Economy Archives — Page 4 of 7 — Business Bells

Business Bells

Category: Economy

  • Buhari Borrows $2.02bn from China in Six Years

    Buhari Borrows $2.02bn from China in Six Years

     

    • $719.61m used to service Chinese loans since inception in 2015

     

     

    President Mohammadu Buhari’s administration has borrowed $2.02bn as loans from China from 2015, data obtained from the Debt Management Office on Monday showed.

     

    According to the statistics obtained from the DMO, Nigeria’s total debt from China as of June 30, 2015 stood at $1.38bn.

     

    However, as of March 31, the country’s debt portfolio from China had risen to $3.40bn.

     

    According to the DMO, loans from China are concessional loans with interest rates of 2.50 per cent per annum, a tenor of 20 years and grace period (moratorium) of seven years.

     

    The debt office said that the terms of the loans were compliant with the provisions of Section 41 (1a) of the Fiscal Responsibility Act, 2007.

     

    The loans from China are tied to project. The projects, (eleven in number as at March 31, 2020), include the Nigerian Railway Modernisation Project (Idu-Kaduna section), the Abuja Light Rail Project, Nigerian Four Airport Terminals Expansion Project (Abuja, Kano, Lagos and Port Harcourt), Nigerian Railway Modernisation Project (Lagos-Ibadan section) and the Rehabilitation and Upgrading of Abuja-Keffi-Makurdi Road Project.

     

    The DMO said the low interest rates on the loans reduced the interest cost to government while the long tenor enabled the repayment of the principal sum of the loans over many years.

     

    However, as of March 31, a total of $719.61m had been made as debt service payment to China since the third quarter of 2015.

     

    Of the amount paid as debt service, 46.15 per cent ($332.03m) was paid to service the interest on the loans.

     

    In the first quarter of 2021, $102.19m was used to service debt to China. This is about 11 per cent of the total $1.0bn used to service external debts within the period.

     

    The DMO recently disclosed that Nigeria had more than $5.83bn foreign loans that had been approved but not yet disbursed as of December 31, 2020.

     

    Out of this amount, $1.25bn is supposed to come from the Export-Import Bank of China. Apart from multilateral agencies, China has remained the nation’s largest creditor.

     

    There had been fears among Nigerians that the country may forfeit some of the projects in case of loan defaults.

     

    The fear grew when the Minister of Transportation, Rotimi Amaechi, in August 2020, confirmed that the country waived its sovereign immunity to obtain Chinese loans.

     

    The minister, however, added that as long as debts were repaid, there would be no need for China to claim any infrastructure.

     

    “We must learn to pay our debts and we are paying, and once you are paying, nobody will come and take any of your assets,” he had said.

     

    Despite the assurance, fear persists that the Chinese loans contain some obnoxious clauses that could breach the nation’s sovereignty especially as the loan agreements are not available in the public domain.

     

    Amaechi denied knowledge of any clause that hands over a national asset to China in case of any default in an AriseTV interview on Monday.

     

    He disclosed that the administration of President Buhari had paid $150m out of the $500m borrowed by the administration of President Goodluck Jonathan for the Abuja-Kaduna Rail project.

     

    The minister also commented on other issues such as the suspension of Bala-Usman and the impacts of the country’s Deep Blue Project on every Nigerian.

     

    When asked about the plans of the Federal Government to pay back the loans so as to avoid the Zambian experience where some national assets such as the Kenneth Kaunda International Airport, the Zambia National Broadcasting Corporation and the National Power and Utility Company were reportedly used to settle Zambia’s financial obligations to China, Amaechi said borrowers should meet their obligations.

     

    He said, “When you take loans, you are expected to pay back. Today we are paying back. Under the regime of President Goodluck Jonathan, the loan for Abuja-Kaduna was taken. It was about $500m. Today, we have paid about $150m on that loan.

     

    “Nigeria has never defaulted when it comes to repayment. I do not also expect that we should default on any other loan that we have taken.”

     

    While commenting on the status of the suspension of Ms Hadiza Bala-Usman from the Nigerian Ports Authority, he said, “I am not aware that I suspended Hadiza. I am not the president, and I do not have such powers. That power rests with the president.

     

    “I am not aware that Hadiza was actually suspended. I suspect she was asked to step aside, to enable investigation to be carried out on NPA, not on her. We are investigating NPA.

     

    “At the conclusion of the investigation, all the reports will be sent to the president who will then make a decision on the way forward.”

