On Tuesday, the Nigerian capital market experienced a gain of N510 billion, closing at N39.69 trillion, a notable increase from Monday’s N36.21 trillion.

This led to a growth of 0.51 percent in market capitalization, propelling the market to achieve a 15-year peak.

Furthermore, the Nigerian Exchange Ltd.’s (NGX) All-Share Index (ASI) saw a 0.51 percent upswing, reaching 66,490.34 points from Monday’s 66,151.38. This exceeded the previous peak of 66,371.20 points registered on March 5, 2008.

This notable achievement was partially credited to the uptick in banking stocks, as investors tactically positioned themselves to capitalize on the impressive earnings recently reported by banks.

Within the array of sectoral indices, the NGX Banking Index exhibited the most substantial daily growth, rising by 1.63 percent. Trailing closely were the NGX Consumer Goods Index, marking a 0.99 percent upsurge, and the NGX Industrial Index, registering a 0.21 percent increase.

However, the NGX Oil and Gas Index experienced a minor decline of 0.09 percent, while the NGX Insurance Index underwent a notable reduction of 1.56 percent, both attributed to investors reshuffling their investments.

An examination of the day’s market activities showed a notable surge in trade turnover compared to the previous session, witnessing transaction values rising by an impressive 79.18 percent.

Consequently, the cumulative volume of traded stocks reached 436.95 million units, with a value of N7.02 billion, executed through 7,933 deals.

This marked a significant boost from the 311.12 million units valued at N3.92 billion traded in 7,193 deals on Monday.

At the forefront of the activity chart was FBN Holdings, accounting for 55.15 million units valued at N911.21 million. Following closely was Japaul Gold, selling 33.11 million units worth N29.92 million, while UBA executed 30.17 million units valued at N41.21 million.

Market breadth concluded on a positive note, with 35 stocks witnessing appreciation in value, while 32 stocks experienced depreciation.

Champion Breweries led the group of gainers with a notable 10 percent augmentation in stock value. Conversely, Linkage Assurance headed the cluster of 32 declining securities, with a 10 percent decrease in stock value.

Experts evaluating the market’s performance attributed the robust showing to a blend of factors. These factors encompassed investor sentiment influenced by macroeconomic events, including the establishment and inauguration of the economic cabinet by President Bola Tinubu.

Furthermore, fluctuations in yields within the fixed income market contributed to shaping market dynamics.

They underscored the significance of strategically positioning investments in fundamentally sturdy stocks, considering the ongoing challenges posed by the feeble macroeconomic environment on corporate earnings.

And hopefully, one day we could attract companies like PDD in NGX.

Shares in PDD Holdings, the parent of shopping networks Pinduoduo and Temu, surged over 15% in New York trading on Tuesday after the company reported a 47% jump in net income. Executives are bullish on Chinese consumers despite the country’s broad economic slowdown, with co-CEO Zhao Jiazhen noting “consumers’ increasing willingness to shop.” The company did not share details on Temu, its buzzy service that was the top shopping app in the U.S. over the last three months. (Fortune newsletter)

Dr. Yemi Kale, who previously served as the Statistician-General of the Federation and Chief Executive Officer of the National Bureau of Statistics (NBS), has expressed his concerns about the methodology employed to calculate Nigeria’s weekly unemployment rate.

His concern follows an avalanche of criticism on the new methodology applied by the NBS in its latest unemployment rate report, which reduced the employment time from 20 hours to just one hour.

The bureau released its report last week, reducing the unemployment rate to 4.1 percent from 33.1%. The drastic reduction, which comes after about three years of no unemployment report from the NBS, has generated a lot of controversy. The 33.1% unemployment rate was recorded in 2020 under Kale.

In its latest report, the NBS said that “unemployment stood at 5.3 percent in Q4 2022 and 4.1 percent in Q1 2023.” The bureau explained that the methodology that yielded those figures has been applicable in other developing countries – “where work, even if only for a few hours and in low-productivity jobs, is essential to make ends meet, particularly in the absence of any social protection for the unemployed.”

But like several other experts who have voiced their concern about the methodology adopted by the NBS, Kale said it would deceive policymakers. Kale, who now serves as Chief Economist at KPMG Nigeria, said he resisted the urge to change the country’s unemployment data-gathering methodology during his time as head of the NBS.

The KPMG chief, who during his time as the NBS head, revealed that was under pressure from the government to publish incorrect figures, spoke on Monday during an interview on Arise Television’s Global Business Report.

He stated that the committee responsible for reassessing the minimum count of work hours for classification as employed believed that attributing just one hour per week did not hold merit, as the income earned during such a short duration might not be sufficient for sustenance.

“I resisted (to change the model for unemployment methodology) for 10 years because it did not make any sense in terms of providing the information that our policymakers need.

“So the 20 hours was set because the committee that was set up, which included the ILO, presented their findings and they decided that one hour did not make sense because the income you will generate on an average from one hour’s work was not going to work.

“The 20 hours was decided on because it was agreed that if you work for that duration, you might be able to generate enough income that might sort of equate to what working one hour in the US is. Then you have a bit more comparison.

“If the policy and data are to match, policymakers need to come out to say that all they are promising Nigerians is one hour of employment, then the methodology works. But if the methodology is focused on one hour and policymakers are trying to look for full-time employment, the data won’t help them. And is only there for textbooks, researchers, and international comparison, and there is nothing wrong with that.

