The Nation Newspaper

Tag: DEBT

  • $5.5b loan: Debt service cost to rise above 62%, says RenCap

    $5.5b loan: Debt service cost to rise above 62%, says RenCap

    The Federal Government’s plan to borrow $5.5 billion through Eurobonds will raise the country’s debt service to revenue cost beyond 62 per cent, Sub-Saharan Africa Economist at Renaissance Capital (RenCap) Yvonne Mhango has predicted.

    The investment and research firm analyst said the debt service/revenue stood at 29 per cent in 2014 fiscal year, even as plans to raise additional fund in the near term imply debt service costs will rise further, albeit at a slower rate.

    In a report released to investors yesterday, titled: Nigeria: Fiscal operations in Seven-month – Capital Expenditure-Light and Debt Service-heavy, she said capital releases for the 2016 budget continued into the first quarter of this year, while public debt has increased by seven percentage points of Gross Domestic Product (GDP) since 2014.

    On the debt service/revenue, she said: “Nigeria’s debt service/revenue has risen sharply in recent years to 62 per cent as at June 2017, against 29 per cent level in 2014. This largely reflects the Federal Government’s low revenue/GDP target of four per cent this year. The Federal Government plans a $5.5 billion Eurobond issuance before year-end, 2017 as part of its efforts to lower local interest rates, by reducing domestic debt/total public debt to 60 per cent, against the over 70 per cent today”.

    Mhango said budget performance in the first seven months of this year and debt developments showed there were no capital releases for the 2017 budget, because it was passed late. She said the Federal Government’s 2017 budget of N7.4 trillion was 6.2 per cent of GDP, and was signed by the executive, after being passed by the Senate in May.

    Of this, N3.1 trillion (2.5 per cent of GDP) was spent in seven months. “Expenditure in seven month was 30 per cent below the (pro-rata) target and was entirely made up of recurrent spending. There were no capital releases from the budget because of its late approval.” she said.

    Mhango said revenue came in on target, at N2.6 trillion (2.1 per cent of GDP) because of a one-off refund from the Paris Club. “When this is stripped out, there was a 20 per cent shortfall in revenue. Below-target spending – due to delayed capital releases – explains the small budget deficit for seven month of 0.8 per cent of GDP, by our estimate, as against the 1.5 per cent (pro-rata) target,” she said.

    She disclosed that the federation account revenue was one-third below target, and that three-quarters of the FGN’s planned revenue for this year is expected to come from the Federation Account, of which two-thirds will stem from oil revenue.

  • Fidelity Bank seals $255.5m debt buyback today

    Fidelity Bank seals $255.5m debt buyback today

    Fidelity Bank Plc will today pay out about $258.06 million to settle a $255.5 million debt buy back after the commercial bank successfully recalled more than 85 per cent of its outstanding $300 million notes due in May 2018 for early redemption.

    According to a schedule by the bank, it will today pay $1,010 for every $1,000 of the notes in payment for the principal amount and accrued interest.

    Fidelity Bank had on September 28 floated a combined tender offer for early redemption of the $300 million 6.875 per cent Notes due May 9, 2018 and an offering for a new $500 million Eurobond. Application list for the tender offer closed last Wednesday, October 11, 2017.

    According to the bank, a total of $255.5 million was validly tendered during the period and it has picked up all the notes validly tendered.

    Fidelity Bank had simultaneously launched a $500 million senior unsecured medium term debt notes. The bank intends to list the new notes on the Irish Stock Exchange where they are expected to be traded on the regulated market.

    Its Managing Director,  Mr Nnamdi Okonkwo, said the bank would net proceeds from the $500 million Eurobond to finance the tender offer of the $300 million notes while the balance would be used for its general banking purposes.

    He said after settling the tender offer, the bank will pay the remaining net proceeds of the $500 million Eurobond into its foreign currency domiciliary account, which may be retained in foeign currency or converted to naira, depending on the bank’s requirement from time to time.

  • Deconstructing the debt story

    Deconstructing the debt story

    Minister of Finance Mrs. Kemi Adeosun, in this piece, puts the debt question in proper perspective. 

    National debt is an emotive issue as well as an economic one. The thought of saddling future generations with unserviceable debt, is not conscionable and certainly not part of the President Muhammadu Buhari-led-administration’s agenda. It is therefore, worthy of an intervention on my part to explain the history, the short-term strategy and the medium to long term outlook for our economy.

