The Nation Newspaper

Tag: Abraham Nwankwo

  • $29.9bn loan not a trap, says DMO

    $29.9bn loan not a trap, says DMO

    The federal government has denied claims that the $29.9 billion loan it plans to access is a trap.
    Director General of Debt Management Office (DMO), Dr Abraham Nwankwo dismissed the claims that the planned borrowing was an attempt to trap Nigeria in a web of indebtedness.
    ” The first thing to note is that this borrowing is normal. Normal in the sense that over the past 20 years there is no year we have not borrowed, so interpreting the proposal submitted to the National Assembly by Mr President for a three year borrowing programme to be an indirect way of trapping the country does not seem to be logical because Nigeria has always borrowed every year.”

    “Every year there is a budget and if you check the budgets many years back you will see that we have been borrowing both external and domestic so there is nothing new about this. Let me also emphasize that since we exited from the Paris and London club debt in 2005-2006 we have always borrowed almost from all these sources we want to borrow from now.”

  • Ecobank wants court to jail DMO boss

    Ecobank wants court to jail DMO boss

    A Federal High Court in Lagos has been urged to commit the Director General, Debt Management Office (DMO), Abraham Nwankwo, to prison for contempt of court.

    DMO is the federal government agency saddled with the responsibility of processing fuel subsidy claims by oil marketers, as well as the issuance of sovereign debt notes.

    Ecobank Nigeria Limited made the appeal before Justice Mohammed Yunusa after accusing the DMO of frustrating its effort to recover debts from an oil firm, First Deepwater Discovery Limited (FDDL).

    Justice Yunusa had in a ruling on February 25, directed that the DMO should transfer the outstanding fuel subsidy sum due FDDL into the company’s account with the Ecobank.

    The bank had alleged that the oil firm has a cumulative subsidy claim of about N1.8 billion with DMO, with N845 million due for payment, prompting Justice Yunusa to rule that the agency should transfer with dispatch, the said sum into the defendant’s account with Ecobank, in order to offset part of FDDL indebtedness to the bank.

    The judge ordered that the DMO should “communicate the PEF/Admin Charges on the balance sum of N1, 020, 451,733.22 to the plaintiff/applicant via the receiver/manager and to pay forthwith, remit or otherwise transfer the entire sum to the first defendant’s account with the plaintiff/applicant.”

    But addressing the court on Tuesday, the bank through its lawyer, Kunle Ogunba (SAN), also prayed that one Umaru Abubakar, who is the DMO’s officer in charge of processing fuel subsidy claims by oil marketers, be jailed for contempt.

    It claimed that despite being served through the agency’s principal officers on February 27, DMO is yet to take the necessary steps to transfer the said funds, thus, frustrating the bank’s effort at recovering its customers’ money allegedly held by FDDL.

  • The great bond bazaar?

    It must feel rather obtuse for Hardball to go into the arcane terrain of high finance and securities on the back page of a newspaper. That may be true but trouble not; a bond is just a fancy word for debt; it is a written obligation to pay a sum on a due date. It is a paper; a contract note also called security issued by a government or a company when it borrows money. Bond is a certificate that is issued a creditor when money is borrowed. If you still don’t get it, let us illustrate further: when a company issues bond, it is simply borrowing money from those holding the bond.

    And Hardball is drawn to this rather ‘unromantic’ topic when it was revealed recently that 19 firms have issued bond worth about N225 billion in Nigeria in the last eight years. In other word, these 19 Nigerian companies have borrowed the above sum from the (bond) market. Noteworthy is that these companies have borrowed from both the local and foreign markets. Mr. Abraham Nwankwo, director-general of the Debt Management Office (DMO), who revealed this was actually elated that for the first time in Nigeria’s history, the private sector had been able to access long-term funds from both the domestic and foreign capital markets.

