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Tag: economic recovery

  • Naira to float in 3-year economic recovery plan

    Naira to float in 3-year economic recovery plan

    CBN pumps $100m into forex market

    •Review of ban on forex for 41 goods
    •15.74% inflation target to be achieved in 2017 and 12.42 in 2018
    •Better public/private sector efficiency
    •A knowledge-based economy
    •Privatisation of selected assets

    A market-driven exchange rate regime is in the works, going by the Federal Government’s economic plan released yesterday.
    There has been pressure that the naira should be allowed to float, its worth dictated by market forces.
    This, argue some experts, will attract investors. But the government insists that no country surrenders totally its currency to market forces, adding that it will intervene when necessary. It may have changed its mind.
    The government will also review and possibly remove the ban on foreign exchange for 41 goods and services, according to the Economic Recovery and Growth Plan (ERGP) 2017 to 2020, which was released by the Budget Ministry.
    Nigeria also sees 2017 inflation at 15.74 per cent, and at 12.42 per cent next year, the plan said. Inflation in January hit 18.7 per cent, its highest level in more than 11 years.
    The development of the plan went through a rigorous process, including wide consultations, and robust engagements with stakeholders from a range of relevant fields. They include economic experts from the public and private sectors, the academia, the Organised Private Sector, civil society groups, Organised Labour, sub-regional governments, international development partners (including the World Bank, International Monetary Fund and African Development Bank), the National Economic Council (NEC) and the National Assembly. The Plan has been approved by the Federal Executive Council.
    “The core vision of the plan is one of sustained inclusive growth. There is an urgent need as a nation to drive structural economic transformation with an emphasis on improving both public and private sector efficiency. The aim is to increase national productivity and achieve sustainable diversification of production, to significantly grow the economy and achieve maximum welfare for the citizens, beginning with food and energy security.
    The plan envisages that by 2020, Nigeria would have made significant progress towards achieving structural economic change with a more diversified and inclusive economy. Overall, the plan is expected to deliver on five key broad outcomes, namely, a stable macroeconomic environment, agricultural transformation and food security, sufficiency in energy (power and petroleum products), improved transportation infrastructure and industrialisation focusing on small and medium scale enterprises.
    Realising that the economy would remain on a path of decline if nothing was immediately done to change the trajectory, the Muhammadu Buhari administration, when it assumed office, embarked on strategic moves to halt the trend and redirect the course of the country’s economy and growth process.
    The process started with the development of the Strategic Implementation Plan (SIP) for the 2016 Budget of Change as a short-term intervention. The ERGP, a Medium Term Plan for 2017 to 2020, builds on the SIP and has been developed for the purpose of restoring economic growth while leveraging the ingenuity and resilience of the Nigerian people.
    The plan seeks to eliminate the bottlenecks that impede innovations and market based solutions, recognises the need to leverage Science, Technology and Innovation (STI) to build a knowledge-based economy, and is consistent with the aspirations of the United Nations Sustainable Development Goals (SDGs).
    The ERGP differs in several ways from previous strategies and plans as it is anchored on focused implementation, which is at the core of the delivery strategy over the next four years;  outlines bold initiatives, such as ramping up oil production to 2.5mbpd by 2020, privatising selected public enterprises/assets, and revamping local refineries to reduce petroleum product imports by 60 per cent by 2018 and  builds on existing sectoral plans such as the National Industrial Revolution Plan and the Nigeria Integrated Infrastructure Master-plan among others.
    The ceremonial presentation of the Plan will take place when President Buhari returns from vacation.
    Also yesterday, the CBN said it had injected fresh $100 million into the interbank foreign exchange market, bringing the total cash intervention into the market to ease difficulties in accessing foreign exchange.
    CBN’s Acting Director, Corporate Communications, Isaac Okorafor, said the ongoing funding of commercial banks was expected to meet the Personal travelling allowance (PTA), Business Travel Allowance (BTA), medicals and tuition fees for forex users.
    The new funding brings the amount so far pumped into the interbank forex market within the last two weeks to $1.14 million for both forwards and invisibles.
    Commending the development, a market analyst observed that it would further create problems for currency speculators who are yet to recover from the sudden appreciation of the naira.
    Former economic adviser to the President and Minister, National Planning Commission, Prof. Ode Ojowu, said:  ”It appears this time around, the CBN has decided to become smarter than the market manipulators, by putting on its cap of authority to look beneath the market forces.”
    The CBN had in February 2017 changed its forex rule supply to guarantee supply to both small and the big end-users. The policy has restored stability and bolstered market confidence which has ultimately boosted the value of the Naira.
    Analysts have also commended the efforts of the CBN in ensuring the continuous appreciation of the naira. This they attributed to good policy and effective communication strategy, which has witnessed increased dollar supply to the market.

  • Agric financing raises hope of economic recovery

    Agric financing raises hope of economic recovery

    The Central Bank of Nigeria (CBN) and commercial banks are beginning to pay attention to agric-based businesses through micro-credit funding. Head of Agribusiness Department at the Union Bank of Nigeria Plc Olabode Abikoye speaks on the need for increased funding for the sector and how it can be turned to a major foreign exchange earner. He also speaks on the commitment of Union Bank to funding smallholder farmers expected to help the government reduce food imports valued at about N1 trillion annually, COLLINS NWEZE reports.