    It bears repeating that anyone who thought that the Nigerian economy we inherited in 2015 was in need of minor adjustment was sadly deluded. Oil prices had plunged from a height of over US$120 to a low of US$28 per barrel yet, the country had foreign exchange reserves of US$28.34 billion (having declined by US$16 billion in the two years to June 2015 from a high of US$44.95 billion). Despite just 10% of the budget allocated to capital expenditure, debt had (in a period of unprecedented oil earnings), inexplicably risen from N7.9 trillion in June 2013 to N12.1 trillion in June 2015. Depending on the candour of the commentator, the outlook was at best, ‘challenging’ and at worst, ‘bleak’.

    However, this administration set to work, with a vision, not just to return Nigeria to a stable economic footing, but to deliver a fundamental structural change to the economy that would reduce our exposure to crude oil. We approached this with a number of binding constraints that must be understood. One of these was that mass public sector retrenchments to create room for capital spending was not an option. Politically, it offended the principles of the All Progressive Congress (“APC”) and economically, it would worsen an already precarious economic situation and cause untold hardship. In light of this, an expansionary fiscal policy was adopted with an enlarged budget which would be funded in the short term, by borrowing.

    As the economy recovered and returned to growth, borrowings would be systematically replaced by revenue, which is the fundamental missing piece in Nigeria’s economic jigsaw. This does not mean that we would ignore waste, which has been a core focus of our efforts. Through the implementation of the Efficiency Unit and enrolment of Ministries, Departments and Agencies (“MDAs”) on Integrated Payroll and Personnel Information System (“IPPIS”), we have successfully saved N206 billion in payroll costs using technology to drive the cleansing process, with the removal of 54,000 fraudulent or erroneous entries. This was attained without the negative social impact of retrenchment.

    As we put our plans together, our economic modelling team correctly forecast that in the short term, there would be an acceleration in the accumulation of debt and an increase in debt servicing costs. However, this would be ameliorated, by correcting the low tax to Gross Domestic Product (GDP) ratio through revenue mobilisation, releasing funds to sustain investment in capital and repaying the debt. Mobilising revenue aggressively is not advisable, nor indeed possible, in a recessed economy but as Nigeria now reverts to growth, our revenue strategy will be accelerated.  This is being complimented by a medium-term debt strategy that is focusing more on external borrowings to avoid crowding out the private sector. This would also reduce the cost of debt servicing and shift the balance of our debt portfolio from short term to longer term instruments.

    The subject of inherited debt must also be drawn firmly into the mainstream of this discourse. Analysts will recall that in July 2017, Federal Executive Council (“FEC”), approved that N2.7 trillion of hidden liabilities would need to be addressed. These obligations include salaries, pensions, oil importation, energy bills and contractor payments, some of which date back to 2006.  It is instructive to note that the recent Academic Staff Union of Universities (“ASUU”) strike, that crippled our tertiary institutions, is one of many examples of commitments made by previous administrations that were saddled on this team. ASUU’s dispute relates to an agreement reached with the Federal Government in 2013 (when oil prices fluctuated between US$102 and US$116 per barrel), which was not honoured. On a daily basis, previously undisclosed obligations are uncovered. The most recent of which relates to oil importation in 2014 and is currently being dimensioned – unpaid and secured by a hitherto undisclosed sovereign note. All of this, while declared public debt was increasing by N5 trillion in two years despite records highs in revenues (in relative terms) from oil sales.

    This Administration believes that Nigerians have a right to the truth. The figures recently released by the Debt Management Office (“DMO”) and much debated indicates that while total public debt in Dollar terms has remained relatively stable since 2015, our debt, when denominated in Naira, has increased from N12.1 trillion to N19.6 trillion. However, this belies the impact of the recent devaluation of the Naira on the external obligations we inherited, which accounted for N1.63 trillion of this increase. Also, to be considered, is the effect of the compounding of debt service on the inherited domestic debt, which was largely short dated. The administration has always been transparent and the reward for transparency should not be consternation but rather, patient and informed analysis. Nigeria’s debt to GDP currently stands at 17.76% and compares favourably to all its peers.

