exploit your system.
• Implement the use of Intrusion Prevention Systems that monitors your network.
• Create a secure sandboxing environment that allows you to open and run untrusted programs or codes without risking harm to your operating system.
• Ensure the use of virtual private network (VPN) to prevent an easy opportunity for APT hackers to gain initial access to your company’s network.
• Enable spam and malware protection for your email applications, and educate your employees on how to identify potentially malicious emails.

Another approval has been granted to Airtel Nigeria by the Central Bank of Nigeria (CBN) to operate as a super-agent Network in Nigeria. The super-agent licence, allows Airtel to create an agent network that could service the customers of licenced Nigerian banks, Payment Service Banks (PSB) and licenced mobile money operators in Nigeria. This licence is different from the PSBs licence in which approval-in-principle was granted to Airtel and MTN on the 4^th of November to float) to launch SMARTCASH and MoMo Payment Service Banks Limited, respectively. The PSBs licence is the right  to provide financial services such as accepting cash deposits and carrying out payments and remittances, issuing debit and prepaid cards, operating electronic wallet and rendering other financial services to the consumers in Nigeria. MTN Nigeria, was the first telecoms firm to obtain a super-agent licence in 2019.

Just like in the case of the PSBs, the approval-in-principle means that Airtel will have to fulfil the minimum requirements for a super-agent within a stipulated period before a full licence is granted to them. According to the CBN, a Super-Agent shall be licensed under the following requirements:

• Must be a company with an existing business, operational for at least 12 months.
• Must be registered with the Corporate Affairs Commission (CAC).
• Must have a minimum Shareholders’ Fund, unimpaired by losses of N50million.
• Must obtain a reference letter from a Financial Institution (FI) as part of its documentation for licence.
• Must have a minimum of 50 agents.

The Super-agents shall undertake the following responsibilities:

• Be responsible for monitoring and supervising the activities of the agents.
• Have information on the volume and value of transactions carried out for each type of service by each agent (which should be made available to the principal).
• Monitor effective compliance with set limits and establish other prudential measures in each case.
• Take all other measures, including onsite visits, to ensure that agents operate strictly within the requirements of the law, guidelines and the contract.
• Notwithstanding the responsibility by the S-A to monitor and supervise their agents, the CBN may at any time request for any information or carry out inspection as it deems necessary.

These licenses will help to diversify the revenue sources of Airtel and others granted them licences and will help boost Nigeria’s financial inclusion drive. It will attract greater competition in Nigeria’s financial services space and as such will help lower the cost of financial services and offer a diverse range of financial products in coming periods ahead.

Sequel to appeals by the Mobile Network Operators and other industry stakeholders, soliciting for a further extension, the Federal Government through the NCC has extended the deadline for the National Identity Number (NIN)-Subscriber Identity Module (SIM) data verification exercise till the 31^st of December, 2021. The extension is to ensure better compliance with government’s directive provide the enabling environment for the registration of Nigerians in remote areas, diaspora, schools, hospitals, worship centres, as well as foreigners, diplomatic missions, those in other areas that were hitherto unreachable, and increase enrolments in countries with a significant number of Nigerians. This will avoid widening the digital divide.

The review of the progress of the exercise indicated that over 66 million unique National Identity Numbers (NIN) have been issued- an indication of progress achieved in the ongoing NIN-SIM linkage. However, a significant part of the populace is yet to be registered into the National Identity Database (NIDB), which may be due to some challenges which the Federal Government has looked into and has made efforts to alleviate, hence the need to extend the deadline.

As of October 30, 2021, over 9,500 enrolment systems and over 8,000 NIN enrolment centres within and outside the country has carried out 66 million NIN enrolments, with an average of 3 to 4 SIMs linked to the NIN. The Federal Government has pledged to allow all innocent, law abiding citizens and residents will not lose access to their phone lines as long as they obtain and link their NIN. To this end, the NCC has created additional NIN enrolment centres within and outside the country, and many more coming up. This will ensure that the remaining citizens and legal residents living in the country and the diaspora are able to obtain their NINs and link them with their SIMs before the end of the year.

The NIN-SIM verification process is geared towards supporting the Government’s drive to develop Nigeria’s digital economy, strengthen the ability of government to protect the cyberspace and support the security agencies.