    The agricultural sector has recorded impressive growth in recent years despite the decline in the Gross Domestic Product (GDP) thanks to funding from the Central Bank of Nigeria (CBN) through commercial banks, Head of Agriculture Department at the Union Bank of Nigeria Plc Olabode Abikoye has said.

    He said the  sector recorded positive growth of above four per cent last year despite the decline in the oil and non-oil sectors, saying the sector thrived in terms of the GDP due to the government’s economic diversification which brought more funding to the sector at a time contributions from the oil sector have nosedived.

    “The Nigerian economy is import-dependent with very little non-oil exports. It relies substantially on crude oil and gas exports with other sectors trailing far behind. The economy is, therefore, susceptible to shocks in the oil and gas industry. In recent times, these shocks have been caused by either developments in the international crude oil market or unease in the Niger Delta region. Despite the challenges in the macro environment, businesses are increasing investments in mechanised farming and other activities in the agric value chain, such as processing, storage, packaging, delivery and logistics,” he said.

    Abikoye said foreign investors and investment fund managers have also raised their investment plans for the sector.

    “The renewed focus of the Nigerian Government on reviving productivity in the agric sector also contributed to this growth. The new Agricultural Promotion Policy (APP), Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL) and other Agric-financing arrangement, have given farmers and businesses new impetus and opportunities for growth,” he stated.

    “Currently, Nigeria is rolling out ambitious reform programmes through the Ministry of Agriculture across its agricultural sector aimed at cutting the country’s dependency on food imports, creating jobs and generating growth. The reforms such as the move to privatise the procurement and distribution of fertiliser and seed have resulted in more private sector participation as well as increase in foreign direct investments, ”he added.

    Besides, the introduction of Agricultural Transformation Agenda (ATA) brought about reforms in the agricultural sector.  National food production grew and led to a sharp reduction in food imports. Also, direct farm jobs rose in the period due to ATA interventions.

    Other important point to mention here is that the government intends to reduce and eventually stop food importation. The cost of food importation is put at about N1 trillion annually.

    “Many private organisations have also diversified into the export market to earn foreign exchange following the prevailing scarcity of forex. Export of agro commodities is a low hanging fruit for prospective exporters and due to the opportunities presented by the devaluation of local currency, the sector witnessed new entrants which also accounted for part of the growth,” he stated.

    Abikoye said there was no evidence of improved forex liquidity, and the forex shortage still one of the key constraints on activities in Nigeria.

    He added that Union Bank is unrelenting in the provision of funding support and technical advisory services to Micro Small and Medium Scale Enterprises (MSMEs) and Commercial agribusiness projects.

    He said Union Bank’s active engagement in agro-commodities value chain financing is hinged on the fact that the benefits of agriculture is becoming more visible, and the sector has  huge potentials to become a major foreign exchange earner and help boost the nation’s revenue base. Across the country, our farmers, traders and transporters are seeing a shift in their fortunes. Nigerians who favoured imported products are now consuming made-in-Nigeria products.

    “If there is any time to take a serious look at financing the growth of the sector, even as the nation moves away from over dependence on oil, it is now. Our development partners – CBN, NIRSAL, NAIC have been supportive over the years as regards providing the enabling on-lending support for qualitative boost in Union Bank’s agribusiness risk assets portfolio. Our team possesses the requisite skills set to actively function in the specialised sector – in areas such as relevant trainings in agro-commodities value chain financing, technical appraisal of credit requests, project monitoring and evaluation, enabling us make risk-conscious and purposeful decisions,” he said.

    On projection for the agric sector within this year, Abikoye said that as the country aims to diversify, agriculture is expected to play a key role in growing the non-oil sector in the coming years.

    “The growing demand for food driven by a large population ensures the demand for agricultural produce remains high. However, policies over the medium and long term will influence the growth and development of the industry. However, there is need to deepen government intervention policies as well as increase public and private partnerships for investments in the sector to end food importation and encourage exportation.

    “Our small-and medium-scale businesses continue to face difficulties in accessing long term and more affordable credit. Most stakeholders are of the opinion that the criteria set to access the government intervention funds (loans either by the CBN or direct from the Federal Government) are seemingly unrealistic. The conditions are said to be too stringent for the consciously marginalised low-scale farmers, who constitute over 80 percent of the country’s farming population,” he suggested

    According to Abikoye, government also needs to address the issue of lack of land title documents by farmers. “The state governments must see reason to make land available to potential farmers for the purpose of achieving the goal of food security. A few suggestions on how we can create an enabling environment for agriculture to thrive  include improving farm storage facilities and improving infrastructure, increased investment to make the sector more attractive to young people, and increased funding intervention by the Federal Government and the CBN,” he said.

    He advised that to achieve self-sufficiency in food and other farm products, considerable work needs to be done across the various value chains. “In December 2016, Morocco and Nigeria signed an ambitious collaboration agreement to revive the abandoned Nigerian fertiliser blending plants. The agreement focuses on optimising local materials and only importing items that are not available locally. This programme has already commenced and it is expected that it will create thousands of jobs and save Nigeria $200 million of foreign exchange and over N60 billion in subsidy. An increase in such arrangements are required for the sector to progress.