    This administration will continue to pursue a prudent debt strategy, tied to gross capital formation.  This will be attained by driving capital expenditure in our ailing infrastructure which will in turn, unlock productivity and create the much-needed jobs. We accept that in the short term, there will be dislocations as our revenue efforts will by definition, lag both our expenditure and debt obligations, creating a fiscal deficit. This will be particularly pronounced in the preliminary years of pursuing this strategy however, the dislocation will be mitigated by the nation’s response to the revenue effort. No economy, anywhere in the world, can deliver sustainable long-term growth, without volatility if tax revenue is at 6% of GDP. This must be addressed. It is not optional and the true risk to future generations of Nigerian’s is that they grow up in an environment where tax avoidance or evasion is viewed as acceptable. We are already seeing some performance improvement in our non-oil revenues. Particularly, year to date performance of Customs Revenue, Value Added Tax (“VAT”) and Companies Income Tax (“CIT”), is 19% (N408.06 from N342.79 billion), 18% (N634.89 from N539.46 billion) and 11% (N838.45 from N757.40 billion)  higher respectively, when compared to the same period in 2016.  This does not mean that we have succeeded. Revenue remains considerably short of our ambitions and must be increased exponentially over the coming years but it is a sign that it can be done.

    It must be recalled that the President Muhammadu Buhari-led-administration has expended more on capital projects than any previous one, despite tight fiscal conditions. Our focus on capital is important as it will underpin our medium and long term needs so the impact may not be immediately felt. But there are early and encouraging signs; major construction will resume on twenty-five roads across the key road networks/sections (A1-A4), which cuts across the 6 geopolitical zones, following the successful raising of over N100bn under the Sukuk debt issuance programme. Our capital releases to Power, Works & Housing in 2016  is estimated to have created 193,469 jobs, with 40,429 being direct jobs and 153,040 indirect jobs. The many thousands of staff of some of our major contractors, who had been furloughed since their last payment receipts in 2014,  will attest to the impact of Government Policy. In agriculture, our policies on rice and fertiliser have seen the resurrection of many rice mills and blending plants and have created a new value chain in industries that were previously import driven with over 300,000 farmers fully engaged.

    It must also be recalled that this administration is working harder on revenue generation than ever before. Blocking leakages, demanding efficiency and even breaching previous ‘no-go’ areas like tax compliance for our higher earners – there are no sacred cows. All these efforts are aimed at ensuring that Nigeria has an economy that distributes wealth and opportunity fairly among her citizens. This commitment to equity should equally provide assurance that we will never burden future generations with the responsibility for paying for past mistakes, rather, we will bequeath a vibrant and reformed economy. We are resolutely convinced, based on empirical data that our collective efforts will deliver a Nigeria that works for all Nigerians and in all global economic conditions.

  • ‘Nigeria needs viable debt market for sustainable growth’

    nigeria needs to encourage the development of a robust and viable debt capital market in order to secure a sustainable domestic pool of capital that could support national growth and development.

    This was the consensus of stakeholders at the 2017 Nigerian Debt Capital Markets Conference & Awards organised by the FMDQ OTC Securities Exchange in Lagos. The event, which brought together subject matter experts with varying focuses and interests in the Nigerian and global financial markets space, provided a platform to deliberate on strategies and other pre-requisites needed to position the Nigerian debt capital markets to support sustainable economic growth and development.

    Vice President, Federal Republic of Nigeria, Professor Yemi Osinbajo, who was represented by the Director General, Debt Management Office, Ms. Pat Oniha said the government knows the importance of the debt capital market to its overall economic recovery and growth plan.

    He said the government would continue to support the development of the Nigerian capital market.

    He urged all stakeholders to support the Federal Government’s diversification efforts by showing greater commitment from the private sector to complement the government’s efforts especially in the area of infrastructure development.

    Minister of Finance, Mrs. Kemi Adeosun, who gave a special address, recognised the opportunities inherent in the debt capital market and assured the participants that the Federal Government was taking bold steps towards putting the necessary reforms to support private sector-led growth, even as the country exits recession.

    Director General, Securities and Exchange Commission (SEC), Mr. Mounir Gwarzo, underscored the growing relevance of the debt capital market to the much-desired turnaround of the Nigerian economy.

    Gwarzo, who was represented by Director, Investment Management, SEC, Ms Mary Uduk, provided an overview of the recent milestones achieved in the Nigerian debt capital market.