    But there lies our point of divergence: Hardball is not as enthusiastic as Mr. Nwankwo on this matter. Yes, it is good to secure long-term loans at low interest rates. This of course is the best recipe for rapid growth and development in a country. But that only applies to countries populated by decent people who are patriotic and care if their country is developed. But Hardball, being wise to the fact that loans in Nigeria are often diverted to personal pockets or deployed to everything else but what they were meant for, cannot help but be skeptical and indeed upbraid Mr. Nwankwo to get sober lest he be celebrating a phantom.

    A good example to learn from is the state governments (read governors) who have found in the capital market, a honey pot for scooping cheap money. It is a known fact that most states have issued bonds for specific projects which were never executed. The funds end up in the pockets of politicians. Thus instead of bond issue helping a state grow it ends up putting them in bondage. Back to the 19 firms, it seems like a bazaar as some as notable on the list are firms that had been run aground and are mere shells because of fraudulent managers and yet some that had been long embroiled in serious graft issues. For instance, the Federal Mortgage Bank of Nigeria, whose current status is hoary and is never known to give account, is recorded to have carted away N30.56 billion.

    Hardball wagers that Nwankwo knows all about this yet he is so happy that Nigerian firms have been enabled to raise cheap funds. Funds for what: to mismanage; to fritter away and even embezzle? What does Nwankwo have to say about the monitoring and regulatory environment? Why is it that nobody seems to care whether the funds are deployed for the purposes they were borrowed? For some of these companies, money was never their problem but poor management. Is this a bazaar of sort?

     

     

  • DMO chief defends Nigeria’s $66b debts

    DMO chief defends Nigeria’s $66b debts

    There is no need to worry about Nigeria’s over $66 billion (over N10 trillion) debts, the Debt Management Office (DMO) has said.

    The money was well invested, DMO Director General Dr. Abraham Nwankwo said.

    Nwankwo spoke at an interactive session with Finance reporters in Abuja.

    He said: “Our total domestic debt for the Federal Government, states and the FCT is about N8.9 trillion (about $48 billion) and the external debt is about $9.38 billion. If you combine the two in one currency, you will find the debt to GDP ratio is about 12.51 per cent, which is much lower than the 26 per cent debt to GDP that is allowed countries in our peer group.”

    The states’ and the FCT’s portion of the domestic debt is about $10 billion (about N1.151 trillion), excluding the external component which stands at a little above $3billion.

    In Nwankwo’s view, one key achievement of the DMO is the development of longer tenor instrument of between two to 20 years in the debt market, which has paved the way for 23 Nigerian companies in the last five years to raise locally N223 billion through the issuance of bonds.

    “This is a development, which was unthinkable before now where only short term instruments of three months and one year were prevalent,” he said.

    Anti-borrowing advocates may have to push their case further. Nwankwo said the government would not shy away from aggressive borrowing, but will allow the private sector to take over in raising cheap funds for the development of the manufacturing, agriculture and other vital sectors while the government will just be a regulator.

    The DMO plans to focus on encouraging the private sector to take the front seat “in raising funds for development both locally and internationally to finance most of the projects that the government undertakes and the government would not be tempted to borrow more in view of its current low Debt to GDP ratio as a result of the recently rebased Nigerian economy”.

    On the nature of the nation’s debt profile, the DMO boss said part of the Federal Government’s portion, about $1.5 billion raised from the international debt market (the Eurobond) is being invested in the power sector to improve the power.

    “The funds is also financing the Nigerian Bulk Electricity Bulk Trader (NBET) and for the Nigeria Gas to power project,” Nwankwo said, adding: “Part of the monies borrowed was used for the dualisation of the Abuja International Airport Road in Abuja ; the dualisation of the Zuba – Anuja Expressway ; the opening of new districts in the Federal Capital Territory and the investment for the upgrade of the cotton industry. There are so many other projects with which these monies have been deployed across the country and they are there for people to see.”

    On the international debt market, Nwankwo said Nigeria’s issuance of a Sovereign bond paved the way for nine Nigerian firms to issue bonds at the international debt market, raising $3.4 billion “because Nigeria was already benchmarked and the firms didn’t have to raise the funds at very high cost”.