The Nation Newspaper

Tag: Economy

  • Auto Policy: Breathing freshness into the economy

    Five years after the repackaging of the national automotive policy, stakeholders have expressed satisfaction with the policy. They say it is yielding positive results and attracting investors globally, OKWY IROEGBU-CHIKEZIE reports.

    Globally, the automotive industry plays strategic and catalytic roles in economic development. This is in terms of its capacity to employ a high number of manpower directly, and also the multiplier effect of cottage industries that spring up as a result of the assembly plant.

    Therefore, when the Federal Government repackaged the automotive policy, stakeholders were upbeat about its ripple effect on the economy. For them, the policy, if properly implemented, will give birth to several small-scale industries, which economists refer to as the wheels on which an economy run.

    The objective of the national automotive policy is to restore assembly and develop local content; thus, creating employment, acquiring technology and reducing pressure on the country’s balance of payment. This thinking may be right given that when the country’s automobile industry was vibrant, several industries sprang up across the country in the glory days of Peugeot Automobile Nigeria (PAN), in Kaduna State

    For instance, Exide Batteries, in Ibadan, Oyo State, supplied PAN batteries for vehicles manufactured at its Kaduna plant. Similarly, the upholstery works in its vehicles were manufactured by a local firm, while Dunlop Nigeria Limited supplied tyres.

    Indeed, efforts to attain an effective automotive sector have been continuous and as the policy continued to evolve over the years with necessary tweaking and remarkable achievements have made.

    Currently, hitherto comatose assembly plants are breathing fresh breathe. As at the last count, over 14 assembly plants, such as PAN, Innoson Vehicle Manufacturing Co. (IVM); Anambra Motor Manufacturing Company (ANAMMCO) and Leyland-Busan, have started assembling new products since 2014. New plants are also coming to live. This, stakeholders say, is a remarkable feat considering that before this policy, three out of the five assembly plants established in the 1970s had become moribund.

    Under the policy, 29 of the 54 licensed assembly plants as at last February are now operational. With a total installed capacity of 419,190 units, actual production of 8,628 units have been achieved so far.

    A cursory look at the assembly plants presents a solid foundation of hope for the industry. For instance, Dangote Sinotruck West Africa Limited, a partnership between Dangote Group and Sinotruck, comes with an investment portfolio of $100 million for truck assembly. The partnership will assemble and produce full range of commercial vehicles covering heavy duty truck, medium truck, light truck and other semi-trailers. With this, the firm aims to meet an expected current demand of these segments of automobiles required for logistics, construction, food & beverage industries in the country. The company has installed capacity to assemble and produce 10,000 trucks annually and this alone will create 3, 000 jobs across Nigeria.

    The turnaround story of ANAMMCO is another positive for the automotive policy. The company downsized its staff in 2011 due to the unfavourable business conditions. The downturn in business also affected employment down the value chain. However with the policy, ANAMMCO recalled 200 of the staff that had been laid off. The company is currently waxing stronger and has received several proposals from Original Equipment Manufacturers (OEM) interested in establishing local assembly presence.

    And the Minister of Industry, Trade and Investment, Okey Enelamah, takes delight in all of these. “The achievements made so far confirm the high potentials of the policy to grow the automotive sector,” an obviously elated minister said.

    The policy has also generated interest outside the country. Recently, a delegation of international automotive investors, comprising original equipment manufacturers and other stakeholders visited the country. Among others, they sought to gain insight into the opening business opportunities and investment environment in the Nigerian automotive sector;  assist in the shaping of national and state policy to support industry overall and domesticated manufacturing for the automotive sector;  gain insight into the automotive sector & potential for enhanced manufacturing in Nigeria; build relationships and networks with key Government and private sector figures; and to  deepen the structured business links and investment between the private sectors of Nigeria and South Africa.

    Enelamah, while receiving the delegation said: “We are excited by the role the automotive industry plays in the strategic and catalytic economic development of countries and we are committed to developing the sector speedily to facilitate the economic diversification of the country.”

     

  • Banks lift economy with sustainable regulations

    Commercial banks, Discount Houses and Development Finance Institutions (DFIs) are showing commitment to a directive by the Central Bank of Nigeria (CBN) on the implementation of the Nigerian Sustainable Banking Principles (NSBP). The NSBP rule is to make the banks look beyond profitability and project funding to boost economic growth but to protect the environment, writes COLLINS NWEZE.

    It is now business unusual in commercial banks, discount houses and Development Finance Institutions (DFIs).

    The guidelines aimed at integrating environmental and social policies into decision-making processes have been rolled out by the Central Bank of Nigeria (CBN) to guide their operations. They (guidelines) are contained in the Nigerian Sustainable Banking Principles (NSBP).

    The apex bank said that trends in international business reporting take account of the impact of business on the environment and the socio-economic risks affecting business concerns.

    According to the regulator, sustainability reporting allows organisational measure, understand and communicate their environmental, social and governance performances.

    Although the reporting system has gained currency and acceptance globally, only a few local banks and organisations encourage sustainability practices in their reports.

    Central Bank of Nigeria (CBN) Governor Godwin Emefiele said the apex bank will continue to renew its commitments towards the implementation of the NSBP and the achievements of the United Nation’s (UN) Sustainable Development Goals (SDGs) and the Paris Climate Change Agreement because a reduction in plastic use will bring about reductions in greenhouse gas emissions and carbon footprint.

    As one of the lenders, Access Bank Plc has expressed its belief in the implementation of NSBP.

    The bank’s Group Managing Director/Chief Executive Officer, Herbert Wigwe, said the lender defines sustainability as providing innovative solutions to support global efforts in addressing social, environmental and economic challenges.

    Wigwe expressed his bank’s determination to create meaningful impact around the world and its subsidiaries by increasing awareness of best sustainable practices that can be implemented within its operational areas.

    He listed profit, planet and people as the pillars in which corporate sustainability are entrenched, explained that the pillars have been embedded into how the bank carries out its operations.

    The bank chief said: “This comes with a vision to be the most sustainable and respected bank in Africa, financing and facilitating brighter futures for all of our stakeholders through innovative services and best in class operations.”

    He said the lender has in line with the sustainability practices, continued to develop simpler and smarter products and services with relevance to Nigerians, not losing focus of its vision to be the world’s most respected African bank.

    Wigwe restated Access Bank’s determination to set standards for sustainable business practices capable of bringing out the best out of employees, deliver superior value to customers and provide innovative solutions for the markets and communities it serves.

    The bank’s sustainability footprints are grouped into four units- economic development; environmental responsibility; sustaining societies; collaborations & partnerships.

    At a recent launch of Nigeria’s Green Bond market development programme in Lagos, the Group Deputy Managing Director, Access Bank, Roosevelt Ogbonna said: “Our strategy, together with a solid corporate governance structure, has enabled Access Bank to retain its leadership position, contributing significantly to the economic growth of Nigeria and the broader African continent.

    “We recognise that a better and prosperous future is linked to the well-being and health of our planet. Thus, the protection of the environment is relevant to us.

    “This encourages us to continue to invest in innovative technologies and techniques that promote the efficient use of resources and address sustainability issues when managing risk.

    “We continue to impact lives positively and responsibly in communities across Africa. Through this, we are able to continually contribute to the socio-economic development of these communities and help to achieve the new Sustainable Development Goals (SDGs).

    “Over the years, our areas of focus in community investment have included gender equality, women empowerment, entrepreneurship, leadership, education, health, arts, and sports.”

    The launch was one of the major events that took place during the Green Bonds Week, which drew local and international stakeholders in Lagos to discuss the impact of climate risk on investment portfolios, the role of regulators in developing the local market and growing green bond issuance.

    Lagos State Governor Akinwunmi Ambode told his audience at the launch that the initiative would present profitable investment opportunities to stakeholders and investors, adding that the finance would help to reduce greenhouse emission and mitigate harsh effects of climate change in the Centre of Excellence.