    He pointed out that the Nigerian Economic Recovery and Growth Plan underscores the role of the private sector in leading the growth that Nigeria desires.

    “To sustainably develop Nigeria, reliance must be shifted from ‘owners’ capital’ and short-term funding from commercial banks to long-term capital from the debt capital market,” Gwarzo said.

    Vice President and Treasurer, International Finance Corporation (IFC), Mr. Jingdong Hua, noted that for Africa to meet and maximise its potential in the global financial markets space, Nigeria must be one of its greatest engines.

    He called on the government to create an enabling environment to support the debt capital market and also promote financial markets education for capacity building of market participants, and the general public.

  • Watch the debt!

    Watch the debt!

    •Inevitable as this may be, the government must be careful all the same

    With the latest report from the National Bureau of Statistics, (NBS), showing a quantum leap in foreign and domestic debts in the first six months of the year, Nigerians’ anxieties about an imminent return to debt peonage would appear not entirely misplaced.

    According to the NBS report, whereas the domestic component of the nation’s debt rose marginally from N14.02 trillion in December 2016 to N14.06 trillion in June, the stock of foreign debt jumped from $11.41 to $15.05 billion during the same period – a growth of N0.04 trillion and $3.64 billion, respectively.

    Of the foreign debt component, the Federal Government’s share accounts for 74 per cent while the states and the Federal Capital Territory, (FCT) share the balance of 26 per cent. For domestic debts, the Federal Government again takes the lion’s share of 78.66 per cent while the states and the FCT account for 21.34 percent.

    Merely from the ugly experiences of the London and Paris Club debts which the country exited in 2005/6, it would seem that the best of arguments for the current hunger for international finance to jumpstart the economy have clearly not erased doubts about the wisdom of going that route again. Nigerians have surely not forgotten that the country had to shell out $12 billion – funds that could have been deployed to modernise the nation’s infrastructure – in final payments to exit the creditor cartel. Or the fact that a good number of the projects for which the humongous loans were obtained, never saw the light of the day. Or still, that a sizable chunk of the funds was stolen outright by officials. None of these however, would seem to compare with repayment terms so unabashedly skewed against the borrower – terms which, no thanks to the countless in-built penalty clauses, ensured that interests and penalties not only exceeded the principal sum borrowed, but left the original sum still intact – in what became the making of odious debts in the global finance literature!

    Latest anxieties about the debt trajectory are therefore not without basis. Nigerians after all, could not have bargained for a situation in which she would escape from the clutches of a club of debtors only to sink into another cycle of peonage in just a little over a decade.  Like the absolute figures, in 2014 Nigeria’s debt to GDP ratio was 14.20%, it surged to 15.86% in 2015 and 21.38% in 2016. More troubling of course is the revenue-to-debt servicing-cost ratio which grew from 29% in 2014 to 38.2% in 2015 and 59 per cent in 2016.

    We must of course admit to the dire realities which make the resort to borrowing both necessary and compelling. First is the continuing swing in oil prices with their negative impact on revenues such that makes wholesale reliance on government revenue for big ticket projects problematic. Second, is the below par performance of revenue earning agencies of government coupled with rampant corruption across-the-board. The factors, taken together with the yawning infrastructure gap which the Integrated Infrastructure Master Plan (NIIMP) reckons would require at least $2 trillion over the next three decades to deliver – an amount far beyond what the revenue profile could support – obviously makes debts an attractive option.

    In any case, it is hard to see how the country can self-finance two of the Buhari administration’s priority projects – the railway modernisation expected to gulp US$6 billion and the US$5.792 billion (about N1.140 trillion) 3,050 megawatts Mambilla Hydro-Power projects under the current revenue profile without external funding.

    Even at that, it does not appear premature to caution the Buhari administration over the growing penchant to take more loans. Aside loans being the last resort, it bears restating that they must be tied to  specific infrastructure projects sorely needed to catalyse the economy. They must be taken on such terms that are competitive and favourable while also delivering value to citizens for every dollar taken.

    Considering ongoing revelations about huge unremitted sums by departments and agencies of government, there could be no better case for the government to look inwards to locate more of such idle funds to execute its naira denominated priority projects. That way, the government would have boosted its revenue while bringing down the revenue-to-debt servicing cost ratio to a more tolerable level.