     

    The minister also said that he was not aware of when the panel would finish and that it was in the hands of the panel.

     

    Responding to how the $195m Deep Blue Project will affect all Nigerians who are not seafarers, he said, “What we have done with the Deep Blue Project is that we will reduce the cost of producing oil in Nigeria.

     

    “By the time we provide security on the waters, the economy would improve because there would be more money coming into the economy. That is the impact it will have.”

     

    He added that the company that handled the project guaranteed to refund of the money spent on the project if there was no improvement in the economy six months after the project.

  • Naira Hits N502/$1 at Parallel Market

    Naira Hits N502/$1 at Parallel Market

     

    The naira, on Friday, fell at the parallel market to N502 to the dollar as speculations continue to hamper forex market operations.

     

    At the importer & exporter (I&E) window, it traded moderately to close at N411.12 per dollar.

     

    The local currency, which closed at N499 to a dollar on Thursday, lost N3 at midday trading Friday, according to data on abokiFX.com, a website that collates parallel rates in Lagos.

     

    It also depreciated against Pound and Euro, trading N710 and N608, respectively.

     

    Recently, the Central Bank of Nigeria (CBN) had made efforts to ease naira against other foreign currencies and unify the country’s forex (FX) rates.

     

    In 2017, it introduced the I&E window to improve foreign exchange market mechanisms, deepen market liquidity, and ensure prompt execution and settlement of all FX transactions.

     

    After its meeting on Tuesday, members of the Association of Bureau De Change Operators of Nigeria (ABCON) declared ‘Operation No Street Trading” to stop the hawking of foreign exchange.

     

    Aminu Gwadabe, ABCON president, said the market would return to normal as the ongoing speculative behaviour was hampering the market operations.

     

    He also said all market participants would work together to lower the foreign currency rate.

  • BDC Operators Move To Crash Exchange Rate, Ban Street Hawking of Dollars

    BDC Operators Move To Crash Exchange Rate, Ban Street Hawking of Dollars

     

    Forex traders under the aegis of the Association of Bureau De Change Operators of Nigeria (ABCON) have said they will start what it called ‘Operation No Street Trading’ to stop the hawking of foreign exchange by BDC operators.

     

    This is part of the measures aimed at bringing down the exchange rate which has been on the rise recently especially after the adoption of the NAFEX rate as the new official rate by the Central Bank of Nigeria.

     

    This disclosure was made by the President of ABCON, Alhaji Aminu Gwadabe, who said that this was part of the resolutions made unanimously by BDC directors at the meeting of the operators on Tuesday, June 2, 2021, in Lagos.

     

    ABCON, in the resolution, told BDCs to improve on their return rendition to regulatory authorities, warning that defaulting members would be punished.

     

    The resolution from ABCON partly reads, “All operators are to collaborate in bringing down the forex rates in the market; street trading by BDC should be discouraged/banned and ABCON will commence operation ‘no street trading’.

     

    BDCs should improve return rendition to regulatory authorities; margin review to meet operational requirements; widening the scope of transactions; digitalisation of BDC operations.

     

    ABCON to punish errant members; ABCON compliance officer and staff to commence nationwide supervision of BDC operations.”

     

    Despite the sales of forex at N393 to a dollar to BDCs by the CBN, the exchange rate has been on the rise since the adoption of the NAFEX rate as the official rate by the CBN with the dollar selling for N499 on Thursday afternoon.

     

    ABCON had in a statement on Sunday, advised foreign exchange users and the general public to patronise only BDC operators licensed by the CBN in order to get dollars at the approved rate.

     

    Gwadabe said the parallel market activities had for years become major drivers of the exchange rates, adding that control over such transactions had become burdensome.

     

    He said forex speculators were capitalising on the state of the forex market and the naira to sell dollars above the CBN-approved margin.

     

    ABCON had some days ago, said that foreign exchange speculators are set to lose over N100 billion in the next one month as the CBN sustains massive funding for Bureau De Change (BDC) operators.

     

    The ABCON President called for the return of normalcy of the market as the ongoing speculative behaviour was hampering the market operations.

     

    The ABCON boss linked the continued fall of the naira at the parallel market and Investors’ and Exporters’ (I&E) Forex window to currency speculators who are hoarding dollars to profit from the currency crisis.

     

    He said the perpetrators are creating an artificial scarcity of the greenback within the market to cause more woes for the local currency.