    Represented by his deputy Mrs. Oluranti Adebule, the governor assured that his administration would take maximum advantage of the opportunity embedded in the Green Bond Market to reverse the harsh trends of climate change.

    He expressed optimism that the Green Bond will enhance the execution of projects to mitigate the effects of climate change in Lagos, while asserting that the success achieved during the N10.69 billion Green Bond issued by the Federal Government last year was a testimony to the fact that Climate Bond investment is a viable option for promoting sustainable growth in the environment.

    Climate Bonds Director of Market Development Justine Leigh-Bell said: “The Nigeria Green Bonds Market Development Programme is a big step towards unlocking the full potential for domestic issuance while developing a pipeline of green investment opportunities and engaging with local and international investors. We are excited about the future in the region.”

    The sustainable projects covered under the Green Bond proghamme are: renewable energy, energy efficiency, sustainable waste management, sustainable land use (forestry and agriculture), biodiversity, clean transportation and clean water. Their structure, risk and returns are otherwise identical to those of traditional bonds

    Officials of Access Bank said they benchmark the bank’s performance against the nine NSBP and produce at least annually, a public Equator Principles report, on transactions that have reached Financial Close and on its Equator Principles implementation processes and experience.

     

    Other banks’ contributions

     

    Diamond Bank’s Managing Director/Chief Executive Officer Uzoma Dozie described the bank’s investment and focus on the Micro Small and Medium Enterprises (MSMEs) segment as strategic and predictive.

    In his view, the future of sustainable banking in Nigeria is retail, therefore it is necessary to grow and consolidate its strength in the segment.

    Managing Director Development Bank of Nigeria (DBN), Tony Okpanachi, said the bank’s operation in addition to its mandate, seeks to achieve the NSBP, where financial inclusion ranks high, as well as the UN SDGs and also in line with the Economic Recovery and Growth Plan (ERGP) of the Federal Government.

    The First Bank of Nigeria Ltd, a member of FBN Holdings Plc, has also initiated its Corporate Responsibility and Sustainability (CR&S) Week in over 3,000 secondary schools across the country to improve financial literacy and inclusion among students.

    The scheme, which involves career counseling session, is part of activities marking the second edition of the bank’s CR&S Week for the year.

    Speaking at Yaba College of Technology Secondary School, Managing Director, Adesola Adeduntan said the week-long event was the bank’s brand promise to always put stakeholders’ needs first.

    Adeduntan said the event was being commemorated across its business communities in Nigeria, United Kingdom (UK), Democratic Republic of Congo, Ghana, The Gambia, Guinea, Sierra-Leone and Senegal.

    He said the initiative was to reinforce the bank’s role in driving sustainable development in its host communities.  Adeduntan stated that the 2018 Corporate Responsibility and Sustainability week would amplify the bank’s ‘Employee Giving and Volunteering Scheme’ to create sustainable impact, touch lives and make our societies a better place to live.

    Counseling the pupils, he said: “Professional life is rewarding but it always comes with continuous improvement and investment.”

    Adeduntan called on the pupils to always align their interests and passion with their capabilities in career decision as well as personal brand.

    He said: “Even though you think you are young but we believe this is the period you should begin to build your personal brand. You need to be creative, innovative and more especially collaborative as collaboration is very important if you want to grow in career. Whoever you are, the ability to collaborate and communicate is very important.”

    Adeduntan assured the pupils that the bank would continue to invest its time and services to develop the youths as better leaders of tomorrow.

    He said: “At First Bank it’s not just about profitability, it’s also about having an impact on the environment in which you operate and that is our trademark and that is what we have done for the past 124 years. And that is what we would continue to do going forward.”

    First City Monument Bank (FCMB) also said its commitment to environmental protection and sustainability remains a core pillar of its CSR focus.

    The bank said its business and operations are designed to ensure that it lends responsibly, promotes financial inclusion, encourages diversity, adheres to health and safety standards, and reduces (or totally avoids where possible) negative impact on the environment.

    “A high-point of the bank’s environmental sustainability is its ability to identify and innovatively devise means of converting challenges posed by the environment to opportunities,” the bank said.

    The FCMB further said it has been participating in the activities marking the World Environment Day (WED) over the years.

    During the commemoration of the day in 2015, the bank collaborated with the Nigeria Conservation Foundation (NCF) in organising programmes to raise awareness on the need to protect the environment.

     

    Sustainable banking milestones

     

    Every year, one per cent of the Access Bank’s profit before tax is allocated to sustainability initiatives incorporating environmental, social and governance (ESG) rating as part of lending criteria. It has introduced a financial inclusion strategy and developed a USSD platform as fallout to bring the unbanked population into the financial system.

    The bank’s efforts in this regard over the past few years, Wigwe added, has resulted in improvement in environmental footprints.

    For instance, waste reduction initiatives form a key part of the bank’s cost-reduction strategy.

    The Save Paper initiative launched across several business locations was aimed at cutting printing paper use by 50 per cent while N1.4 billion has been invested in capacity building for female employees of the bank who are now happier and better committed to delivering excellent services.

    In terms of gender balance, the bank said its board composition is above the CBN regulation of 30 per cent. It carried out early branch closure policy to cut down electricity costs and introduced employee volunteering scheme to provide employees with a platform for giving back to the society.

    The bank has also created an inclusive and empowering environment for its employees through various initiatives. One of such initiatives is the introduction of sustainability as a part of the ‘W initiative’ targeted at Women Empowerment, whereby it has educated 55,000 women, through the W Academy.

    Sustainability, according to the lender, has been embedded in its culture as it has included it as part of assessment in the performance evaluation process of employees.

    On economic development, Access Bank introduced ‘Beta Mama Beta Pikin’ to promote savings culture amongst the lower band of society whilst providing an opportunity for mothers and their children to gain access to health insurance.

    The bank has supported 30 hospitals through the Hospital Facility Upgrade Support Scheme (HFUSS) and launched “N1 billion Access Nolly Fund”, a new and innovative financial service aimed at improving and providing solutions for the movie industry.

    On environmental responsibility, its efforts have improved the environmental footprints.

    It resulted in 63.4 per cent reduction of emissions from electricity, 16. 7 per cent reduction in emissions from petrol across Nigeria; led to 28.8 per cent reduction in emissions from diesel across Nigeria as validated by the NSBP.

    The bank’s sustainability footprints have also led to 24.9 per cent reduction in diesel usage from early shutdown policy since June 2017, even as it has introduced over 413 solar-powered Automated Teller Machines (ATMs).

    “Our Ogunlana Drive branch is fully powered by solar energy with no connection to the national grid we have four solar-powered branches, 311 branches powered by hybrid of alternative energy sources and national grid and we have LED lightings in all our facilities nationwide,” Ogbonna said.

    On sustaining societies in Africa, the lender said that through strategic investments in communities, it has in the last few years impacted 853 communities, 20,071,453 beneficiaries and 358 Non-Governmental Organisations (NGOs).

     

    Partnerships and disclosures

     

    To underscore the importance of collaborative efforts in achieving the SDGs, Access Bank and the FMDQ securities market recently formalised partnership with the Financial Sector Deepening Africa and Climate Bonds Initiative United Kingdom. The aim is to revolutionise the Nigerian Debt Capital Markets (DCM) into properly- functioning and globally -competitive market.

    The bank won multiple awards. They included: the Sustainability, Enterprise and Responsibility Awards (SERAs), and another awards for “Best Company in Climate Action”.

     

    CBN/NDIC’s roles

     

    The CBN and Nigeria Deposit Insurance Corporation (NDIC) want banks to shift focus from profitability alone and consider also other issues around sustainability, before lending.

    NDIC’s Managing Director Umaru Ibrahim said that banks should ensure that activities of companies that pollute the environment are not financed. He said the United Nations Environment Programme (UNEP), through its UNEP Financial Initiative on the Environment and Sustainable Development at the Earth Summit in 1992, placed it as pertinent concern for financial systems across the world.

