Page 12 - AfrElec Week 47 2021
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AfrElec POLICY AfrElec
IMF advises Nigeria to remove
‘retrogressive’ electricity subsidies
NIGERIA THE International Monetary Fund (IMF) has “General government interest payments are
advised the Nigerian government to remove expected to remain high as a share of revenues
what it called “retrogressive” fuel and electricity making the fiscal position highly vulnerable to
subsidies in early 2022 as part of its fiscal policy. real interest rate shocks and dependent on cen-
The IMF also said in the concluding state- tral bank financing.”
ment of its 2021 Article IV Mission to Nigeria The IMF mission stressed the need to fully
that, while the economy is recovering from a remove fuel subsidies and move to a mar-
historic downturn, the outlook is for a subdued ket-based pricing mechanism in early 2022 as
recovery, in part due to slow FX reforms and stipulated in the 2021 Petroleum Industry Act.
uncertainties regarding the ability to repatriate “Nigeria’s past experiences with fuel subsidy
foreign funds, which have discouraged new cap- removal – all of which have been short-lived
ital inflows. and reversed – underscore the importance of
Despite higher oil prices, the government fis- building a consensus and improving public trust
cal deficit is projected to widen in 2021 to 6.3% of regarding the protection of the poor and efficient
GDP, reflecting implicit fuel subsidies and higher and transparent use of the saved resources.”
security spending, and remain at that level in In addition, the IMF said, implementation
2022, it said. of cost-reflective electricity tariffs as of January
“Over the medium term, without bold reve- 2022 should not be delayed.
nue mobilization efforts, fiscal deficits are pro- “Well-targeted social assistance will be
jected to stay elevated above the pre-pandemic needed to cushion any negative impacts on the
levels with public debt increasing to 43% in poor particularly in light of still elevated infla-
2026,” it said. tion,” it added.
Egypt’s El Sewedy Electric pursues
a strategy of inorganic growth
NIGERIA EL Sewedy Electric, a cables and electrical fix- results for the first nine months of 2021 reflected
tures supplier, will pursue its strategy of growth the contribution from acquisitions with 29.9%
over dividend reinforced by three acquisitions year-on-year revenue growth, 28.2% y/y gross
for $86mn made in 2021, Moscow-based VTB profit uptick and 30.1% y/y surge in net income.
Capital (VTBC) said in a research note. Gross profit margin stood at 13.5%, almost flat
However, it cautioned that El Sewedy must y/y, VTBC said.
deliver successful integration if it does not wish Volumes soared, with the first contributions
to fall victim to volumes over margins expan- from the consolidated acquisitions in Indonesia
sion. It warned that as a result, dividends in the and Pakistan. They are bound to improve further
short term could be subpar to prevailing bond when the new facility being built in Tanzania
yields. comes on stream. It is on track and by beginning
The investment bank notes that financial of 2022 will be 40% completed.
P12 www. NEWSBASE .com Week 47 25•November•2021