    “The agriculture sector has huge potentials to become an alternative foreign exchange earner. However, the key issues remain unreliable power supply, export incentives, and access to finance. We must take advantage of current opportunities to export processed agricultural products and manufactured goods. Expansion of existing, as well as the development of new Export Processing and Special Economic Zones in partnership with the private sector is recommended,” he stated.

    Abikoye said that sustained decline in production levels, new orders and raw materials inventories are responsible for the decline in credit to agric sector in 2016 even as global growth remained uneven as the risks remain tilted to the downside.

    He attributed the decline to the fall in banks’ holding of government securities which had a negative bearing on domestic credit to private sector like financial resources provided to the private sector through loans, purchase of non-equity securities, trade credits and other account receivables that establish a claim for repayment.

    He believes that for the Nigerian economy to achieve greater growth in the future, the financial industry must be encouraged to serve the real sectors while corporate bodies should be encouraged with favorable government policies, to give agriculture the oxygen it needs to thrive by sourcing a greater percentage of raw materials utilised locally in the nearest future.

    “Apart from driving down costs for the manufacturers and ease, the pressure on the nation’s dwindling foreign reserves, local raw materials sourcing will also play an important role in creating employment opportunities, boost income levels and empower farmers along the agriculture value chain. Building strategic partnerships with banks, agricultural non-governmental organisations, donor agencies and research organisations and leveraging these partnerships to mitigate some of the challenges that currently affect the agro-commodities value chain will take the agricultural industry to the next level and meet the funding needs of the stakeholders,” he advised.

  • ‘SMEs crucial to accelerating economic recovery’

    Nigeria’s leading mobile payments company, Funds & Electronic Transfer Solutions Limited (fets) has said the Small, Medium Enterprises (SMEs) sector has crucial role to play as the Federal Government draws out broad startegies to put the economy on growth path.

    It said it has demonstrated its commitment to encourage and support local entrepreneurs in the SME sector in their quest to become global brands.

    Its Managing Director, Mrs. Omotade Odunowo stressed the importance of the SME sector to the development of the economy, adding that the firm remains passionate about the growth and development of the sector.

    Describing the sector as the backbone of any economy, she pointed out that one of the ways of aiding the growth of the sector is by identifying with the dreams and aspirations of local entrepreneurs to grow beyond their current state.

    As a demonstration of its commitment to the sector, she recalled that the firm recently sponsored one of Nigeria’s rising fashion brands, Orange Culture to the 2017 edition of the Fashion Scout, the international showcase for fashion pioneers. It is also the United Kingdom’s largest independent showcase for emerging and established design talent during the London Fashion Week.

    With the sponsorship, Orange Culture is the first African menswear brand ever to be invited by the organisers of the show.

    Orange Culture will have the opportunity to showcase its collection to the most respected fashion players including buyers from Harrods and Harvey Nichols.

    Mrs. Odunowo said the firm was proud to be associated with the Orange Culture brand, describing it as a future global brand that will do Nigerians proud in years to come. According to her, the sponsorship was just one of the strategies it has used to encourage local entrepreneurs.

    She said the firm has put a lot of effort in developing technologies and products that are designed to help them launch and manage their businesses, using its secure mobile payment solution.

    “At fets, we are continually looking for ways to encourage and empower Nigerian entrepreneurs to achieve their dreams of taking their businesses to the next level. This is what we hope to achieve with this sponsorship arrangement with Orange Culture; taking it beyond the shores of this country to become a truly global brand in the near future,” she said.

    The Chief Executive Officer, Orange Culture, Adebayo Oke-Lawal,  thanked fets for supporting his firm’s dreams of showcasing its designs at the Fashion Scout London Fashion Week AW17, describing it as one of the best things that has happened to the company.

    “I’m glad that we’ve been able to collaborate with a company that’s built on innovation and forward thinking-attributes that are in alignment with the brand Orange Culture,” he said.

  • Experts predict economic recovery in 2017

    Experts predict economic recovery in 2017

    Despite the prevailing harsh economic situation in the country, experts are optimistic that there are clear indices indicating economic recovery and growth in 2017.

    A research document packaged by a team of financial and economic experts at GTB and made available to The Nation attempted a prognosis of the challenges that bedeviled the economy these past months and offered plausible solutions aimed in their view at getting the country out of the doldrums.

    While x-raying performance in the outgone year, the experts noted that: “Despite the economic challenges, the business community found a way to stimulate economic activities albeit at a rather slow pace relative to the previous year. It is however believed that the non-implementation of full terms of the CBN flexible exchange rate policy brought about a multiplicity of exchange rates with tough consequences for all sectors of the economy rather than foster effective price discovery.

    “In view of the heightened regulatory oversight, we expect corporates to conduct their businesses within the ambit of law whilst displaying the highest level of professionalism and compliance to regulatory provisions. Should our first scenario play out, we expect to see an improvement in foreign exchange earnings with attendant impact on foreign exchange supply, business activities, and economic wellbeing. On the flipside, any further deterioration could lead to a worsening of the foreign exchange environment, a depression of business activities and protracted economic contraction.”