  • Budget 2018: Chamber demands increase in capex to boost economy

    The International Chamber of Commerce Nigeria (ICCN) has urged the federal government to increase capital expenditure in order to grow the economy.

    Making this clarion call recently was the Chamber’s Chairman and Regional Coordinator, Sub-Saharan Africa, Babatunde Savage.

    According to him, there is urgent need for restructuring of government’s spending in favour of capital expenditure in view of the huge infrastructure deficit confronting the nation.

    Savage, who spoke at the 19th yearly general meeting of the Chamber in Lagos, noted that the relatively low performance in capital budget, which hovered around 60 per cent as at December 2017, when compared with the almost 100 per cent implementation of recurrent expenditure is not development friendly.

    He said the trend of unspent capital allocations, which are usually returned to the treasury, is a product of delayed budget approval processes, hence the need to revisit this issue for the good of the economy. According to him, it is a widely held view that the private sector is the engine of growth and poverty reduction, as well as one of the most powerful catalysts for the transformation of the economic structure of countries.

    “Businesses thrive when supported with well-conceived regulatory policies and good corporate governance practices in line with global best practices. Corporate governance, to me, is all about how an organisation is managed- its corporate and other structures, its culture, its policies, and the ways in which it deals with its various stakeholders. “It is concerned with structures and processes for decision making and with the control and behavior that support effective accountability for performance outcomes/results,” he added.

    On the future outlook, Savage said the global economic growth prospects have improved modestly due to stronger United States growth expectations, exit of some large economies from recession and rising commodity prices.

    “With the gradual recovery from recession, stability in exchange rates, inflation under control, we certainly have reasons to be optimistic. Oil prices have surged to $60-70pb beyond 2017 expectations, offering Nigeria some respite and suggesting a better economic outlook in 2018. Adopting the highest standards of corporate governance to achieve long-term value for all is now imperative,” he added.

     

  • What $2.5b currency swap deal means for banks, economy

    The much-awaited guidelines for the $2.5billion currency swap deal between the Central Bank of Nigeria (CBN) and The Peoples Bank of China (PBoC) have been unveiled. The deal will widen the trade window for local banks and increase their revenues. But, it could worsen the widening trade gap between Nigeria and China. The deal, which is valid for three years in the first instance, is renewable if approved by both countries. COLLINS NWEZE writes on what the Federal Government must do to reap the benefits of the deal.

    Local banks stands to gain from the $2.5 billion currency swap deal between Africa’s largest economy, Nigeria, and the world’s second largest economy, China.

    The economies of both countries need each other, and so do their businesses and banks. The banks in both countries are not only going to be earning fees from the ensuing transactions, but will begin new lending to businesses.

    These gains and the need to keep the naira stable prompted the Central Bank of Nigeria (CBN) to sign the bilateral currency swap agreement with the People’s Bank of China (PBoC).

    In local currencies, the swap is worth 15 billion Renminbi (RMB) or N720 billion. The three-year renewable  deal  will  allow  for  the  direct exchange of RMB and naira for the purpose of trade and direct investment between both countries.

    According to the PBoC, the aim of the swap arrangement is to facilitate  bilateral  trade,  direct  investment,  and  safeguard financial market stability. The trade is expected to reduce the demand for United States dollar by Nigerians importing from China and consequently  strengthen  the  value  of  the  Naira.  The deal will reduce  certain  barriers  for  Nigerian  importers  of  goods  from China   and   reduce   the   cost   of   transactions   in   multiple currencies.

    FSDH Research has therefore reviewed the historical trade position between Nigeria and China to determine the benefits of the swap deal. Its review in the last five years shows that Nigeria’s imports from China are higher than the exports to China, leading to a negative trade  balance.

    China  has  been  one  of  Nigeria’s largest  import  partners  over  the  last  five  years, with  imports from  China  accounting  for  an  average  of  20.95 per cent  of  total imports   between   2013   and   2017.

    Imports   from   China increased  by  21.16 per cent  from  N1.48  trillion in  2013  to  N1.79 trillion in 2017. On the other hand, Nigeria’s exports to China averaged just 1.50 per cent  of  total  exports  over  the  period.  Exports  to  China increased  by  28.99 per cent  from  N171  billion  in  2013  to  N220.57 billion in 2017.

    FSDH  Research therefore considers that  while  the  currency  swap agreement may improve foreign exchange stability and aid external   reserves   management   to   a   certain   extent,   it presents downside risks.

    “The fact that it removes some trade barriers between the two countries may increase Nigeria’s imports    from    China.    This    development    without    a corresponding increase in Nigeria’s  exports  to  China  will further increase Nigeria’s trade deficit with China. Nigeria needs to develop competitive advantage in the production of certain  exportable  goods  that  China  currently  imports  in order  for  Nigeria  to  get  the  full  benefit  from  this  currency swap deal,” the research firm said.

    Speaking on the development, Chief Economist at Renaissance Capital (RenCap) Charles Robertson, said the $2.5 billion bilateral currency swap agreement is expected to boost Nigeria’s foreign reserves.

    Speaking during the investors’ conference organised by RenCap in Lagos, he said the deal would reduce the use of the third currency, mainly dollars in the transaction chain.

    Nigeria’s ability to provide support, particularly in foreign currency to commercial banks and importers was weakened by falling oil prices eroding the country’s forex reserves and foreign currency revenues.

    Also, in an emailed note to investors, Afrinvest West Africa Limited, an investment and research firm, said the currency swap deal’s impact will be noticed in periods of forex rate volatility and/or scarcity in the country.

    In the report titled: Gains of the Bilateral Currency Swap Agreement between the CBN and PBoC, Afrinvest said consequent on the opening of the “Swap Line”, both central banks would exchange a stock of their local currencies (RMB 15 billion /N720 billion), which could either be extended by mutual consent at expiration in 2021 or reversed.

    Afrinvest Managing Director, Ike Chioke, said the pact, which was as a result of over two years negotiations between both banks, would provide adequate local currency liquidity for Nigerian and Chinese industrialists and other businesses in order to reduce their difficulties in the search for a third currency.

    “We view the agreement as a positive development, given the foreign currency liquidity squeeze Nigeria frequently experiences and the strong trade and investment ties between the two countries. According to the trade statistics by the National Bureau of Statistics (NBS), merchandise trade between China and Nigeria reached a record high of N2 trillion in 2017 (8.7 per cent of total Merchandise trade), thus making China Nigeria’s third largest trading partner after India and the United States (accounting for 12.5 per cent and 10.8 per cent of merchandise trade respectively),” he said.

    Also, the Balance of Trade is heavily tilted in favour of China as imports from China in 2017 (N1.8 trillion) was eight times Nigeria’s export (N220.6 billion) and accounts for 20.9 per cent of total imports in the last five years.

    “This is clearly suggestive of Nigeria’s growing dependence on China, much like most of the rest of the world, for manufactured products and industrial inputs, reinforcing the importance of this currency swap agreement for Nigeria’s import dependent manufacturing and trade sectors which jointly contribute 27.8 per cent to Gross Domestic Product (GDP),” he said.

    Besides, given the established strategic importance of China as a major trade partner, the bilateral currency swap agreement will be beneficial to the Nigerian economy in several ways.

    “First, it would reduce currency transaction cost for importers and ease forex liquidity pressures in periods of forex rate volatility and/or scarcity. The implementation of this currency swap will also enhance financial stability and external reserves management by reducing the volume of forex interventions in the local market needed to fulfill imports demand,” he said.

    Lastly, he added that the agreement could serve as a risk management and unconventional monetary policy tool as probable losses resulting from transactions affected by volatility in the local currency could be hedged and minimised.

    “As an unconventional monetary policy tool, in managing third currencies pressures and liquidity, the importance of the bilateral currency swap agreement between Nigeria and China cannot be neglected. Whilst we are excited by the symbolism of this agreement, we also note that the impact on the economy will be limited by the relatively small size of the Swap Line, which could barely cover 40 per cent of Nigeria’s Chinese import in a single year,” he said.