  • NLC To Take Decision On Govs’ N408/Litre Petrol Proposal Today As Experts Warn FG

    NLC To Take Decision On Govs’ N408/Litre Petrol Proposal Today As Experts Warn FG

     

    The Nigeria Labour Congress (NLC) will today (Friday) come up with its position on the recommendation by governors that the price of Premium Motor Spirit, popularly called petrol, be raised from N162/litre to N408.5/litre.

     

    A committee set up by the Nigeria Governor’s Forum had on Wednesday called for immediate removal of petrol subsidy. It recommended a petrol price of between and N380/litre and N408.5/litre.

     

    However, the Abuja Chamber of Commerce and Industry and the Lagos Chamber of Commerce and Industry on Thursday advised the Federal Government to be tactful when removing petrol subsidy. They recommended that it be done gradually.

     

    Also, officials of the Nigerian National Petroleum Corporation told our correspondent that the oil firm was awaiting the Federal Government’s position on the recommendation of the governors before it would adjust petrol price.

     

    NNPC has been the sole importer of petrol into Nigeria for more than three years running.

     

     When contacted by our correspondent on Thursday for the position of the NLC on the latest recommendation of the governors as touching petrol price, the Deputy President, Joe Ajaero, replied, “Congress will come up with a position latest tomorrow (Friday).”

     

    Officials of both the NLC and the Nigeria Union of Petroleum and Natural Gas workers in separate exclusive interviews had last week argued that the continued imports of petrol by the NNPC was at the detriment of Nigeria’s refineries.

     

    They also insisted that the government should fix Nigeria’s refineries and stop importing petrol to help halt subsidy and save funds for the country, as they opposed subsidy removal now.

     

    Commenting on the matter, the President, ACCI, Dr Al-Mujtaba Abubakar, said in an interview that it would be painful to raise petrol price to N408/litre this time and called for gradual increment.

     

    He said, “The subsidy removal can be staggered. They (government) can stagger it by either removing about 25 per cent in the first three months, another 25 per cent next, and so on. They can stagger it.

     

    “But as they remove the subsidy people will also want to see the benefits coming.”

     

    Abubakar said the ACCI was in support of subsidy removal, but stressed that the amount saved must be properly channeled into infrastructure development.

     

    On his part, the Director-General, LCCI, Dr. Muda Yusuf, explained that the inevitability of the deregulation of the petroleum downstream sector had not been in doubt.

     

    He said given the huge financing gaps that existed at all levels of government, it was impossible to continue to sustain the subsidy regime, adding that the opportunity cost of petrol subsidy was huge.

     

    Yusuf said, “But the transitioning process from a subsidy regime to a deregulated policy space calls for a strategy that is inclusive and socially sensitive.

     

    “It is a tricky situation that demands tactful handling. It has profound social dimension. There is a strong economic argument, there is significant investment effect and there is a potential substantial political cost.”

     

    The LCCI DG, however, noted that the bigger conversation should be around what should be done to mitigate the short term adverse social effect on the vulnerable segments of the society.

     

    The Group General Manager, Group Public Affairs Division, NNPC, Kennie Obateru, told our correspondent that the oil firm would await the Federal Government’s position on the governors’ recommendation before changing petrol price.

     

    He said, “We really cannot take a position on that now because we don’t want to pre-empt whatever government is going to decide and it is whatever the Federal Government decides that will come to play.

     

    Obateru said the corporation was aware of the recommendation by the governors and admitted that petrol subsidy had truly been a burden on NNPC.

  • NLC Suspends Strike In Kaduna

    NLC Suspends Strike In Kaduna

     

    The Nigeria Labour Congress has suspended its five-day warning strike in Kaduna State to pave way for negotiations as requested by the Federal Government.

     

    The President of NLC, Comrade Ayuba Wabba, announced the suspension of the strike on Wednesday in Kaduna.

     

    He said, “As you are aware, we have been in Kaduna State for the past four days for our declared protest and industrial action against the sack of workers without following due process as provided by the Labour law.

     

    “This action was successful and we tried to maintain procedures of industrial action.

     

    “This afternoon an official letter was communicated to the NLC national headquarters signed by the Minister of Labour.

     

    “We will honour the meeting as scheduled for tomorrow at 11:a.m. The labour leaders in Kaduna will also be present because they have the substance of the issues in the state.”

     

    Wabba said “the NLC suspended the strike immediately” to give dialogue a chance.