    On the exchange rate, they said, it is their considered opinion that a credible FX market is an important factor in building a thriving economy, we expect a full implementation of the terms of the flexible exchange rate policy, which will aid effective price discovery and eliminate multiplicity of rates.

    “The combination of such policies with an improvement in foreign exchange earnings will ultimately lead to a moderation of inflation, and narrowing of the gap between the official and parallel rates. Further delays can only create further fragmentation and escalate FX scarcity, with attendant consequences for the economy.”

    Expatiating, they said: “With productions costs driven primarily by exchange rate   concerns, we expect that an improvement in foreign exchange availability and stability, coupled with base effects will cause a further moderation in inflation.

    “A continued illiquidity of foreign exchange will however result in increased inflationary pressures on the economy. We believe that the present inflationary pressure is not entirely a monetary phenomenon and the use of monetary policy tools alone might be ineffective.

    “Consequently, we expect the government to commence the implementation of fiscal policies that will not only augment the monetary policies in place, but also spur productivity and encourage local production.”

    Concluding, the team said it was heartening to note that: “Despite the beating the Nigerian economy has taken in the last 24 months, one thing is still clear; the fundamentals of the economy, which includes the market size, population, enterprise competency of Nigerians, demographic, natural resources etc., are still very strong. In our opinion, the harmonisation and implementation of the right policies (both fiscal and monetary), that will optimise these fundamentals into stimulating economic activities and maximising productivity, appear to be the missing link.”

  • Buhari unveils economic recovery plan in December

    Buhari unveils economic recovery plan in December

    Insists on $29.9b loan in meeting with Saraki

    Following two days of brainstorming in Abuja, various teams drawn from the public and private sector have concluded work on various aspects of a new and comprehensive economic blueprint for Nigeria.

    Minister of Budget and National Planning, Senator Udo Udoma whose ministry organized the retreat stated that contrary to critics’ misleading opinion that the federal government lacks an economic programme, President Muhammadu Buhari had laid out one in his 2016 Budget speech.

    According to the minister, the president’s economic vision, the Strategic Implementation Plan drawn up by his ministry along with vibrant ideas canvassed or analysed at the retreat would be harmonised and launched as the federal government’s comprehensive economic development programme next month.

    “It is helpful to note that the National Economic Recovery and Growth Plan will play a signalling role, while also promoting coherence and coordination.

    “In other words, by putting government strategies, directions, policy priorities and intended initiatives in one place, other stakeholders are better able to take their own strategic economic decisions.

    “In addition, economic actors in various sectors will be guided by commonly derived objectives in the plan which promote coordination and prevent duplication and needless dissipation of scarce resources.

    “The planning process also provides an opportunity to review the trajectory of the economy, especially in the context of regional and global developments,” Senator Udoma stated.

    According to him, the federal government’s focus on stimulating and revitalising the Nigerian economy is yielding positive results already, especially through the reforms in agriculture, stimulated investment in the solid minerals sector and the ‘Made in Nigeria’ campaign.

    He noted that government’s identification of 45, 000 ghost workers through the Treasury Single Account and the liberalization of fuel supply which curbed daily consumption by 30% and saved $4. 5 million daily expenditure through elimination of false subsidy claims are among the recent economic gains.

    Pointing out that Nigeria has been grappling with the ‘triple shock of prices, production and power’ for most of 2016, he stated that economic recession, collapse of oil prices and the vandalisation of oil pipelines that has a negative effect on electricity and gas supplies are serious challenges.

    He said that the two-day retreat was conceptualised to provide an opportunity for stakeholders from the various sectors of the economy to consult and exchange views on the medium-term economic plan and facilitate enduring macroeconomic stability, economic diversification, ease business competitiveness, enhance social inclusion and assess governance processes towards enhancing rapid economic growth.

    Among government officials present at the retreat, along with private sector players were the Minister of Mines and Steel Development, Mr.  Kayode Fayemi, Minister of State, Petroleum Resources, Dr. Ibe Kachikwu, Minister of State for Health, Dr. Alhassan, Permanent Secretary in Ministry of Budget and National Planning, Hajia Fatima Mede, Special Adviser to the President on National Planning, Alhaji Tijani Abdullahi and a Deputy Governor of CBN, Dr. Sarah Alade.

    Eminent experts invited to lead brainstorming sessions on macroeconomic reforms include Mr. Bismarck Rewane, Professor Akpan Ekpo, Dr. Abraham Nwankwo from Debt Management Office and Dr. Yemi Kale who heads the National Bureau of Statistics.

    Those who examined various aspects of economic growth drivers are Mr. Bode Agusto, Professor Olu Ajakaiye, Mansur Ahmed, Mr. Linus Adie, Mr. Segun Awolowo and Dr Yemi Dipeolu, Economic Adviser in the office of the Vice President.

    Those invited to analyse ideas for improving business competitiveness include Mr. Frank Nweke, Dr. Ayo Teriba, Dr. Obadiah Mailafia, Ambassador Chiedu Osakwe, Mrs Yewande Sadiku and Mr. Louis Edozien.