    He however, highlighted a key downside risk to the agreement, which is that the ease of transaction with a highly competitive country like China could worsen Nigeria’s trade balance and weaken domestic manufacturing capacity. “We think this concern is justified, particularly in a period of heightened trade skepticism. Yet, it also emphasizes the need to deepen domestic policies on improving competitiveness,” it said.

    Former Executive Director, Keystone Bank, Richard Obire, said as middlemen, banks in both countries will earn new fees, and initiate new credit facilities for merchants. “The currency swap deal will expand the capacity on what the banks can do. Besides, customers in both countries will have their transaction base expanded, including new opportunity to import or export equipment, raw materials and finished goods,” he said.

    Obire explained that Nigeria need to take measures that will ensure it begins to export finished products to China, and such would create jobs and capacity at home. “We are currently at the raw materials exporting stage and until that is changed to finished goods export, Nigeria may not get the full benefits of the deal,” he said.

  • ‘CFTA ’ll grow economy by $2.9b’

    The Coalition of South-South Chambers of Commerce, Industry, Mines & Agriculture has urged the Federal Government to sign the Continental Free Trade Area (CFTA) agreement. It will increase the nation’s economic growth by  $2.9 billion with an estimated 8.18 per cent increase in Nigeria’s total export.

    Its President, Prince Billy Gillis Harry, who spoke in Lagos at the weekend, said signing the trade treaty will also expand market access for export of Nigeria’s goods and services, covering a market of 1.2 billion Africans with a combined gross domestic product (GDP) of $2.5 trillion.

    CFTA’s broad objectives, according to Harry, is to overcome dependence on exportation of primary products, promote social and economic transformation for inclusive growth, as well as industrialisation and sustainable development, accelerating the diversification of intra-African trade with the aim of increasing trade by 50 per cent by 2022.

    He said it will also create a free market for goods and services and pave the way for the establishment of the Continental Customs Union, enhance competitiveness at all levels and more specifically at the industrial level through exploiting opportunities for scale economies.

    He said: “The focus of the CFTA is trade in goods and services, intellectual property rights, competition policy and investment. The negotiation is to be conducted in two phases. Thus, phase one covers trade in goods and trade in services while phase two shall cover intellectual property rights, competition policy and investment.

    “Protocols on trade in goods and services have been concluded in the first phase and included in the framework agreement. The second phase of negotiation is scheduled to commence in June, 2018.”

     

  • Economy, security, others…three years after

    Three days ago, the Presidency released a factsheet on what the Muhamamdu Buhari-led administration has done in the last three years. OLUKOREDE YISHAU chronicles the things that have not remained the same since President Buhari mounted the saddle.

     

    It was a period many Nigerians will not forget in a hurry. And not a few are still feeling the hangover. But the statistics are looking good. A fact sheet released at the weekend by the Presidency to mark the third year of the Muhammadu Buhari administration shows that better days lay ahead.

    Just before the hardship set in, dynamites were thrown. Grenades caused chaos. Gunshots rented the air. The scenes were in the Niger Delta. The victims were not human-beings but oil facilities – strategic ones for that matter. And the effects on oil production and export were not only huge and scary. They were costly. The economy bled and needed oxygen to be on the path of recovery.

    Settling down to business, President Muhammadu Buhari and his team put up their thinking cap. The grievances of those blowing up the pipelines must be addressed. His deputy, Yemi Osinbajo, a professor of Law, went from one creek to the other, preaching peace.

    He visited oil-producing communities, listened to the people and spelt out the Federal Government’s commitment as captured in the ‘New Vision for the Niger Delta’. In the vision are answers to the 16-point Demand Agenda submitted to President Buhari by the Pan Niger Delta Forum (PANDEF). This vision has berthed the Nigerian Maritime University in Delta State, approval has been granted for the establishment of Modular Refineries in the nine Niger Delta states and work has resumed on abandoned projects in the oil-rich region, including the East-West Road.

    The engagements with the Niger Delta and the Organisation of Oil Exporting Countries (OPEC) helped to raise oil revenues and ultimately in growing the external reserves, the Excess Crude Account (ECA) and the Sovereign Wealth Fund (SWF). The engagement with OPEC involved rallying the organisation and Non-OPEC members to discuss stabilisation of the global oil market in Doha and in Algiers. This led to an exemption from the OPEC production freeze and rise in oil prices.

    These steps, according to the government, helped to kick out recession of 2016/2017 and there is a 1.95 per cent growth in the first quarter of this year; inflation has fallen for the fifteenth consecutive month from 18.7 percent in January last year to 12.5 percent as of April; and external reserves has climbed to $47.5 billion, the highest in five years, which also double the size as of October 2016.

    The exports in 2017 were 59.47 per cent higher than 2016; agriculture exports grew 180.7 per cent above the value in the previous year; raw material exports grew 154.2 per cent above the value of 2016; solid minerals exports for last year grew 565 per cent above the value the previous year; and last year saw exports of manufactured goods growing by 26.8 per cent above the value the previous year.

    Other cheering news included: “The first quarter of 2018 saw the fourth consecutive quarterly increase in capital importation since Q2 2017. The total value of capital imported in the quarter stood at $6.3 billion, which is a year-on-year increase of 594.03 per cent and a 17.11 per cent growth over the figure reported in the previous quarter.

    “The new FX Window introduced by the Central Bank Nigeria (CBN) in April 2017 now sees an average of $1 billion in weekly turnover, and has attracted about $25 billion in inflows in its first year (and a total turnover of $47.14 billion) – signaling rising investor confidence in Nigeria.

    “Nigeria’s Stock Market ended 2017 as one of the best performing in the world, with returns in excess of 40 per cent.

    “Five million new taxpayers added to the Tax Base since 2016, as part of efforts to diversify the government revenues.

    “Tax Revenue increased to N1.17 trillion in Q1 2018, a 51 per cent increase on the Q1 2017 figure. N2.7 Trillion spent on Infrastructure in 2016 and 2017 fiscal years, an unprecedented allocation in Nigeria’s recent history.

    “Fourteen moribund Blending Plants revitalised so far under the Presidential Fertiliser Initiative (PFI); with a total capacity of 2.3 million metric tonnes (MT) of NPK fertilizer.

    “The contribution of solid minerals’ to the Federation Account rose five-fold from N700 million in 2015 to N3.5 billion in 2017.”

    To align monetary, fiscal and trade policies, the administration in April last year created a new forex window for investors and exporters, which has helped stabilise the market. The window has attracted more than $45 billion in its first year of operation.

    The fact sheet noted: “The Buhari administration has implemented a new debt management strategy which targets a ratio of 60 per cent to 40 per cent between domestic and external debt. The other objectives of the strategy are to moderate growth in debt service costs, free up space in the domestic market so that the private sector can have increased access to loans, and, to shore up external reserves.

    “The Renminbi-Naira Swap Agreement between the Peoples Bank of China and the CBN.”

    In the area of bond issuance in the international capital market, the Federal Government last year successfully issued $4.5 billion Eurobonds, $4 billion of this was for the part financing of the deficits in the 2017 budget ($1.5 billion) and 2018 ($2.5 billion).

    The Eurobonds were highly oversubscribed, and the country was able to issue a tenor of 30 years, the first time in its history.

    A Diaspora bond to the tune of $300 million with a tenor of five-years was also issued for the first time to part–finance last year’s budget.

    The N100 billion Sukuk issued to finance 25 road projects across the country, N10.69 billion debut Green Bond to fight climate change and the N8.126 billion raised from 11,366 retail investors through the Savings Bond since it was launched in March 2017 are key achievements of the administration in its drive to reflate the economy.

    Many states, struggling with payment of salaries, have received more than N1.9 trillion from the Federal Government to meet their salary and pension obligations. This assistance has come in the form of budget support facility (N606.55 billion), Paris Club refunds, infrastructure loans and loan restructuring for facilities with commercial banks.