     

    Minister of Information and Culture, Lai Mohammed, had said that the Federal Government would intervene to bring the labour crisis rocking Kaduna State to a peaceful end.

     

    Mohammed said that the Federal Government was disturbed about the sudden turn of events in Kaduna State, stressing that the Minister of Labour and Employment, Chris Ngige, is already working to broker a truce between the opposing sides.

     

    He said, “The Federal Government is not folding its arms and already, the Minister of Labour and Employment has waded in and he is in touch with both the government of Kaduna State and the Labour.

     

    “In addition, the security apparatus all over the country have also taken pre-emptive measures to ensure that hoodlums don’t take advantage of this situation.

     

    “At the end of the day, all the parties have to come back to the drawing table to agree and hammer out concessions and agreements”.

     

    The Chairman, Kaduna chapter of NLC, Ayuba Suleiman, had asked workers to ground all activities for five days as directed by its national leadership to serve as a warning, following the sacking of no fewer than 4,000 state workers in April.

     

    Suleiman and the NLC Secretary, Christiana Bawa, in a statement, asked their colleagues to begin the warning strike from Sunday at 12am.

  • LCCI, ACCI, Others Raise Concerns As Buhari Seeks Nod For Fresh $6.1bn Loan

    LCCI, ACCI, Others Raise Concerns As Buhari Seeks Nod For Fresh $6.1bn Loan

     

    The Abuja Chamber of Commerce and Industry (ACCI) and the Lagos Chamber of Commerce and Industry (LCCI) have both raised concerns over the rising debt profile of Nigeria following President Mohammadu Buhari’s fresh request that the Senate should approve another N2.3tn external loan.

     

    President Buhari has asked the National Assembly to approve N2.3tn ($6.18bn) external loan to enable him to fund part of the 2021 N13.8trn national budget.

     

    The request was contained in a letter addressed to the Senate President, Ahmad Lawan, and Speaker, Femi Gbajabiamila and read at plenary in both chambers on Tuesday.

     

    Buhari said the proposed loan, equivalent of N2.3tn, was to finance the 2021 budget deficit of N5.6tn.

     

    He said the amount was part of N4.6tn that the federal lawmakers had earlier approved for his regime to be borrowed this year as contained in the 2021 Appropriation Act.

     

    He said the loan would enable the Federal Government to fund critical infrastructural projects in transportation, health and education among others.

     

    This is coming barely a month after the Senate approved $1.5bn and €995m external borrowings for the federal government.

     

    The loans were part of the $5.5bn and €995m external borrowings which Buhari had, in May 2020, asked the red chamber to approve to finance various priority projects of the Federal Government and to support the state governments facing fiscal challenges.

     

    Buhari’s fresh letter was titled ‘Request for the Senate’s concurrent approval of donor fund projects under the 2018-2020 Federal Government external borrowing rolling plan’.

     

    The projects listed under the 2018-2020 external borrowing plan, according to Buhari, are to be financed through sovereign loans from the World Bank, African Development Bank, and French Development Agency.

     

    Other funding agencies are, Islamic Development Bank, China EXIMBank, China Development Bank, European Investment Bank, European ECA, KFW, IPEX, AFC, India EximBank and International Fund for Agricultural Development.

     

    He said the total amount expected to be borrowed under the borrowing plan amounted to a total sum of $36,837,281,256, $910,000,000 and Grant Component of $10,000,000.

     

    He said the projects and programmes in the borrowing plan were selected based on positive, technical and economic evaluations as well as the contribution they would make to the socioeconomic development of the country.

     

    He said it would also enable the government to create employment, reduce poverty as well as protect the most vulnerable and very poor segments of the Nigerian society.

     

    Buhari said, “All the listed projects form part of the 2018 — 2020 External Borrowing Plan and covered both the federal and states governments’ projects.

     

    “They and are geared towards the realisation of the Nigeria Economic Sustainability Plan that cut across key sectors such as infrastructure, health, agriculture and food security, energy, education and human capital development and COVID-19 Response efforts.

     

    Meanwhile, Buhari, in another letter on Tuesday, sought the federal parliament’s nod to implement projects meant to be funded with the proposed loan.

     

    Rising debts raising serious sustainability concerns -ACCI, LCCI

     

    The President, ACCI, Dr Al-Mujtaba Abubakar, said the chamber was aware of the government’s plan to fund the deficit in the 2021 budget.

     

    He, however, told our correspondent that the government should be mindful of the adverse effect of excessive borrowing.