    Aspects of social inclusion and job creation in the forthcoming economic blueprint were handled by Professor Ode Ojowu, Professor Joe Umo, Dr. Martina Nwordu and Mr. Afolabi Imoukhuede who is SSA to the Vice President on Job Creation.

     

  • Ugwuanyi partners veterinarians for economic recovery

    Ugwuanyi partners veterinarians for economic recovery

    Enugu State Governor Ifeanyi Ugwuanyi has said his administration will partner veterinary doctors to revive the state’s economy to surmount the severe economic challenges in the country.

    The governor spoke in Enugu when he hosted a delegation of the state chapter of the Nigerian Veterinary Medical Association (NVMA) at the Government House in Enugu.

    The association informed the governor about the maiden joint International Congress of African Veterinary Association and the Nigerian Veterinary Medical Association, which will hold in Enugu from October 31 to November 4.

    Ugwuanyi said veterinary doctors had a key role to play in the drive to revive the state’s economy, especially “in the areas of increased and more sustainable livestock production as well as improved public and environment health”.

    He added: “Be assured that government will always be ready to partner members of your association towards the achievement of this objective, especially as it promises to be of immense benefit to our people and the state’s economy.”

    The chairman of the Local Organising Committee (LOC) of the congress Prof. Den Chris Onah said the proposed congress would be used to attract investment and showcase the state’s economic potentials to the world, especially in agriculture and livestock production.

  • How housing can boost economic recovery

    How housing can boost economic recovery

    The mortgage sector remains a critical segment that should be explored by the government to revitalise the economy. The Federal Mortgage Bank of Nigeria (FMBN), saddled with delivering quality services to National Housing Fund (NHF) contributors and mortgagors, is taking steps to ensure that Nigerians have affordable housing. The bank, which is tackling bad debts in the industry, is also forming viable partnerships to stimulate competition for the growth of the housing sector, writes COLLINS NWEZE.

    To country can boast of economic prosperity without providing housing or creating a suitable environment for its people to secure reasonably priced housing.

    For Nigeria, the housing deficit of about 18 million is huge enough to stimulate government’s action. But the government has seen the need to make housing more attractive for stimulating growth.

    Apart from providing credit guarantees to developers, the government is also planning to issue promissory notes to reduce the developers’financing requirements. It is expected that the provision of credit guarantees is critical in attracting private sector funds into the industry.

    For the Federal Mortgage Bank of Nigeria (FMBN)Acting Managing Director, Richard Esin, with the economy in recession in the second quarter, providing funding to bridge the housing deficit would help to create jobs, deepen economic development and ensure speedy economic recovery.

    He believes that repositioning the bank remains the first step in achieving the desired impact in the housing sector. He said the bank recorded N424 million as operating surplus in its half-year business. He explained that the profit was realised from its total income of N5.8 billion.

    The bank’s half-year financial performance indicated an operating surplus of N424 million from an income of N5.8 billion. Esin said the half-year performance review was aimed at taking stock of its performance  from January to June 2016 as well as strategise on improving its operations.

    Esin said the Business Performance Review (BPR), which was the first in the history of the bank, became imperative to chart a new course for the bank.

    He stressed that the bank must strive to focus on creating a performance-driven culture at all levels of its operations, which can be achieved through the bank’s four pillars of corporate governance compliance, profitability, operational effectiveness and debt recovery.

    On the debt profile of the bank, Esin admitted that the bank was compiling a debtors’ list, adding that the Economic and Financial Crimes Commission (EFCC) has expressed the willingness to assist the bank to recover the debts.

    He said: “The bank is collaborating with other organisations of like minds to promote self-reinvention and stimulate competition for the overall growth of the housing sector.”

    At the end of the review, Esin said the bank would begin a paradigm shift to sustainable profitability and the ascendency towards delivery of quality services to the National Housing Fund (NHF) contributors and mortgagors.

    The FMBN, under Esin, has been expanding, and coordinating mortgage lending   nation-wide, and promoting affordable housing to ensure that about 18 million housing deficits, estimated at N59.5 trillion, are addressed.

    FMBN started the management and administration of the contributory savings scheme known as the NHF, which enabled it to mobilise long-term fund from workers, banks, insurance firms and the Federal Government to advance loans at soft-interest rates to contributors.

    The FMBN finances mortgages created by primary mortgage institutions (PMI) under the NHF scheme, and gives estate development loans (EDL) to real estate developers.

    The new FMBN chief understands that achieving the bank’s objectives would require the collaboration of the EFCC to recover the FMBN cash with developers, who collected fund but failed to deliver on the projects.

    Esin is also focusing on cheap and affordable housing, not exceeding N5 million per unit, to ensure that more people key into the project even as the FMBN continues to encourage more people in various states within the federation,government parastatals, and the masses to key into the project.

    The Esin-led FMBN has, therefore, requested the help of the EFCC to recover its huge bad debts from developers and others, who obtained housing loans from it, but misappropriated the fund. He made the request when he visited the Chairman of the commission, Ibrahim Magu, in Abuja.