    External reserves have doubled since October 2016, from $24 billion to $48 billion, while the Nigerian Sovereign Investment Authority (NSIA) has seen the injection of $1.15 billion under the Buhari administration (the first government inflows since the original $1 billion which the fund kicked off with in 2012).

     

    Unlocking the potentials

     

    The administration leveraged on its goodwill to attract multi-billion investments and loans from China and Morocco. Buhari’s April 2016 visit to China unlocked billions of dollars in infrastructure funding and construction has progressed on the 150km/hour rail line between Lagos and Ibadan.

    The National Economic Recovery and Growth Plan (NERGP), launched in April last year to chart a course for the economy over the next four years.

    According to the government, the NERGP is to restore economic growth, invest in Nigerians, and to build a globally competitive economy by giving priority to agriculture, power, macro-economy, energy efficiency, transportation infrastructure and driving industrialisation through Small and Medium Scale Enterprises (SMEs).

    The administration is supporting MSMEs with $1.3 billion from the Development Bank of Nigeria (DBN). The money was provided by the World Bank, German Development Bank, the African Development Bank (AfDB) and Agence Française de Development.

    The Bank of Industry (BoI) has disbursed more than N160 billion in loans since 2016. It has also established a N5 billion Fund for artisanal miners, as part of the Federal Ministry of Mines & Solid Minerals Development’s Programme to boost activities in the mining sector.

    A power reform led to the launch of the N701 billion Payment Assurance Programme to guarantee payments to generating companies and gas suppliers. This programme, known as the Power Sector Recovery Programme, was endorsed by the World Bank.

     

    The Anchor Borrowers Programme

     

    The Anchor Borrowers Programme (ABP) of the CBN has raised local production of grains. It has produced a model agricultural collaboration between Lagos and Kebbi states. The country’s rice imports fell from 580,000 MT in 2015 to 58,000MT last year. The programme has seen the disbursement of N82 billion to 350,000 farmers of rice, wheat, maize, cotton, cassava, poultry, soy beans and groundnut. It has aided the farmers to cultivate about 400,000 hectares of land. Rice yields have doubled from two to three tonnes per hectare.

    According to the fact sheet, “between 2016 and 2018, eight new rice mills have come on stream. More than a billion dollar of private sector investments in the production of rice, wheat, sugar, poultry, animal feed, fertilisers, etc, since 2015.

    “Nigeria’s milled rice production has increased by about 60 percent, from 2.5 million MT in 2015, to 4 million MT in 2017.

    “The Presidential Fertiliser Initiative (which involves a partnership with the Government of Morocco, for the supply of phosphate), has resulted in the revitalisation of 14 blending plants across the country, with a total installed capacity in excess of 2 million MT.

    The benefits include annual savings of $200 million in foreign exchange, and ¦ 60 billion annually in budgetary provisions for Fertiliser subsidies.”

    “The scheme has also made it possible for farmers to purchase fertiliser at prices up to 30 per cent cheaper than previously available.”

     

    Ease of Doing Business

    Reform Programme

     

    The Presidential Enabling Business Environment Council implemented its 60 National Action Plan between February and April. The plan has given willing investors the platform to search for company names on the website of the Corporate Affairs Commission (CAC). Such investors can upload their registration documents directly to the CAC website without hiring lawyers to prepare registration documents. A single form has been created for company incorporation to save time and reduce cost. The Federal Inland Revenue Service (FIRS) e-payment solution has been integrated with the CAC portal to facilitate e-stamping. The country now has a simplified Visa on Arrival (VoA) Process.

    To also ease business, a joint physical examination of cargo has been directed to ensure one-point contact between importers and officials. The CBN, Customs and commercial banks have been compelled to process Net Export Proceeds forms within 72 hours and pre-Shipment Inspection Agencies (PIAs) must issue Certificate of Clean Inspection (CCI) within three days.

    The number of documents required for imports has been reduced from 14 to eight. The ones for exports have come down from 10 to seven. Now, terminal operators are mandated to finish container’s examination in 12 hours.

    Pro Osinbajo, as Acting President, sealed the National Action Plan by signing three Executive Orders to improve efficiency in the business environment and promote local procurement by government agencies. Since 2017, three Executive Orders, Executive Order on Improving Efficiency in the Business Environment, Executive Order on Promoting Local Procurement by Government Agencies and the Executive Order on planning and execution of projects, promotion of Nigerian content in contracts and science, engineering and technology have been issued. The Senate also passed the Companies and Allied Matters (Repeal & Re-enactment) Bill 2018 last month to give legal backing to some of the reforms already launched and being implemented.

    The Presidency said: “The new law allows the use of electronic signatures for company registration documents; provides for the submission of applications for reservation of names through electronic means; allows for a new form of legal entity known as Limited Liability Partnerships (LLPs), and makes it possible for a single person to form a private company in Nigeria; among other reforms.

    The success of the Ease of Doing Business Reform Programme resulted in Nigeria moving up 24 places on the World Bank’s Ease of Doing Business rankings in 2017, and earning a slot on the List of 10 Most Improved Economies.”

     

    Infrastructural development

     

    The administration is revitalising the country’s 3,500 kilometre network of Narrow-Gauge railway. A consortium, led by General Electric (GE) and comprising Transnet of South Africa, APM Terminals of the Netherlands and Sinohydro Consortium of China, is working on the Lagos-Kano Railway Narrow-Gauge Line.

    The reconstruction of the Abuja Airport runway was done within the scheduled six-week period (March to April 2017).

    Last month, the government launched the Presidential Infrastructure Development Fund (PIDF), under the management of the Nigerian Sovereign Investment Authority (NSIA). The PIDF has a seed funding of $1.3 billion. (NSIA) in March invested $10 million to establish a world-class Cancer Treatment Center at the Lagos University Teaching Hospital (LUTH), and $5 million each in the Aminu Kano University Teaching Hospital and the Federal Medical Centre, Umuahia to establish modern diagnostic centres. These centers are billed for completion this year.

    The Abuja Light Rail system has been completed and will go into operation this year. The first line will connect the city centre with the airport, with a link to the Abuja-Kaduna Railway Line.

    Other projects done by the administration, according to the document, are the following Water Supply Projects and Dam/Irrigation Projects have been completed by the Buhari administration; Central Ogbia Regional Water project in Bayelsa, Sabke/Dutsi/Mashi Water Supply project in Katsina, Northern Ishan Regional Water Supply project, Kashimbila Dam, Taraba State, Ogwashi-Uku Dam, Delta State, Shagari Dam Irrigation Project, Sokoto State and the rehabilitation of Ojirami Dam Water Supply Project, Edo State.

    On ecological projects, the document shows that more than 70 projects were awarded and completed across the six geopolitical zones. Some of the 25 road projects being funded by the N100 billion Sukuk Bond are: the construction of Oju/Loko–Oweto bridge over River Benue to link Loko (Nasarawa State) and Oweto (Benue State) along route F2384, dualisation of Abuja–Abaji–Lokoja Road Section I, dualisation of Suleja–Minna Road in Niger State Phase, dualisation of Abuja–Abaji–Lokoja Road, rehabilitation of Enugu–Port Harcourt dual-carriage, rehabilitation of Enugu–Port Harcourt dual-carriage, dualisation of Yenegwe Road Junction–Kolo–Otuoke–Bayelsa Palm in Bayelsa and others.

     

    Social Investment Programme

     

    The Social Investment Programme (SIP) has over nine million beneficiaries drawing from its N140 billion purse. The 200,000 N-Power beneficiaries draw N30, 000 stipends monthly. Another batch of 300, 000 are being processed.

    Significantly, no less than 3,162,451 people in 26, 924 cooperative societies have been registered for the Government Enterprise and Empowerment (GEEP) Scheme. N15.183 billion interest-free loans have been issued across the country to 300,000 market women, traders, artisans and farmers. 349,000 new bank accounts/wallets for beneficiaries and intending beneficiaries have been opened to promote banking inclusion.

    In November last year, the GEEP was chosen as the pilot programme for the Bill & Melinda Gates Foundation Policy Innovation Unit in Nigeria.