     

    Abubakar said, “We, however, urge the Federal Government to take judicious note of the negative side of excessive borrowing, especially on interest payment among others. We particularly called attention to the already high debt service rate and its attendant depletion of revenue earnings.

     

    “We once again call on the Federal Government to minimise borrowing and focus more on cutting the cost of governance. If this is not done, debt service may soon further cripple the economy and dampen any hope of higher GDP growth.

     

    “When other economic indices are considered, it is clear the administration needs to urgently embark on cost chatting measures before it is too late.”

     

    On his part, the Director-General, LCCI, Dr Muda Yusuf, said although the request was not an entirely new proposition, the government should be cautious of growing the country’s debt profile.

     

    He said, “The rising debt profile of government raises serious sustainability concerns. Although government tends to argue that the condition is not a debt problem, but a revenue challenge.

     

     “But the truth is that debt becomes a problem if the revenue base is not strong enough to service the debt sustainably. It invariably becomes a debt problem.”

     

    “What is needed is the political will to cut expenditure and undertake reforms that could scale down the size of government, reduce governance cost and ease the fiscal burden on government.”

     

    Yusuf said it was important to ensure that the debt was used strictly to fund capital projects that would strengthen the productive capacity of the economy, adding that emphasis should be on concessionary financing, as opposed to commercial debts which were typically very costly.

     

    In response to the president’s loan request, Prof. Adeola Adenikinju, an energy economist, told our correspondent that the country had a serious revenue generation problem that should be addressed.

     

    He said that for FG to meet its expenditure, one of the options was to increase the rate of Value Added Tax which in the current economic situation, was impossible.

     

    Adenikinju said, “The withdrawal of subsidy which would have freed up some cash for the government is mired in political debate.

     

    “Also, curbing wastage in expenditure is something the current administration does not seem to be doing well.

     

    “Borrowing in itself is not bad as many countries fund their budgets with debt, but we have to look at the current debt exposure and the ability to pay the loans.

     

    “Debt servicing was reported as almost equivalent to revenue in 2020. The question now is how does the government want to pay back the debt.”

     

    He added, “The country has been overdependent on oil as 90 per cent of foreign exchange comes from it. Now is the time to walk the talk towards economic diversification that has been continuously discussed.

     

    “The govt needs to take intense action and direct policies to industries with the capacity to generate income like manufacturing and tourism. Revenue expansion is critical at this moment; else we will be forced to keep borrowing.”

     

    Fresh N2.34tn loan is for capital projects – DMO

     

    The Debt Management Office on Tuesday said the request by the President, Major General Muhammadu Buhari (retd.) for the National Assembly’s approval for fresh N2.34tn loan was meant to provide funds for capital projects such as power, transport, agriculture and rural development, education, health and water resources.

     

    This, it said, was in line with the 2021 Appropriation Act.

     

    The DMO made the clarification in a statement titled ‘Clarification on Mr President’s request for NASS’s resolution for N2.34tn new capital raising’.

     

    According to the statement, provision for the loan had been previously made in the 2021 Budget which was approved in December 2020.

     

    The statement read, “The proposed new capital raising is the new external borrowing already provided for in the 2021 Appropriation Act.

     

    “It will be recalled that the President signed the 2021 Appropriation Bill which included new domestic and new external borrowing into law after the approval of NASS.

     

    “Accordingly, the new capital raising has already been approved and is now being presented to NASS in order to fulfil the provisions of Sections 21 and 27 of the Debt Management Office (Establishment, Etc.) Act, 2003.”

     

    The statement added that the loan would be used for capital projects, such as power, transport, agriculture and rural development, education, health and water resources.

     

    It added that the proceeds were to be deployed to capital projects in various sectors of the economy including power, transport, agriculture and rural development, education, health and water resources that were included in the 2021 Appropriation Act.

  • Remittances To Nigeria Drop By 28% – World Bank

    Remittances To Nigeria Drop By 28% – World Bank

     

    Remittance inflow to Nigeria dropped by 28 per cent in 2020 due to the COVID-19 pandemic, the World Bank has said.

     

    The bank added that remittance flows fell for sub-Saharan Africa by 12.5 per cent, according to its Migration and Development Brief 33 Phase 11 entitled: “COVID-19 Crisis Through a Migration Lens’’ published on Thursday.

     

    The report said the decline in remittance flows to Nigeria was largely responsible for the fall in remittance flows to sub-Saharan Africa.