    Esin informed the anti-graft chief that but for the resilience of the bank, it would have been unable to meet the financial requests of Nigerians, including staff of the EFCC, because of defaulters.

    He disclosed that the developers had a huge debt overhang with the bank, adding that they obtained construction finance loans from the bank to build estates, but diverted the funds into other non-productive and non-regenerative activities.

    According to him, some developers completed the estates, sold the housing units and failed to remit the sales proceeds to the bank.

    Esin said some Primary Mortgage Banks, which obtained funds from the bank for mortgage finances, for on-lending to qualified NHF contributors, declined to disburse the funds to the applicants. Besides, there were those who obtained equity contribution from would-be mortgagors, but refused to deploy same in the provision of mortgage finances to the applicants’ benefit.

     

    Stakeholders speak

    Managing Director/Chief Executive Officer (CEO), Brent Mortgage Bank Limited, Kola Abdul, said housing provision required huge capital outlay, which is often beyond the capacity of the medium income/low income groups, hence the need for adequate funding for the sector.

    He spoke at the launch of new mortgage products developed by his company in Lagos.

    He said his bank was targeting a chunk of the estimated $21 billion yearly remittances by Nigerians in Diaspora with its newly developed product, Brent Home Ownership Diaspora Account (BHODA).

    Speaking during the product launch in Lagos, over the weekend, the bank chief said the product was specifically created for Nigerians in Diaspora who desire to own a home or invest in property in their homeland.

    “We realised that although Nigerians in Diaspora are working hard and living in decent accommodations outside the country, they also deserve a decent place of abode in Nigeria. We also realised that many of them have not been able to achieve this dream of owing a home of their choice because of funds diversion,s suppression, and conversion by friends and relations,” he said.

    Abdul explained that the product would eliminate those challenges and make home ownership easy for investors. He said the firm had identified  some marketing agents in the United States, United Kingdom and Republic of Ireland, who would  assist the company in conducting due diligence on its prospective customers.

    “We simply require completion of our forms on-line with requisite documents attached. The prospective customer at the onset will state the area where he or she wants the property, type of property, price range and other necessary details. Brent has opened domiciliary accounts with two commercial banks in Nigeria. Remittances would be made into any of these accounts in three different currencies namely, dollar, Pounds Sterling and Euro,” he said.

    Another mortgage banker, Stephens Obi, said bridging the housing deficit could create over one million jobs in the construction sector. He said states and local government authorities could participate through financial resources, land donations, infrastructure, tax reduction and registration of demand.

    He described housing deficit as the government’s inability to house its citizens in properly -fitted houses with the necessary modern infrastructure for their basic needs, such as water and electricity. The need to address the shortfall, he added, remained a good means of stimulating the economy.

    “It stimulates the economy by pushing a lot of money into circulation. Every recessive economy needs a stimulus as we can see from around the world; an injection of cash into the economy in the hands of spenders. This acts as stimuli. Money being spent at all levels at the same time will move the economics of buying and spending to revive the economy. This ability to spend creates the necessary needed monetary activity in the country. Construction of houses will initiate growth, which would assist in creating jobs. The economy is stimulated, which will translate invariably to Gross Domestic Product (GDP) growth,” he said.

     

    Housing gap in statistics

    Statistics showed that Nigeria is a peculiar country, where mortgage finance, as a share of Gross Domestic Product (GDP), is extremely low. At a paltry 0.5 per cent, compared with 80 per cent (UK), 77 per cent (USA), 31 per cent (South Africa) and two per cent (Ghana), it is a huge joke. The housing and construction sector accounts for only 3.1 per cent of Nigeria’s rebased GDP. Housing production is 100,000 units per year while 800,000 units are needed yearly.

    As a result of the lack of a robust mortgage financing system, Nigeria’s rate of home ownership is one of the lowest in Africa at 25 per cent.

    Statistics showed that Nigeria’s home ownership rate is much lower than countries, such as Singapore (90 per cent), Indonesia (84 per cent), Kenya (73 per cent), USA (70 per cent), Benin Republic (63 per cent) and South Africa (56 per cent).

    Esin has, therefore, accepted the responsibility of delivering on the mandate of the bank and carrying forward the modest achievements of his predecessors.

  • ‘Buhari working to lead Nigeria to economic recovery’

    ‘Buhari working to lead Nigeria to economic recovery’

    A former member of the House of Representatives and governorship aspirant of the All Progressives Congress (APC) in Kaduna State in the 2015 election, Isa Muhammed Ashiru, has expressed confidence in the ability of President Muhammadu Buhari to lead the country out of the recession.

    Ashiru who is a member of the APC Akida Group in Kaduna State, said the economic challenges facing the nation was a sign of good things to come for the country.

    In his Sallah messagein Abuja yesterday, the former lawmaker said the socio-economic challenges could be likened to the trial of Prophet Ibrahim (AS), who was commanded by Allah to sacrifice his only son, Prophet Ismail, in a rare display of total submission to the will of Allah following which Ibrahim (AS) became one of the most celebrated men in the Holy Qura’an.

    He appealed to Nigerians, irrespective of their faith, to reflect on the significance of the  celebration of Eid-el-Kabir, promising that with their sacrifices and commitment, peace and progress are in the offing.