    The administration is catering for 8.2 million primary school pupils through its Homegrown School Feeding Programme (HGSFP) in 45,394 public primary schools across 24 states. The benefiting states are: Abia, Anambra, Enugu, Ebonyi and Imo in the Southeast; Akwa Ibom, Cross River and Delta in the Southsouth); Osun, Oyo, Ondo and Ogun in the Southwest); Benue, Niger and Plateau in Northcentral; Kaduna, Katsina, Kano, and Zamfara (North West); Bauchi, Taraba, Borno, Gombe and Jigawa in the Northeast). Over 87,261 cooks have been engaged under the scheme.

    “The Health aspect of the programme has seen over three million pupils dewormed in six states. The deworming programme is a bi-annual programme aimed at eradicating and reducing the burden of worms,” the Presidency said.

    Through its Conditional Cash Transfer (CCT) scheme, 297,973 beneficiaries now get N5, 000 monthly stipend nationwide.

     

    Cleansing budgeting

    process/BVN/Efficiency Unit

     

    Aside the activities of the anti-graft agencies, the Presidential Initiative on Continuous Audit (PICA) is to strengthen controls over government finances through a continuous internal audit of Ministries, Departments and Agencies (MDAs). Through the initiative, more than 50,000 ghost workers have been identified and N198 billion was saved in 2016.

    The anti-corruption war has generated budget reforms, which made the President to direct all government agencies to prepare their budgets in line with International Public Sector Accounting Standards (IPSAS). A budget template was developed for this purpose.

    For the first time, this year’s budget was collated, using a web-based application developed by the Budget Office of the Federation (BOF). MDAs were compelled to upload their proposals on a portal.

    The Bank Verification Number (BVN) has also saved the government a lot of money. All payments are done only into accounts with verifiable BVN. This helped to detect the 50,000 ghost workers using the Integrated Personnel Payroll Information System (IPPIS) platform.

    The creation of Efficiency Unit (EU) has promoted efficient use of government resources. It has resulted in saving N15 billion that would have gone into travel, sitting allowances and souvenirs.

     

    TSA/Open Government

    Partnership and whistleblowing

     

    On August 7, 2015, the President compelled the MDAs to close their accounts with commercial banks and transfer their balances to the CBN on or before September 15 of that year. By this action, he gave life to a policy launched in 2012 but left unimplemented. This has resulted in the consolidation of over 20,000 bank accounts. An average of N4.7 billion is saved monthly in banking charges. The era of some MDAs having idle cash in banks and still borrowed exorbitantly from banks is gone for good.

    The government has not relented in shutting corruption doors once discovered. One of such led to its signing on to the Open Government Partnership (OGP). In 2016, President Buhari was at the International Anti-Corruption Summit organised by the United Kingdom (UK) Government, where he pledged that Nigeria would join the international transparency, accountability and citizen engagement initiative.

    He fulfilled the promise in 2016 when the country became the 70th country to join the OGP. This has led to an OGP National Steering Committee (NSC), which has developed a National Action Plan (2017–2019) to mainstream transparency in the management of public resources. The plan was submitted at the OGP Global Summit in Paris, France, in December 2016.

    The anti-corruption drive brought about the Whistleblowing Policy, which within its first two months of operation, yielded over $160 million and over N8 billion in recoveries of stolen government funds. The figures have since grown. N13.8 billion was recovered from tax evaders. In May, the government paid N439.2 million to 14 whistleblowers who gave specific tips on tax evasion. There have also been N7.8 billion, $378 million and £27, 800 in recoveries from public officials targeted by whistleblowers.

    The National Economic Council (NEC), under the Osinbajo chairmanship, carried out an audit of key federal revenue generating agencies and discovered that N526 billion and $21 billion was underpaid to the Federation Account between 2010 and 2015. The audit to cover the period until June 2017 is ongoing.

    The PICA said it uncovered 54,000 fraudulent payroll entries thus saving N200 billion.

     

    A more transparent NNPC

     

    The Nigerian National Petroleum Corporation (NNPC) was indicted by the independent global reports for being opaque. One of the first steps the administration took was to reconstruct the corporation’s opaque accounting structure. This led to the closure of more than 40 accounts. Now, NNPC publishes its financial reports monthly and the operational deficits have been reduced by not less than 50 per cent. NNPC outstanding annual audits from 2011 to 2014 have been conducted.

    The administration has also resolved the shadowy oil swap deals that had cost the country billions of dollars and left it at the mercy of a few rich Nigerians. The government has also introduced third party financing to eliminate direct funding of cash calls.

    It has eliminated the Offshore Processing Agreement (OPA) through the introduction of the Direct Sales and Direct Purchase (DSDP) scheme with reputable off-shore refineries. This has yielded annual savings of $1 billion.

    The Petroleum Industry Governance Bill (PIGB) put together by the Federal Ministry of Petroleum Resources, has now been passed into law by the Senate, after 17 years of failed efforts.

    In 2016, the Federal Government exited the Cash Call arrangement with Joint Ventures (JVs) with International Oil Companies (IOCs), which put pressure on government’s finances. The failure to fully fund them resulted in more than N6 billion arrears as at December 2015. The reforms have led to the negotiation of the debt arrears owed the IOCs from $6.8 billion to $5.1 billion and a long-term repayment plan has been agreed on.

     

    International hugs and kisses

     

    The international community has warmed up to the Buhari administration in the last three months. The President has enlisted the support of multilateral institutions, such as the World Bank and IMF, security agencies, Western countries and other friendly nations to source, locate and repatriate stolen assets. He has met key world leaders, including President Donald Trump. The United States (U.S.) government is supplying 12 Super Tucano Aircraft to Nigeria.

    At one of his international engagements, specifically the London summit on anti-corruption, Buhari announced that Nigeria would begin the full implementation of the principles of the OPEN contracting data standards.

    It was in furtherance of the President’s trips to the Middle-East, where he sensitised the governments on the need to repatriate stolen assets and repatriate the suspects for trial at home. In January last year, Nigeria and UAE signed Judicial Agreements on Extradition, Transfer of Sentenced Persons, Mutual Legal Assistance on Criminal Matters.

    The Federal Government and the Swiss Government in March last year signed a Letter of Intent on the Restitution of Illegally-Acquired Assets forfeited in Switzerland. Under the agreement, the Swiss government has repatriated $322 million in Abacha Loot. The cash is being warehoused in a Special Account in the CBN and it will be deployed towards the SIP.

     

    Insurgency lost its steam

     

    Although there are still pockets of attacks, but gone were the days when insurgents reigned supreme. One of the first things Buhari changed was the military structure, which led to the relocation of the Nigerian Military Command Centre to Maiduguri in May 2015. The results are glaring: Over 13,000 persons have been rescued by the troops, including 106 of the Chibok schoolgirls 105 of the Dapchi Girls abducted in February. Since December 2015, all territories previously under the Boko Haram control have been regained; by June 2015, Nigeria provided $21 million to the Task Force; and in June 2015, the United States (U.S.) announced a $5 million support for the fight against terrorism in the sub-region.

    The seriousness with which the administration has pursued the anti-terror war has also led to the U.S. government further announcing an additional $40 million for humanitarian assistance in the sub-region. It is in the process of selling war planes to the country.

    Boko Haram’s operational and spiritual headquarters, “Camp Zero”, in Sambisa Forest, has been captured. The army has arrested Usman Mohammed, (a.k.a. Khalid Al Barnawi), leader of the Ansaru Terrorist group and one of the most wanted terrorists in the world, on whose head the U.S. placed a $6 million bounty.

    Also arrested and being prosecuted is Amodu Omale Salifu, leader of an ISIS affiliate group active in Northcentral.

    As the campaigns for the next general elections gather steam, Nigerians will sure be looking for more actions.

     

  • Fair deal, but …

    President Muhammadu Buhari, in his May 29 Democracy Day broadcast, rolled out an impressive list of achievements. The President  reeled out his score card, based on his government’s three pillars: security, corruption and the economy.