     

    “The decline in flows to sub-Saharan Africa was almost entirely due to a 28 per cent decline in remittance flows to Nigeria.

     

    “Excluding flows to Nigeria, remittances to sub-Saharan Africa increased by 2.3 per cent, demonstrating resilience,’’ the report stated.

     

    According to the report, the relatively strong performance of remittance flows during the COVID-19 crisis has also highlighted the importance of timely availability of data.

     

    It stated that given its growing significance as a source of external financing for low and middle-income countries, there was need for better collection of data on remittances.

     

    It emphasised that there was need for better collection of data on remittances, in terms of frequency, timely reporting, and granularity by corridor and channel.

     

    With global growth expected to rebound further in 2021 and 2022, remittance flows to low and middle- income countries are expected to increase by 2.6 per cent to $553bn in 2021 and by 2.2 per cent to $565bn in 2022.

     

    The report stated that global average cost of sending $200 remained high at 6.5 per cent in the fourth quarter of 2020, more than double the Sustainable Development Goals (SDGs) target of three per cent.

     

    It stated that sub-Saharan Africa continued to have the highest average cost (8.2 per cent) adding that supporting the remittance infrastructure and keeping remittances flowing includes efforts to lower fees.

     

    The true size of remittances, which includes formal and informal flows, is believed to be larger than officially reported data, though the extent of the impact of COVID-19 on informal flows is unclear.

     

    “As COVID-19 still devastates families around the world, remittances continue to provide a critical lifeline for the poor and vulnerable,” said Michal Rutkowski, Global Director of the Social Protection and Jobs Global Practice at the World Bank.

     

    “Supportive policy responses, together with national social protection systems, should continue to be inclusive of all communities, including migrants,” he said.

  • Remove Petrol Subsidy, Economic Council Tells Buhari

    Remove Petrol Subsidy, Economic Council Tells Buhari

     

    The Presidential Economic Advisory Council has asked President Muhammadu Buhari to remove subsidy on petrol and adopt a pricing regime that reflects the cost of the commodity.

     

    Buhari had in 2019 set up the council chaired by Prof Doyin Salami to replace the regime’s defunct Economic Management Team led by Vice-President Yemi Osinbajo.

     

    The council, charged with the responsibility of advising the President on economic policy matters including fiscal analysis, economic growth and a range of internal and global economic issues working with the relevant cabinet members and heads of monetary and fiscal agencies, reports directly to Buhari.

     

    Its advice that petrol subsidy be removed formed part of its presentation at its sixth regular meeting with the President last Friday, when it also warned that the subsidy regime would worsen solvency of state governments.

     

    According to the document presented at the meeting, a copy of which was obtained by The PUNCH on Sunday, the council drew Buhari’s attention to three issues that it said required urgent attention.

     

    They include the need for policy clarity with regard to fuel subsidies which it said would help resolve the dilemma which rising crude oil prices present; the worsening security environment which it said had adversely affected food production leading to higher prices; and the need for the Petroleum Industry Bill to encourage investment in Nigeria’s oil and gas sector.

     

    The council noted that improving crude oil prices had led to what it called the Nigerian ‘dilemma.’

     

    The dilemma, it said, resulted from the conflicting implications of higher crude oil prices on the nation’s economy.

     

    According to the council, rising crude oil prices improve public sector revenue and reserves of foreign currency while higher crude oil prices mean that the cost of imported petrol should be higher than the N167/litre being paid at filling stations.

     

    It noted that the restoration of subsidies created a set of significant problems. It added  that as there was no provision for subsidy payments in the 2021 budget, such payments would have to be done by the Nigerian National Petroleum Corporation thereby further reducing revenues accruing to the Federation Account.

     

    This situation, it said, was capable of worsening the solvency of many state governments and could take the country back to 2015 when the Federal Government had to provide ‘bailout’ funding to the states.

     

    The council stated, “As there is no provision for subsidy payments in the 2021 budget, such payments will have to be done by the NNPC thereby further reducing revenues accruing to the Federation  Account.

     

    “The solvency of many state governments will worsen – this could take us back to 2015 when the Federal Government had to provide ‘bailout’ funding to the states.”

     

    The Salami-led group added that restoration of subsidy made investment in Nigeria’s downstream oil sector unattractive.

     

    The document read, “Council advises as follows: there is an urgent need for clarity and consistency in petrol pricing policy.

     

    “Subsidy on petrol be removed and a pricing regime which reflects the cost of petrol adopted.