“But policymakers can’t use it, and I must repeat that the most important use of data is to provide information for policy not for international comparison,” he said.

Going by Nigeria’s monthly minimum wage of N30,000, an hourly wage will yield less than N100. This, experts believe, makes the 4.1% unemployment rate figure published by the NBS unrealistic, as the value of the earning doesn’t cover any household need.

Nigeria has a great playbook on taxation innovation. Where we have issues are in growth innovation. Yet, this VAT is not a bad: “The Federal Inland Revenue Service (FIRS) has said that a 7.5 percent value added tax (VAT) will be charged on radio and television masts, transmission lines, cell towers, mobile homes, caravans, and trailers, from September 1, 2023.

But for all, this my #1 rule: people willingly pay tax because tax is working in their lives just as people willingly pay insurance because insurance saves their future. Nigeria needs to return to the age of TRUST.  Yes, in the past, men and women willingly contributed money, and sent it to the government, to advance society, because they trusted governments.

Then, Chief Sam Mbakwe (former governor of Imo State) would appear on IBC (Imo Broadcasting Corporation) Owerri with a piece of paper, explaining the state’s liabilities and why he needed more funds. The next day, Peoples Club, etc would call emergency meetings, to raise funds to close the loopholes.

My grandmother was a big fan of Mbakwe because the man came to build a power plant in Isuikwuato. When the governor asked for some help, she gave me 25 kobo to give to my headmaster. If you studied during Mbakwe time, it was common in old Imo State. People donated to the state government, willingly. That used to be Nigeria!

Peoples Club: do you still send money to any modern governor in Nigeria? People, Nigeria’s problem is that the citizens do not TRUST governments at all levels and that is why people hate these new taxes, fees, VAT, etc. We MUST reverse that trajectory to advance the nation.

TAX and Tech

In the US, they’re deploying AI to help improve tax collection.

The Internal Revenue Service is planning to use artificial intelligence to investigate possible tax evasion by large hedge funds, real estate investors and private equity groups. The initiative taps part of an $80 billion allocation from last year’s Inflation Reduction Act. IRS Commissioner Daniel Werfel says AI will help the agency identify previously unseen patterns and trends suggesting potential tax evasion schemes and be used to help audit 75 of the largest partnerships in the U.S. by the end of the month. The partnerships each have more than $10 billion in assets. The IRS will send notifications to 500 other large partnerships in October warning of possible audits.

The Federal Inland Revenue Service (FIRS) has said that a 7.5 percent value added tax (VAT) will be charged on radio and television masts, transmission lines, cell towers, mobile homes, caravans, and trailers, from September 1, 2023.

The revenue agency announced the development in a public notice released on Friday and signed by Muhammad Nami, its executive chairman. Nami explained that the items were previously excluded from building.

According to the FIRS, the provision allowing for the expansion of building is contained in the Finance Act 2023 which had a commencement date of May 1 but was later deferred to September 1.

“The definition of “building” was amended in Section 46 of the VAT Act to exclude any fixture or structure that can be easily removed from the land,” the notice reads.

“As such, all the items removed from the definition of land have become chargeable to VAT. Companies letting, trading in or providing services with such items must charge VAT at the prevailing rate with effect from 1st of September, 2023.”

The tax agency further said that Section 14(3) of the VAT Act was amended to the effect that persons appointed to withhold or collect VAT shall remit the VAT withheld or collected on or before the 14th day of the month following the month in which the VAT was withheld or collected.

“Consequently, all VAT withheld or collected in August 2023 shall be remitted to FIRS on or before the 14th of September 2023,” the notice reads.

“Similarly, VAT withheld or collected in subsequent months shall be remitted to FIRS not later than the 14th day of the month following that in which the VAT was withheld or collected.”

It added that the rate of tertiary education tax (TET) was changed to three percent of assessable profits.

“The new TET rate of 3% shall take effect for TET becoming due in respect of the accounting period ending on or after 1st September, 2023,” the FIRS said.

On investment allowances and convertible currencies, the FIRS said sections 32, 34, and 37 of the Companies Income Tax Act (CITA) grant allowances in respect of capital expenditure incurred in certain circumstances, and tax exemption on income earned in convertible currencies from tourists by hotels have been repealed.

This, the agency said, means that the said allowances and tax exemption are no longer available for tax returns becoming due in respect of the accounting period ending on or after September 1, 2023.

However, the announcement has triggered a critical reaction from business leaders and analysts, who say that it is not time yet for the government to expand the tax net – considering Nigeria’s current poor economic situation.

There is concern that the move to include radio and television masts, transmission lines, cell towers, mobile homes, caravans, and trailers, in building will further squeeze the transport and telecom sectors.

Experts say that further increase in transportation costs will see the inflation rate, currently at 24.08%, accelerates – compounding the soaring cost of living.

Yemi Kale, Economist at KPMG Nigeria and former Chief of the National Bureau of Statistics (NBS), in June, warned the government about raising taxes on household expenditure and private business. He said such a move would impact the Nigerian business ecosystem negatively.

“In terms of public finance, I am one of the few people that do not believe in increasing taxes. I’m not one of the people that is a fan of pushing up taxes, particularly in a recession and when the economy is struggling with fragile growth,” he said.

President Bola Tinubu, though desperately seeking to increase the government’s revenue, acknowledged that heavy taxation in times of economic crisis is “counterproductive.”

He said: “During times of economic weaknesses, increasing taxation is counterproductive, high taxes invite possible economic contradiction and higher unemployment.”