    According to him, despite the challenges, there is no doubt that the worse is over for the country because President Buhari is well intentioned and working hard to put Nigeria on the path of recovery.

    He decried what he called the tendency to derail from the change agenda of President Buhari, adding that this led to the formation of APC Akida Group in Kaduna State.

    Ashiru maintained that  the Akida Group represents commitment to the ideals of socio-economic change exemplified and championed by the President, and hailed Nigeriansfor their support.

  • Path to economic recovery, by DMO Chief

    Path to economic recovery, by DMO Chief

    Debt Management Office (DMO) Director-General Dr. Abraham Nwankwo has painted a rosy economic future anchored on diversification and enhanced revenue from taxation. According to him, in three to five years, Nigerians will feel the impact of the present administration’s policies on manufacturing, agriculture, entertainment and mining, among others, because they will strengthen the naira and improve foreign reserves, writes COLLINS NWEZE.

    The naira and foreign reserves are the worst hit in the wake of Nigeria’s dwinding revenue because of the crash in crude oil prices. The naira has shot up from 215 to 350 against the dollar in the last 16 months in the parallel market; the reserves have continued on their downward slide from over $36 billion to $26.5 billion within the same period.

    As worrisome as these indicators may be, Debt Management Office (DMO) Director-General Dr. Abraham Nwankwo described them as temporary setbacks that will be overcome when the government’s policy on diversification of the economy begins to crystalise.

    At an interactive session with reporters in Lagos last weekend, Nwankwo said the government’s efforts at revitalising other sectors of the economy, such as agriculture, solid minerals and manufacturing, among others, will impact on the economy in the next three to five years.

    He said when the economy is diversified, Nigeria’s growth will not be determined by the prices of crude oil.

    The DMO boss said much revenue would be derived from taxation, adding that the country’s low comparative tax revenue to the Gross Domestic Product (GDP) ratio, currently at about seven per cent against the 18 per cent average in most developing countries, will improve following efficient production.

    He said through taxes, government can secure the fund to finance major developmental projects that will impact on the people’s lives.

    Nwankwo is optimistic that, despite the challenges, Nigeria’s dream of becoming one of the best 20 economies in the world by year 2020 is still realistic.

    “The target of getting the country to rank among the 20 leading economies in the world by 2020 is still being pursued. The crash in crude oil prices should not in any way derail that target. When you are running a race and something trips you and you fall, you have to wake up, and continue the journey. Also, even if oil is the base for economic growth and development, it was an inappropriate base for growth. But luckily for the country, there are alternatives in agriculture,” he said.

    The DMO chief said the country has been unable to exploit up to 25 per cent of opportunities in agriculture.

    He said: “We need to achieve internal food security and have the opportunity to export agro-based products in processed form. Imagine the variety of food stuff  from savannah to the deserts, all the various legumes, roots and others that can be grown from these environments. If we effectively exploit agriculture, if and as we are making progress in agriculture, firstly, the major consumer of our forex like agro-based raw materials, rice, fish, poultry, wheat, will be taken care of and government will save billions of dollars from these imports.

    “We have the capacity to produce theses products and even export to other countries. Based on the pronouncements of the agriculture minister based on the vision of President Buhari, in three to four years, we will be self-sufficient in poultry, rice production. We are on the right path to be self-sufficient in food, and enormous forex will be saved from agriculture production alone. Reserves will rise, and the local currency will be stronger. That is the essence of the growing economy.

    “You can see that in the manufacturing sector, some factories are operating below capacity. But with the ongoing implementation of President Muhammadu Buhari’s policy on diversification of the economy and revatilising the power infrastructure, the sector will pick up and create more jobs for the people.”

     

    Road to diversification

    President Buhari had in his democracy day broadcast on May 29, said the economic misfortune facing the country due to low crude oil prices has equally provided it with an opportunity to restructure the economy and diversify.

    “We are in the process of promoting agriculture, livestock, exploiting our solid mineral resources and expanding our industrial and manufacturing base. That way, we will import less and make the social investments necessary to allow us to produce a large and skilled workforce. Central Bank of Nigeria (CBN) will offer more fiscal incentives for business that prove capable of manufacturing products that are internationally competitive. We remain committed to reforming the regulatory framework, for investors by improving the ease of doing business in Nigeria,” he told Nigerians.

    Already, the first steps along the path of self-sufficiency in rice, wheat and sugar – big users of Nigeria’s scarce foreign exchange – have been taken.

    For instance, the Labour Intensive Farming Enterprise will boost the economy and ensure inclusive growth in long neglected communities. Special intervention funds through the Bank of Agriculture will provide targeted support.

    Also, the Solid Minerals Minister the minister has produced a roadmap where we will work closely with the World Bank and major international investors to ensure through best practices and due diligence that we choose the right partners. Illegal mining remains a problem and we have set up a special security team to protect our assets. Special measures will be in place to protect miners in their work environment.

    The National Economic Team under the Presidency chaired and managed by the Vice President Prof Yemi Osinbajo which also has the Finance Minster, Mrs. Kemi Adeosun as member. The DMO’s Director-General, Dr. Abraham Nwankwo, is also a member of the team. Other members are Ministers of Budget; Trade and Investment; and Information. The team is expected to guide the government to achieve the desired result.