     

    “It is noteworthy that with the exception of petrol, the prices of all other petroleum products have been deregulated; the cost of retaining the subsidy outweighs the benefits, or that the benefits of removing the subsidy are far greater than the costs.

     

    “Data published by the National Bureau of Statistics also show that petrol prices are not the same across Nigeria.

     

    “In March 2021, petrol prices range between N162.17 and N200.87/litre –the highest being in Lagos State whilst the lowest prices are obtained in Adamawa State.

     

    “Council is especially concerned that in addition to further worsening government revenue, re-introduction of subsidies will jeopardise investment in the oil sector and also create uncertainty about general government policy on pricing.”

     

    On security, the council noted that there was a consensus on the worsening of the security situation in Nigeria.

     

    It listed the sources of security challenges to include Boko Haram and ethno-religious conflicts; political violence; economic and resource-based violence; organised violent groups; and herders/farmers /settlers clashes.

     

    The council noted that violence had had impact on human capital and on poverty and vulnerability while physical capital and infrastructure are often damaged; while business and investment suffer.

     

    It noted that the economic cost of insecurity was estimated at 2.6 per cent of GDP in 2020, or $10.3 billion.

     

    On the way out, the council advised the FG to among others, “Defeat Boko Haram decisively, as a decisive defeat is necessary to permanently keep the insurgency at bay.

     

    “There is need to review strategy as to the way forward, examining all options -including seeking the assistance of external powers.

     

    “Improve the implementation of policies aimed at improving access and quality of education in underserved areas.

     

    “Implement existing law on compulsory attendance of primary school to reduce the number of out of school children, a key recruiting ground for thugs.

     

    “Resolve grievances around exclusion from access to power, opportunity, and representation through dialogue.

     

    “To be effective, government should involve civil society, the private sector, regional and international organisations focused on peace and conflict resolution in roundtable discussions aimed at resolution of grievances.”

     

    On the PIB, the council noted the progress of the bill through the National Assembly.

     

    It said, “The importance of this bill to the national economy cannot be overstated.

     

    “When enacted, this law will have a profound effect beyond the oil and gas sector.

     

    “Potentially, this bill could provide a basis for building and industrial economy for Nigeria.

     

    “Implementation of the Paris Agreement has seen a continuous global transition away from fossil fuels towards renewables as primary energy source.

     

    “The PIB will join the National Petroleum Policy and the National Gas policy in defining the environment for investment in the oil and gas sector and also influence sentiment around Nigeria as an investment destination.”

     

    In a statement released by the Special Adviser to the President on Media and Publicity, Femi Adesina, at the end of the meeting on Friday, the Presidency left out the issue of removal of petrol subsidy from the issues raised by the council while it mentioned the remaining two issues- security and the PIB.

  • FG Set To Merge MDAs, Slash Personnel Cost, Says Finance Minister

    FG Set To Merge MDAs, Slash Personnel Cost, Says Finance Minister

     

    The Federal Government is set to merge some of its ministries, departments and agencies and cut personnel cost as part of measures to reduce cost of governance.

     

    Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, gave the hint on Tuesday at the ongoing ‘National Policy Dialogue on Corruption and Cost of Governance in Nigeria’ held in Abuja.

     

    It was organised by the Independent Corrupt Practice Commission (ICPC).

     

    The minister said the FG would also remove some items from the budget in order to reduce government’s expenditure.

     

    She said that the measure had become imperative because “we still see government’s expenditure increase to a terrain twice higher than our revenue.

     

    “We need to work together, all agencies of the government to cut down our cost. We need to cut down unnecessary expenditure; expenditure that we can do without.

     

    “Our budgets are filled year in year out with projects that we see over and over again and also projects that are not necessary. “Mr President has directed that the salaries committee that I chair, work together with the Head of Service and other members of the committee to review the government payroll in terms of stepping down on cost.”

     

    She also said government agencies with the same mandate would be merged.

     

    The Steve Oronsaye Committee on restructuring of government MDAs submitted its report many years ago but had not been implemented due to lack of political will.

     

    Chairman of the ICPC, Mr Bolaji Owasanoye, identified the cost of governance as a major “driver of corruption in Nigeria”.

     

    He said that “payroll padding” and the “phenomenon of ghost workers” were clear cases of corruption and bloated personnel cost of the MDAs.