  • Firm, contractors quarrel over unpaid N400m debt 

    Firm, contractors quarrel over unpaid N400m debt 

    •  •Spokesman: They should be patient, we’ll pay soon 

    Aggrieved contractors and Conoil Producing in Koluama community in Southern Ijaw Local Government Area of Bayelsa State are in a row over unpaid N400 million debt.

    The contractors have threatened to shut down operations, if the firm failed to pay them.

    The indigenous contractors, under the aegis of Conoil Ango Field Marine Spread Contractors, said the company had not paid them for about 10 months for the barges and tugboats they hired.

    The contractors, in a petition sent to the management of Conoil, said despite waiting from December 2016 to September 2017, the company is yet to pay them for their services and equipment.

    Those who signed the petition are Chief Amadein Moses; Belief Leghemo; Mathias Sam; Tibiebi Amadein; Lloyd Sese; Christian Omietimi; Amos Imelekedi; Levi Wilson; Francis O. Francis; and Boma Leghemo.

    They claimed the debt is causing crisis in the community, adding that they can no longer contain the anger of indigenes.

    The petition was also sent to J.T.C. Leghemo, a traditional ruler; chairman of Oil and Gas in Koluama clan; 16 Brigade Commander in Yenagoa, Bayelsa; and the commander Gunboat in Bayelsa.

    It said:  ’’This is to bring to your notice again that the marine spread payment has taken too long and that we plead with you to please, effect our payment without delay. We have been waiting for almost 10 months.

    ‘’We, the indigenous marine equipment contractors, have resolved that if we do not receive any reasonable months’ payment this week, we will have no other option but to prevent your flowstation equipment or materials from entering our locality, Koluama, to your site.

    ‘’This is not a threat but it is a task that must be done, we have run out of patience. If you like, you can kill us with state apparatus, we are ready to die.’’

    Speaking on the development, the Contractors’ Coordinator, Chief Amadein Moses, said their patience had been overstretched, urging Conoil to do the needful to prevent problems.

    Conoil’s Public Affairs Manager Mr. Richard Edegbeai admitted  that the company is owing the contractors.

    But he appealed to them to exercise patience, saying the company was making efforts to pay.

    He criticised them for going to the media, adding that when they were promptly paid, nobody heard about it.

    Edegbeai said: “The ones they have collected before, did they go to the media houses to report that Conoil was paying them promptly? I do not understand them. If you are doing contracts, and for one reason or the other, there is delay in payment, they should understand.

    ‘’When it was good, nobody heard. They did not go to any place to report. Yes, it is true we are owing them and we are processing the money. A cheque of N200 million was to be given to them last Friday, but somehow, the cheque did not come on time.

    ‘’Why are they going all over the place, complaining? What about other contractors that we are also owing? There is no country that is not owing. Even America is owing. So, they should be patient.

    ‘’And because they are a community, they forced these marine spreads contract on us. Some of the barges we are not using, but we pay for them just because we want to upgrade.

    ‘’So, they should be patient. If they do not want to be patient, they know the best place to go, that is the court. And the moment they go to court, what it means is that they have frustrated the contract. I think patience is the keyword. By the grace of God, they will get their money soon.’’

  • Mimiko, Akeredolu differ on N220b Ondo debt profile

    Former Ondo State Governor Olusegun Mimiko has said his administration did not leave N220 billion debt for the Oluwarotimi Akeredolu administration.

    Mimiko was reacting yesterday to the allegation by his successor that it inherited N220 billion debt from the last administration, but he insisted that the last administration left over N20 billion in the state’s coffers.

    Akeredolu spoke on Wednesday in Akure, the state capital, at the swearing-in of new commissioners.

    The governor said Mimiko’s government embarked on frivolous projects and took loans from various financial institutions.

    But in a statement yesterday by his former Information Commissioner Kayode Akinmade, the former gov3ernor said Akeredolu’s claim was not true.

    He said the present administration had admitted meeting over N20 billion in government’s coffers.

    Mimiko said: “We left N20 billion, including N7.37 billion in the Current Account, N7.53 billion as Fixed Deposit, N1.2 billion in the MDG Account, $346,000 and 443,000 Euros in the Domiciliary Account, including the N825 million Subsidy Reinvestment and Empowerment Programme (SURE-P) fund in the Local Government Account.”