    In general terms, he was true in what he claimed his government had done. But whether that score card has met the general high expectation of the change mantra, that propelled the president and his All Progressives Congress (APC) to power, is another matter.

    Still, given the rather tenuous juncture at which the administration took over in 2015, it should be fairly proud of its achievements, forged in the most difficult and testy of times.

    The president was, therefore, right on the money in his opening assertions, in the second of his 37-paragraph speech, when he said, inter alia: “The commemoration of this year’s Democracy Day is … a salute to the resilience and determination of Nigerians …”  Indeed, it has been tough for everyone, the governors and the governed — a crucible Nigeria had not experienced for a long time.

    That is why, to every claim the president has made, there is probably a counter-claim, earnest or cynical. But that would appear a function of a polity that agrees it has glaring problems, but fiercely disagrees on how to solve them. Also, there is hardly any agreement on how to tackle spin-offs from a problem being solved. That is, because the society reeks with mutual distrust — ethnic, religious, communal.

    Take the security question. On Boko Haram, the most critical security blight the administration inherited, the president said — and it is true — that his government has done much better than the Goodluck Jonathan Presidency.

    Enthused the president: “Before this administration came into being three years ago, Boko Haram held large areas of land spanning several local governments in the North East.  Today,” he added, “the capacity of the insurgents has been degraded, leading to the re-establishment of authority of government and the release of captives”.

    True — and those right in those troubled spots — returning emirs that fled their courts; and locals that sought refuge in the bush and in Internally Displaced Persons (IDP) camps — would probably appreciate that remarkable transition, much more than those commenting, hundreds of miles from the North East vortex.

    Yet, despite that progress, the Dapchi school girls’ capture — all 104 of them — re-echoed the shameful abduction of the 276 Chibok girls, of the Jonathan era. Though the Buhari Presidency moved fast to negotiate the release of the Dapchi girls, save the sole Leah Sharibu, still in captivity for insisting on her Christian faith, that Chibok could repeat itself in Dapchi put a dent on the administration’s anti-terror score card. Still, it is also fair to say that Buhari has negotiated part-release of the Chibok girls — what Jonathan could not do. But that the rest are still in captivity gores not a few.

    Even then, as the government was lifting the Boko Haram siege, another pestilence of killers were descending upon the land, this time mainly in the Middle Belt. In the first quarter of 2018, the killings were so brazen, particularly in Benue and Taraba, as to rubbish whatever records the administration had chalked up on security.

    The crisis is not helped by the simplistic blaming of every killing on “herdsmen”; and the explosive allegations that the killings were “ethnic cleansing”. Later investigations, however, would reveal a more complicated problem, spanning farmers-herdsmen tension, politically motivated killings allegedly by cult groups, and even ancient feuds revived by crippling poverty, among sundry anomie.

    But whatever the scope or source of these killings, the Buhari administration cannot claim to have made  a dent on security without eliminating the bloodletting  and making every corner of Nigeria safe. It should also be wary of declaring success on the war against terror. Until the last terrorist, suicide-bombing soft targets, is curtailed, the war on terror cannot be won.

    On corruption, the Buhari government, of truth, has much to crow about.  Aside from big name convictions, the anti-sleaze war has not only been on the front burner, there is increasing consciousness that maybe a Nigerian government is at last ready to punish corruption. Indeed, only on May 30, the long-drawn trial of the Revd. Jolly Nyame, Taraba two-term governor from 1999-2007, ended in a 14-year gaol term, without any option of fine. That is an encouraging feat.

    The president was also right on the strict implementation of the Treasury Single Account (TSA), ironically an initiative of the Jonathan Presidency, which didn’t have the will to walk its policy talk. Aside from saving a large quantum of cash  — the president put the figure at N200 billion — from pilferers, implementing TSA is attacking corruption from the preventive side. That is far cheaper than chasing stolen funds. But the most obvious gains from the anti-sleaze war would appear generally doing more with less, when compared to the boom period of the Jonathan administration.

    Still, there are abiding worries, in some quarters, that the corruption war is one-sided, and driven by political affiliations, rather than strict merit. But another view point has also countered that the opposition was crying wolf, just to corral sympathy.  Whatever it is, President Buhari must ensure the corruption war is fair to all.

    From corruption to the economy, the adminstration’s third pillar. Again, from the recession that dawned with its entry into office, the economy would appear at last on the mend. The president, quoting the National Bureau of Statistics (NBS), said the economy grew by 1.95 per cent, in first quarter 2018, against the deficit -0.91 growth in first quarter 2017, even if back then, the economy was inching its way out of recession.

    Foreign reserve has also grown to US$ 47.5 billion in May 2018 from US$ 29.6 billion in May 2015, when the administration took over. Of course, there is the huge investment in agriculture, symbolised by rice and yam, two popular staples, that drive the government’s policy sing-song that Nigeria must grow what they eat and eat what they grow. The president said the aggressive cultivation of rice has reduced rice importation by 90 per cent, within three years. Also, all over the country there is clear evidence of fixing roads, and building rail — the result of 30 per cent of the budget on capital expenditure, a rarity, many would say, since 1999.

    At best, however, what the administration has done is priming the economy for its eventual rebound. For it to achieve real success, it must continue on the right path of fiscal discipline and an even increased spending on infrastructure, not to talk of finally delivering on the power sector, which generation is now put at 7, 000 mw. Then, and only then, would its exertions translate to direct citizens’ joy and less hunger in the land.

    But aside from these three pillars, the Buhari Presidency should be more sensitive to appointments, to conform to Nigeria’s diversity. The president has always argued that his cabinet has met the national spread, as demanded by the Constitution — which is true. But others have countered that his security appointments are skewed to the North, thus eliciting some form of alienation from those parts of the country that feel left out. The president would therefore do well to be more sensitive on this score and balance the appointments.

     

     

  • FITC CEO harps on role of banks in economy

    The Financial Institutions Training Centre (FITC) has said the growth of the economy depends on the strength and success of its banking sector.

    The FITC Managing Director/CEO, Lucy Newman, said in a statement that the implementation of guidelines and effective policies in the banking system would strengthen the system and facilitate sustained economic growth.

    Speaking at the FITC Thought Leadership Discussion Series in Lagos, Newman said the discussions in the series and the outcome of the forum would trigger significant insights into how to strengthen the financial sector.

    She said the discussion series were in line with the mandate of the FITC to protect, promote and advance the knowledge and practice of banking and finance in Nigeria and Africa.

    Also speaking, the Director-General, Zambia Development Agency, Patrick Chisanga, who spoke on how to strengthen the banking system and facilitating sustained economic growth, said the success of the banking sector could not be achieved without addressing the issue of corporate governance.

    He said corporate governance and the government were inseparable.  He added that his submission was informed by his experience of how investor confidence in the Zambian economy increased and resulted in higher Foreign Direct Investment inflow because of demonstrated commitment to political stability and corporate governance.

    According to Chisanga, it is safe to conclude that corporate governance is a beacon to attract foreign investment and create effective, efficient and sustainable business enterprise. He described corporate governance as an immutable factor in the enthronement of efficiency and prosperity in any system.

     

  • Oil price rise brightens hope for economy

    The rising oil prices have given the economy a shot in the arm. The government can now fund key projects with more revenue accruing to it. COLLINS NWEZE writes that the windfall also raises hope on implementation of the N8.617 trillion 2018 Budget.

    When crude oil price crashed to nearly $25 per barrel in January 2016, there was little hope that it would rebound. But, over two years after, the oil price has risen significantly. It hit $76.56 per barrel ysterday.

    The development will no doubt shore up government revenue. For the years, oil has been the mainstay of the economy. But the Federal Government is working on its diversification by boosting the non-oil sectors.

    Mining and agricultural are among the sectors being promoted to widen the country’s revenue base.