  • FG Says N30,000 Minimum Wage Binding On All Employers

    FG Says N30,000 Minimum Wage Binding On All Employers

     

    The Federal Government has said the N30,000 national minimum wage is binding on all employers of labour, including state governments and the private sector.

     

     

    President Muhammadu Buhari stated this on Saturday in Abuja during the Workers’ Day celebrations.

     

    He spoke through Minister of Labour and Employment, Senator Chris Ngige, stressing that the minimum wage law signed in 2019 was a national law that everyone must obey.

     

    Buhari said, “Private sector and state governors are bound by the laws, because we have workers as prescribed in that law. So, it is not a question of pick and choose. We moved the national minimum wage from N18, 000 per month to N30,000. It is an irreducible plus. Therefore, we expect them and the people in the private sector to comply.”

     

    He also told the workers that the FG was against any attempt to remove the national minimum wage from the exclusive list, adding that the issue of pension minimum wage was backed by the constitution, and every employer was bound by it. The FG, he said, would pay all minimum wage arrears owed pensioners from 2019 to date.

     

    “All pensioners in the federal civil service are to get their arrears paid beginning from May 1, 2021,” Buhari said.

     

    He noted that although the negative effects of the COVID-19 pandemic were monumental, the government had tried to cushion the effects of the disease without reducing incomes.

     

    This was made possible, he said, through the diversification of the economy, thus keeping the country afloat.

     

    Buhari listed some of policies being executed by his administration to create jobs and empower the populace.

     

    He said, “While awaiting the formalisation of our social protection network and people’s welfare, we have not and will not rest on our oars in combating the challenges of our time occasioned by COVID-19 pandemic.

     

    “We have in our place some social-economic policies to alleviate poverty and ours include but not limited to the expansion of the Conditional Cash Transfers for the vulnerable poor from 2.6 million households (13 million persons) to 7.6 million households (32 million) and COVID-19 Rapid Response Register for urban poor, which now has 4.8 million households (20 million).”

     

    The president said the government, through the Federal Ministry of Trade and Investment, was implementing the Entrepreneur Support Programme, Artisanal Support Fund, and Payroll Support Fund for small-scale businesses.

     

    In a message jointly signed by the President of NLC, Ayuba Wabba, and President of TUC, Quadiri Olaleye, the leadership of organised labour lamented the poor conditions Nigerian workers had been subjected to.

     

    They alleged countless violations of human, workers, workplace and trade union rights all over Nigeria in the last one year.

     

    They said the situation was compounded by the health and socio-economic effects of the COVID-19 pandemic, which led to the loss of millions of jobs and subsequently pushed about 27 million Nigerians into poverty.

     

    Wabba said this year’s May Day was dedicated to brave women and men, who paid the supreme price in the performance of their jobs, contracted the coronavirus, and suffered life-lasting complications as a result.

     

    “We must say that our country has not made the desired progress in protecting workers and the Nigerian people from the impact of COVID-19, which has brought with it daunting challenges for Decent Work, Social Inclusion cum Protection and Distress on peoples’ welfare,” he stated.

     

    Wabba added, “Despite the best efforts of government, organised labour, and private sector employers, millions of Nigerian workers have lost their jobs, their means of livelihood and have slipped into destitution, lack and misery. The weakness of our social protection system has aggravated the pain and frustration of our compatriots.”

     

    Olaleye said labour was proffering alternative policy options to government to consider in order to save the country from the current difficult situation.

     

    He said rather than help businesses to grow, agencies of government had been stifling the small-scale businesses through multiple taxation, leaving the economy and Nigerians strangulated and impoverished.

     

    The TUC president said government should see the need for expansionist policies to restore the essential role of the state in the protection of essential public goods, notably health, education, jobs, and sound management of the petroleum and power sectors.

     

    On the removal of petrol subsidy, Olaleye said organised labour was pushing for production cost and pricing method as against the existing import-parity model, which had bled Nigeria of humungous forex.

     

    He urged the government to implement a three-year suspension of increase in gas price to help stabilise the cost of electricity tariff in the country.

     

    “With the savings made, the cost of the electricity tariff could be reduced by N10.50 across the high price bands,” he said.

     

    Representative of the Senate President, and Chairman, Senate Committee on Labour, Senator Godiya Akwashiki, said the National Assembly was always willing to partner the leadership of the workers in safeguarding the wellbeing of workers and ensuring industrial stability.

     

    Secretary to the Government of the Federation, Boss Mustapha, commended Nigerian workers for standing with the FG during the challenging period of the outbreak of COVID-19.