    According to him, the above amount, most of which came during his tenure, was to be used to offset a chunk of a backlog of salaries before the then Accountant General disappeared.

    The statement added: “On figures listed as External Debt, it is necessary to state the following. Our administration did not incur any foreign debt in all its eight years. Also, the External Debt stock as at February 2017 was US49,958,268.49, which (if translated at 1 US $ = N305) is N15.23 billion. All of these external debt stock was inherited from previous administrations.

    “Again, we did not contract any external loan for all of our eight years. Well aware of the fact that government is a continuum, we continued to service the debts, some of which spanned over 20 years.

    “Internal debt profile, we aver, stood at N53.159 billion comprising mainly of salary bail out loan of N13.76 billion, Excess Crude Account loan N9.79 billion, CBN restructuring FGN Bond N4.13 billion, CBN budget support N7.5 billion and Ondo State seven years’ bond of N17.6 billion.

    “Of all the above listed indebtedness, only the Ondo State seven years’ bond was directly incurred by our government to build major infrastructure across the state.

    “Yes, we experienced the sad reality of salary arrears, like almost all the states of the federation. That is why unpaid salaries for the period of August 2016 to January 2017 was N32.40 billion, with N20.93 billion owed state government workers and N11.469 billion owed local government workers, including political appointees.

    “Even at that, it must also be clear that we left office on February 24 (2017) while Federal allocation for February salaries was received by the incumbent government on February 28. We could not have paid February salary when we did not receive February allocation before exit.

    “On pensions, N4.8 billion was said to be owed by the state government and N25.237 billion by the local governments. We wonder where these figures came from. At inception, our administration paid N1.5 billion out of outstanding pensions and gratuities. All the years of our administration, monthly obligations to pensioners were considered and paid as part of salaries.

    “The N32.40 billion salary arrears were, therefore, inclusive of obligations to pensioners, except gratuity, which is owed both at the state and local government levels.

    “While we note that gratuities are outstanding, we state for the benefit of all, that this is one sad development that was not peculiar to Ondo State alone. Almost all States of the federation have defaulted on gratuities in the last 10 years or more.

    “We urge the government and interested citizens of our state to avail themselves of the true state of our indebtedness from the Debt Management Office.”

  • NSCDC foils man’s bid to kill self over N50,000 debt

    NSCDC foils man’s bid to kill self over N50,000 debt

    Ogun State Command of the Nigeria Security and Civil Defence Corps(NSCDC) has arrested a man identified as Abiodun Onipede for attempting to kill himself following frustration from his inability to pay a debt of  N50,000 loaned to him by a credit facility outfit.
    The 34 years old Onipede and  father of five, was said to be  a former staff of Ogun Staye Traffic Compliance and  Agency (TRACE).
    It was learnt that he got the N50,000 as loan  and the pressure from the creditor on him to pay the debt, coupled with his inability to perform his responsibility as the head of the family forced to consider suicide an option.
    Onipede who was arrested by the Anti-Vandal unit of  the NSCDC while attempting to run rope on his neck which he had already fastened to a tree in the bush along Ayetoro road in Abeokuta, ostensibly to commit suicide.
    He was on the verge of hanging himself when  an Operative of the NSCDC’s anti – vandal unit who wanted to ease himself in the bush  stumbled on him and aborted the suicide bid.
    It was learnt that the Suspect, a commercial Tricyclist was a 200 level drop-out of Federal College of Education(FCE), Osiele due to financial difficulties.
     He was said to have lost one of his children due to  complication after a surgery performed on the child.
    Narrating his botched suicide bid to reporters, Onipede said: “due to the health problem of my child in 2008, I had  to drop out  so that I could  have some money to take care of my sick child. But, we later lost the child in 2009 because we were unable to pay some hospital bills after people have helped us in raising money for the surgery.
    “I was duped  by some people and they even threatened  me, and this made me to leave Abeokuta for Akwa-Ibom state. It was when I came back after a year that I discovered I have been sacked from the TRACE.
    “I am frustrated because am owing a lot of people ranging from house bill to  electricity bill, and some other bills. I am ashamed of myself because am not a responsible man, I cannot cater for my family as a head.
    “The Lapo officials  have used OPC to arrest my wife because of the money. Am just frustrated because I have to pay N3,000 every Friday and I am presently jobless. And I still have like N24,000 to balance  .
    “I cannot pay the hospital bill of my mother, I can’t take care of her, I was told she is now on the street begging to survive. No family to help me, we have been living in abject poverty.
    “What added to my conclusion to commit suicide was due to my inability to refund the ‘Lapo’ loan I collected when I wanted to start my tricycle business. The officials  of the Lapo have  been giving my family  tough times  for sometimes now, because, I cannot afford to be repaying N3,000 every Friday.
    “It was not my fault, am just a frustrated man that does not know what else to do. I wish to go back to school; I want the government to help me with a job that can cater for my family and other things that are important.”
    The Public Relations Officer of NSCDC, Ogbonnaya Dyke,  said the action of Onipede was a crime against the state.
    “Since the matter is under our Crisis management team, we have to swing into action to address the situation.
    “It is a crime against the state for someone to try to take his life. Necessary actions will be taken by the Corps in addressing the situation. He is going to be handed over to the police after our intelligence Unit has done its   proper works,” he said.