     

    Eurobond sale coming

    Beyond the need to diversify the economy, Dr. Nwankwo also said Nigeria may still access the Eurobond or sovereign sukuk market for more cash. He said Nigeria is working out details for issuing a debut sovereign sukuk this year and may also sell a Eurobond.

    He hinted that Nigeria had yet to determine the size of a potential sukuk deal and was working with the Securities and Exchange Commission (SEC), the Central Bank of Nigeria and the stock exchange to build capacity.

    Besides, Nigeria’s low debt to Gross Domestic Product (GDP) ratio means the country can borrow more to fund budget, infrastructure and other essential projects that will stimulate the economy and create jobs for the citizenry.

    Nigeria, reeling from the plunge in vital oil revenues, has set up a government committee to advice on the amount to be raised from the Islamic bond sale, the timing and jurisdiction of issue, either domestic or foreign.

    “We are definitely going to issue a sukuk this year. We may also likely issue a Eurobond this year. We are working hard to put together the entire necessary framework,” Nwankwo told Reuters on the sideline of a media briefing.

     

    Budget and infrastructure funding

    The DMO boss said the N1.84 trillion deficits in the N6.06 trillion budget for 2016, will be used sorely for capital projects funding. He said this is the only time that such huge amount is allocated and specified for capital projects. “This is the first time that the budget specified that all borrowed funds will be for capital expenditure. The sharing of internal and international borrowing is almost 50/50. We have been borrowing locally, but we have to take advantage of the relatively low cost of funds externally. We do not want to borrow too much from the domestic economy, so that we do not crowd-out the domestic environment,” he said.

    He said that given the challenges the economy is going through, much depends on what the media reports. “The media is critical, because what the media tells the international community will determine investment flows into the country. It is our responsibility to continue working hard to ensure the resilience our economy is exhibiting is sustained, until we achieve the turnaround that will come with diversification,” Nwankwo said.

    He said achieving self-sufficiency in power will enable government generate more income; companies will be able to pay more taxes, thereby helping government diversify its revenue bases.

    “It is possible that in the next five to seven years, the whole picture of Nigeria will be a complete turnaround because of government’s economy diversification plan. The difference between Nigerian and other countries facing similar economic challenges is that those countries do not have the same opportunities we have in Nigeria. Nigeria is near 100 per cent idle capacity, meaning the flexibility to grow the economy is high,” he said.

    He urged Nigerians not to be depressed because of drop in crude oil prices. “We have no reason to be depressed just because crude oil price is down. We have to see the varieties of opportunities available for the country to grow the economy based on a well-diversified and sustainable manner. We as responsible stakeholders in the economy, should emphasise these opportunities,” he said.

    “Indeed in other countries, the major source of revenue is taxation. Taxation should also be explored. Government should be able to sustain itself with taxation revenues. Now with the better tax compliance, and effective sanctions for defaulters, we have a room to boost public revenue from taxation,” Dr. Nwankwo stated.

    Finance Correspondents Association Chairman, Babajide Komolafe, praised the efforts being made by the DMO to support government’s diversification effort. He said the role of DMO in economic development cannot be over emphasised. He said that FICAN will continue to support the DMO to achieve its goals within the economy.

  • ‘Infrastructure investment, others crucial to economic recovery’

    ‘Infrastructure investment, others crucial to economic recovery’

    Improving Nigeria’s infrastructure through prioritised investments will help to secure its long-term success as Africa’s largest economy, a new report by The Boston Consulting Group (BCG) has shown.

    The report titled: Unlocking Nigeria’s Potential: The Path to Well-Being was released yesterday to coincide with the opening of BCG’s new office in Lagos this week.

    The report identified infrastructure, education, health, governance, and civil society as areas that require immediate attention, and outlined the root causes of these challenges and a series of actions that can drive meaningful progress.  The most critical focus, the report says, must be addressing Nigeria’s weak infrastructure—doing so will enable the country to make the much-needed progress in the other key areas and diversify sources of foreign exchange.

    Speaking during the presentation of the report, Senior Partner and Chairman of BCG’s Lagos Office, Luis Gravito,  said: “Economic pressure, including low oil prices, a possible recession, and a declining naira, make it imperative that the country move quickly to address major gaps—and infrastructure should be priority one. Swift and disciplined action will allow Nigeria to fully harness its vast resources and potential, most notably its vibrant and entrepreneurial population.”

    Gravito who is also co-authored the report, said investment in power, roads and transportation; water and sanitation are crucial to sustaining a long term economic boom for the country.

    According to the report, the value of Nigeria’s infrastructure stock is about 35 per cent of her Gross Domestic Product (GDP), compared with an average of about 70 per cent for large economies. A key reason for the shortfall: Nigeria invested just $664 per capita (adjusted for purchasing-power parity) in infrastructure annually from 2009 to 2013, or three per cent of GDP, compared with an average of $3,060, or five per cent of GDP, for several peer countries. It warned that without decisive intervention, that gap is likely to keep widening.