Opinion!!! XKPMG Versus Nigeria (Negative Capability)

By Bashorun J.K. Randle

The credit for the concept of Negative Capability rightfully belongs to another “J K” (John Keats) who defined it as the possibility of living with uncertainty. In Africa, we have turned it upside down. A case in point was the front page report in “Daily Trust” newspaper on September 7, 2023.

EDITOR’S PICKS

Headline: “HUSBAND RUSHES TO KANO COURT AS WIFE THREATENS TO RE-CIRCUMCISE HIM”

“One resident of the Kano metropolis, Malam Ali, has rushed to a Sharia Court sitting in RijiyarLemo seeking the court to stop his wife from her threat to renew his circumcision.

Malam Ali told the court that his wife has been threatening him for long that she would renew his circumcision, adding that she even bought a sharp knife and kept it inside the house.

He said from that time he has been sleeping with one eye whenever he is in her house, as he has two wives.

After hearing the complaint from the husband, the court presided over by MalamSunusiDanbabaDaurawa adjourned the matter till October 4, for further hearing.

Speaking to journalists after the court session, the husband said he checked her room and took away the sharp knife to save himself but he is not yet comfortable.

“I don’t know what happened; she just said she must renew it. I still love my wife and we are living peacefully. This is the only challenge I am facing with her.

“That is why I decided to report her to the court if they can stop her,” he said.

However, the wife refused to address journalists on why she is attempting to renew his circumcision.”

However, we should thank KPMG for a more sombre and elegant illustration of Negative Capability.

Headline: “PUNCH” newspaper of Tuesday, September 12, 2023

GDP growth: FG’s 6% target in four years impossible, says KPMG

A multinational consulting firm, KPMG, has stated that the economic goal of President Bola Tinubu to grow the Gross Domestic Product growth rate of the country by six per cent is over-ambitious and as such cannot be achieved in four years.

The company, in its issue “Eight Flashnotes” released on Friday, observed that the government’s plan, which means growing the value of real GDP from N74.6 trillion in 2022 to N92.5 trillion by 2026, representing an increase of N17 trillion in four years, is “not feasible”.

It noted that while the GDP growth of three per cent is assumed in the first year going by World Bank’s projection for 2023, the economy will then have to grow by an average of seven per cent for the subsequent three years and moving growth from a forecasted three per cent in 2023 to at least seven per cent in 2024 and afterwards, which seems overly ambitious, adding that the best possible GDP growth rate to be achieved within the next four years would be between four to 4.5 per cent.

The notes read, “We are of the opinion that there is very limited space to attain a 6 pet cent average real growth rate in four years or an increase in real GDP by N17trillion and an average GDP growth rate of between 4-4.5% at the best is more feasible in the next four years. Even this will require the country to get its policies right and keep consistent faith with macroeconomic reforms.”

It stressed that a challenging macroeconomic environment and various constraints such as inflation, subsidy removal, and infrastructure limitations are some of the challenges the government would face to maintain a fine and delicate balance across economic variables.

Giving further reasons, the multinational company said, “For example, to grow government revenue to expand government consumption and investment, it might increase taxes and /or borrow from the private sector. However, increasing taxes can lower purchasing power and slow consumption expenditure growth. At the same time, private investment may be curtailed as business earnings are squeezed from slowing demand, higher costs from higher taxes, and higher interest rates as government borrowing crowds out private-sector lending and then pushes rates up.

“GDP, using the expenditure approach, is the cumulation of household and government consumption expenditure, private and public investment, and net exports which means the president will have to introduce policies and take decisions that will lead to growth across these variables. However, taking decisions in one variable can lead to a decline in another.

“The initiatives government and the private sector may also have to put in place to cushion the effects of the removal of petrol subsidy may also worsen the costs of businesses and leave less for expansion in the short-to-medium term which covers the duration of the president’s first term and the focus of his growth targets.

“Household consumption expenditure which is the largest share of GDP and the easiest to grow is however constrained by high double-digit inflation which is expected to get worse with the subsidy removal, the implementation of the finance bill 2022 and the unification of the FX rate whenever it is implemented within the next four years, in addition to the perennial supply and transportation bottlenecks, security concerns and power and other infrastructural constraints to doing business in Nigeria will affect costs of production and price of goods and services,” KPMG concluded.