  • Total faults Akwa Ibom on N25b tax debt

    Management of Total Exploration and Production Limited (TEPNG) has faulted the government of Akwa Ibom State over the alleged unremitted tax amounting to N25 billion spanning 2011 to 2016.

    In a statement by the French oil giant in Nigeria, its External Relations Manager, Charles Ebereonwu, said: “The attention of Total E & P Nigeria Limited (TEPNG) has been drawn to stories in the media alleging that the company is indebted to the Akwa Ibom State Government to the tune of N25, 000,000,000:00 in unremitted Personal Income Tax for the period covering 2011 to 2016.

    “TEPNG hereby objects to the alleged tax liability on the following grounds: The Company does not have the record of employees being resident in Akwa Ibom State nor does it maintain any office or operational base in the State.

  • The Etisalat debt debacle

    The surreal tale surrounding a $1.2 billion (about N541billion) loan given to a foreign-owned private company by a consortium of 13 Nigerian banks is staggering.

    The syndicated loan was given to Etisalat Nigeria in which Emirate Telecommunications Group Company (Etisalat Group) of United Arab Emirate (UAE) has the controlling shares of 45 per cent; followed by Mubadala Development Company also of UAE, which has 40 per cent; and a third firm, which represents the entire Nigerian shareholders and has only15 per cent. Etisalat Group secured the seven-year facility some time in 2013 to refinance a $650 million loan and fund the network expansion of its outpost, Etisalat Nigeria. Like others before it, the contractual relationship has gone awry and the N541 billion debt has become a subject of controversy.

    Following its inability to repay since 2016 and the failure of restructuring talks, the Abu Dhabi-based parent company of Etisalat Nigeria cleverly latched on takeover threats by the lender banks to repudiate its legal obligations. It promptly transferred its 45 per cent stake and 25 per cent preferential shares to a loan trustee. To make it more insulting, the foreign firm declared that it has no further obligations under the contract as its stake now has a zero value in its books. All seven directors of Etisalat Nigeria – the six representing Etisalat Group and Mubadala, all UAE nationals; as well as the chairman, Hakeem Belo-Osagie – have resigned.  An orphaned Etisalat Nigeria is now making frantic efforts to have the loan written off as non-performing.

    The question which this sordid transaction raises is: should our banks be subsidising the so-called foreign investors with depositor’s money? And what benefit accrues to the nation from such economic decisions? This is more so as the mission of these foreign firms is not social service but to make profits which get repatriated to their home countries soon after. At the end of the day, their economies receive a boost, ours shrinks.  Their local currencies get further strengthened against the Naira, and Nigeria continues to lose respect among the comity of nations.

    A N541billion credit for a foreign company is by all standards outrageous; particularly in an ailing economy like ours. That the transaction has become controversial is calamitous. It reflects the poor business decisions that have helped to crumble our economy and plunge the nation into recession. The broad consequences of this debacle are far reaching. Among these are its negative impact on the balance sheet of the affected banks, the bleak prospects of dividends to shareholders, and the uncertain future of the employees of the banks. Of course, the worst hit in event of bank failures are those who took their monies to these financial institutions for safe keeping.

    Granted that banks are into the business of lending funds, but should they not devote depositors’ money to grow local firms?  Several industries owned by our country men and women are in crying need of finances but no financial institution in Nigeria looks their way.  Workers in these local firms are being retrenched daily in the face of recession inflicted on the country by such poor business decisions. Indeed, many local companies have closed shop for want of funds, further worsening our situation as an import-dependent nation with the attendant negative impact on economic indices.

    For failing to properly weigh the costs and benefits of this decision, the lending banks and the arrangers have now found themselves in a deep mess. They have realised they have been taken for an unpleasant ride. And that Etisalat Nigeria merely served as a conduit for the foreign firm to skim off depositors’ money as there is no proof that the fund was applied to the desired end. The banks are said to be seeking to enlist the support of the Economic and Financial Crimes Commission (EFCC) rather than considering how to get the International Police (Interpol) to investigate the trans-national crime. The Central Bank of Nigeria (CBN) also shares in the blame for failing to detect this rot early enough and nip it in the bud.

    Also difficult to fathom is, whether or not the loan to Etisalat Group was guaranteed. The lender banks should have insisted that such a huge credit be guaranteed by the government of UAE or that of Abu Dhabi State given their interests in the controversial firms. The UAE government owns 60 per cent of the shares of Etisalat Group while the rest were publicly traded.  Mubadala Development Company is an investment company of the Abu Dhabi State government. It is surprising that leaders of both UAE and Abu Dhabi State have done nothing to stop the management of these companies from defrauding Nigeria

    Our kith and kin out there in UAE are treated no better than criminals. They neither can own nor operate bank accounts following government’s fiat, let alone secure a bilateral loan. The excuse for precluding Nigerians from operating bank accounts there is the activities of a few unscrupulous elements.  But here, we literally shut down our banks to fund just one UAE company run by those that lack respect for a contract which they voluntarily entered. The N541 billion credit extended to Etisalat Group can set up well over 20 banks in Nigeria. The capital base of banks in Nigeria is still N25 billion.

    The Etisalat debt saga is only a microcosm of how foreign investors rip our nation off and leave our economy in distress. Rather than bring in the much sought after Foreign Direct Invest (FDI) to shore up the economy, the so-called foreign investors come with the intention of defrauding the country and exploiting its populace. They all arrive on the Nigerian scene with empty suitcases. Then, with the aid of a Nigerian arranger, who has a personal stake; they go cap in hand to our local banks asking for depositors’ money, which they readily get.

    The local deposit banks will hurriedly pool resources together to meet their outrageous demands as in the case of Etisalat. More often than not, the credit advanced to the foreign firms disappears without a trace. When the fund is applied here, the populace is exploited and the proceeds repatriated to the various home countries of the foreign investors.

    Indeed, this incident portrays the disservice the Nigerian financial institutions and CBN are doing to the country. These institutions have a penchant for turning foreign firms that are worth nothing in their respective countries into instant successes as soon as they step onto Nigerian soil using depositors’ funds. And with the billions of Naira or Dollars secured from the banks, juicy and inflated contracts get awarded to them by corrupt public officials entrusted with public procurements.

    Those dubbed celebrities fall over themselves to act as their ‘ambassadors’ or whatever they call them. The mass media will follow up and brand the companies ‘giants’. Most of the so-called telecoms giants, construction giants, and what have you were all pigmies before arriving here. They achieved greatness through local deposit banks and contracts in which due process is circumvented.  In turn, these foreign companies reward Nigeria by enslaving her people. Their contribution as corporate citizens of Nigeria does not go beyond turning the country into a nation of dancers, singers, and clowns through all manner of reality shows targeted at youths, who represent the future of our country.

    There is absolutely no reason those involved in this latest show of shame should not be arrested and tried for economic sabotage. The board and management of the 13 financial institutions as well as the arranger of the N541 billion credit   should be clamped into detention. In civilised societies, such characters will not be walking about as free men. They certainly will be in detention waiting to face the highest penalties for financial crime in the land.

    It is time Nigerian banking laws are strengthened to bring intellectual resources to bear in the management of these institutions. The credentials of those aspiring to run our banks or head certain departments of banks including Treasury, Foreign Exchange, Risk Management and Legal must meet internationally accepted standards to reverse the negative consequences of their decision on our economy. Otherwise, we will continue to grow other economies at our own peril.

     

    • Dr Nnadi, a former editor wrote from Owerri, Imo State.