Subsequently, something close to a reprieve was delivered on the front page of “Vanguard” newspaper on August 29, 2023.

Headline: “KPMG DOWNGRADES NIGERIA’S GDP GROWTH TO 2.65%

“KPMG, world’s leading accounting firm, has downgraded its 2023 Gross Domestic Product (GDP) growth forecast for Nigeria to 2.65 percent from its previous projection of 2.85 percent.

The firm cited the contraction in oil production, the impact of subsidy removal and foreign removal and foreign exchange (FX) reforms on households, as well as further increase in inflation rte for the rest of 2023, among other things as reasons for th downgrade.

Giving these positions in its flash note titled; “Underwhelming Q2 2023 GDP Growth Recorded”, the firm stated: “Second quarter of 2023, Q2’23, GDP results is broadly in line with our earlier downward revision of 2023 GDP to 2.85 percent.

“Nevertheless, we are adjusting our 2023 forecast further downwards to 2.65 percent.

“Firstly, half-year 2023 (H1’23) GDP currently stands at 2.41 percent and will require an average growth in H2 2023 of 3.30percent and 3.50 percent to end the year at 2.85 percent and 3.0 percent respectively for 2023 which we believe is challenging and unlikely.

“Q2 2023 is however the quarter where the impact of Subsidy removal, FX unification and other reforms of the new administration had it major impact on squeezing household consumption demand and firms’ costs of operations as well as reduced private investment as firms continued to adopt a wait and see approach, tweak strategies to cope with rising costs and reduced demand for their goods and services and struggled to find FX to operate. These factors will likely constrain non-oil growth given that household consumption and private investment constitute the largest share of GDP.

The impact of subsidy removal was evident in the biggest contraction I n road transportation GDP since the new GDP series.

Though, subsidy was only removed in June 2023 representing one month impact of the three months of the quarter, road transport GDP contracted by – 55.14 percent in Q2 2023, representing the biggest contraction in road transport GDP in history.

This contradicts the muted results recorded with respect to inflation for that same month which according to NBS was not expected to fully reflect on the CPI though methodologically, the inflation rate in each sector is used to deflate nominal GDP for that sector.

At the same time, there has been muted government capital investment in the economy in Q2 2023 and the first half of Q3 2023 so far, with new administrations at the Federal and State level settling down in Q3 2023.

Furthermore, oil production has started Q3 2023 with a further contraction in July 2023 and 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.”

We owe TundeAsaju a huge debt of gratitude for his superlative Tribute titled: “REQUIEM FOR A PATRIOT” on the front page of “Daily Trust” newspaper on September 5, 2023:

“It is not often that a meteor drops from the star-studded firmament of the Nigerian military without flags flying at half-mast. It was the case when September last year Major General AbdullahiIyandaMuraina passed instestate at a Dubai hospital. Until his retirement and subsequent demise, the highly decorated General served at the Army Pay Records. He was at different times the chief of accounts and budget at the army headquarters, a position that must have sharpened his business sense. His enemies tried unsuccessfuly to soil his records with the 2016 arms procurement contract investigation, but he swam ashore into a peaceful retirement without as much as a day with interrogators of the dreaded EFCC.

Among the chattels credited to him were eight (8) posh houses in Abuja’s elite districts conservatively valued at N1 billion each. He had homes in Ibadan, his home town; farmlands and at least one fuel station on the busy Abuja-Keffi highway. Among the six vehicles he left behind, two were bulletproof vans to be shared among his two wives.

For an accountant far removed from the battlefront, these were modest investments that guarantees a retirement from poverty. Unfortunately, death snatched him before he could enjoy his blessings. Last week, solicitors to his two wives placed a full-page advert in the media asking judges who were not privy to how the wealth were amassed to decide how it should be shared. What a great loss to the nation, prudence in the military and a potential circus for his enemies as they watch how the courts share the hard-earned wealth of a prudent and patriotic officer/accountant!