    More than 95 per cent of Nigeria’s foreign exchange (forex) earnings come from crude oil exports. Brent crude oil futures were at $75.59 per barrel up 72 cents, or one per cent, from their last close after climbing to $75.89 a barrel earlier in the session, their highest since November 2014.

    The deepening economic crisis, now threatening Venezuela’s existence, is believed to have been responsible for the rise in oil prices.

    United States (U.S.) oil prices rose above $70 a barrel for the first time since November 2014. Speculations on whether the U.S.  will pull out  from a deal with Iran ended on Tuesday as President Donald Trump announced the withdrawal of the U.S. from an Obama-era nuclear agreement with Iran.

    Analysts warned that the deepening economic crisis in major oil exporter, Venezuela, threatened to further crimp its production and exports. Venezuela’s oil output has been reduced by half since the early 2000s to just 1.5 million barrels per day (bpd), as the South American country failed to invest enough to maintain its petroleum industry.

    Beyond Venezuela’s woes, Nigeria’s economy is gaining momentum as more revenue is expected to accrue to government coffers. This becomes exigent because for the government to meet its developmental goals, especially in funding key projects, which are capital intensive, it must earn enough revenue mainly from oil.

    With over N1.3 trillion already sunk into infrastructure, a steady rise in crude oil prices is expected to boost further spending in the segment. The new oil windfall may have created a better opportunity for the Federal Government implement this year’s N8.617 trillion budget.

     

    The infrastructure gap

     

    The Africa Infrastructure Country Diagnostic (AICD) report for 2011 estimated that Nigeria required sustained spending of $14.2 billion per annum over the next decade to effectively tackle its infrastructure challenge.

    That pinpoints the huge funding requirement for present and future infrastructural development and its attendant impact on survival and growth of businesses in the country.

    Besides, traditional funding methods can no longer suffice as fund providers and various levels of government lack the resources at their disposal. Therefore, earning more funds from oil may simply be the solution to bridging the infrastructure funding gap.

    West African Institute for Financial and Economic Management (WAIFEM) Director-General, Prof. Akpan Ekpo, explained that budgetary allocations alone may not be enough to finance the infrastructure deficit in the country. He said the rise in crude oil prices could come to the rescue.

    The country’s current available power generation capacity is about 7,000 megawatts, which is a far from the estimated demand of between 10,000 and 12,000 megawatts.

    This has resulted in frequent and unpredictable load shedding and a heavy reliance on generators by consumers.

    Ekpo said: “With the current political will to tackle corruption and the desire to find a solution to the infrastructure problem, there is the need to channel fresh investments into power supply, roads, the railway and other social amenities.”

    The impact on government revenues and the economy has been positive. It has prompted the International Monetary Fund (IMF) to revise its 2018 projections for Nigeria’s growth to 2.1 per cent from 1.9 per cent.

    The growth, the IMF said, would be supported by higher oil prices and domestic production, increased forex liquidity and market deregulation.

    These will boost investors’ confidence, foreign direct investment and foreign portfolio investment inflows. But achieving these, the Fund explained, will require the implementation of policies, such as tax reforms, social safety programmes and investments in infrastructure.

    The impact of the rising crude oil prices is already being felt in the economy. The National Bureau of Statistics (NBS) data showed the Gross Domestic Product (GDP) grew by 1.40 per cent year-on-year in real terms in the third quarter 2017. It was the second consecutive positive growth since the emergence of the economy from recession in second quarter of last year.

    The growth, although seen as fragile, was also higher by 0.68 per cent points from the rate recorded in the preceding quarter.

    Nigerian Stock Exchange All-share Index (NSEASI) is still miles below record highs set in early 2008, but a 43 per cent rally in 2017 has helped to close the gap.

    FBN Capital analyst Olubunmi Ashaolu said the NSEASI was among the best performing indices globally in 2017, better than Nairobi Stock Exchange and Johannesburg Stock Exchange which gained 17.5 per cent and 16.5 per cent respectively.

    The NSEASI was still in negative neighbourhood in early May but surged after many offshore investors keyed into the Central Bank of Nigeria’s (CBN’s) Investors’ and Exporters’ (I&E) Forex Window. The forex window’s turnover since late April through to January 3, totals $26.3 billion and has averaged $1 billion on a weekly basis since mid-September last year,  after foreign investors got assurances they could exit the market at will. Their share of transactions picked up, reaching 53 per cent and 54 per cent in October and November respectively due to momentum created by the window.

    The market had also enjoyed a lift after the foreign reserves accumulation became impressive and the Federal Government successfully tapped the Eurobond market thrice, raising $4.5 billion in three offers. The foreign reserves are now in excess of $47 billion.

    Brent crude prices had earlier risen by 5.39 per cent to $66.72 per barrel on December 28, from $63.31 per barrel on December 14.

    Oil prices reached $67.02 per barrel on December 26, the highest in 29 months following the announcement of the pipeline blast in Libya – which supplies crude to Organisation of the Petroleum Exporting Countries’ (OPEC’s) major export terminal, the Es Sider terminal.

    An economist, Bismarck Rewane, described oil prices rise as positive for Nigeria’s dollar earnings, implementation of the 2018 Budget and better equities performance.

    He was   optimistic that stocks would keep rising this year as investors take advantage of their low prices.

    Another economist with PricewaterhouseCoopers (PwC) Nigeria, Adedayo Akinbiyi, said the budget of $23.82 billion, based on an oil price benchmark of $45 per barrel, oil production of 2.3 million barrels per day and an exchange rate of N305/$1 was meant to consolidate the economic growth recorded last year.

    The budget funding would come from $18.82 billion revenue projection, with oil and non-oil accounting for 37 per cent and 63 per cent respectively.

    Gross official reserves increased by $3.82 billion in December last year to $38.77 billion  following $3 billion raised through Eurobond in November, which was reflected in the reserves on a 30-day moving average basis.

    The forex windows enabled the CBN to meet forex demand and the attracted inflows contributed to the accretion of reserves. Reserves at end-December covered 14.4 months’ merchandise imports, and 9.7 months when imports of services are added.

    Analysts said the debate should move on from whether Nigeria has an adequate external buffer to whether it is maximizing the revenue accruing from its reserves.

    Re-emphasizing the pickup in the economy, Rewane, said economic scorecard for Nigeria showed that crude oil price stood at $52.20 per barrel as at January 2017 and rose to $66.34 per barrel in January 2018.

    He said: “The second half of 2018 will be politically driven. There to be increased government spending in the run-up to the 2019 election. This will be favourable for growth.

    “On the other hand, investors may adopt the wait and see approach due to political uncertainties.”

    But, Rewane warns that Nigeria’s economy remains largely vulnerable to commodity shocks. Lower oil prices or a dip in domestic production due to militant activities will weigh on economic activity, and could possibly reverse current progress. Any delay in policy responses will also prove detrimental.

     

    IMF counsels on diversification

     

    The IMF advised oil-dependent economies, including Nigeria, to intensify economic diversification as the global body foresees the crash of crude oil prices in the near future.

    The IMF said: “Some low-income countries like Mozambique and Nigeria have experienced financial stress or deteriorating loan quality in recent years as growth has moderated and corporate balance sheets have weakened.

    “Further deterioration in loan quality would impair credit intermediation and ability of the banking sector to support growth, which would raise the risk of cost recapitalisation and severely burden the already strained public finances.”

    The IMF Director of Research, Maurice Obstfeld at a news conference yesterday said that global economy would grow by 3.9 per cent in 2018. Obstfeld said the forecast was borne out of the continued strong performance in the Euro area, Japan, China and the U.S.

    He said: “Despite the good near-term news, longer-term prospects are more sobering. Advanced economies are far facing aging population, falling rates of labour force and low productivity growth.

    “Emerging and developing economies present a diverse picture.  Many of these countries need to diversify their economies to boost future growth and resilience.’’

    According to Obstfeld, global financial conditions remained loose, despite the approach of higher monetary policy interest rates and enabling a further buildup of asset-market vulnerabilities.

    He said the recent escalating tension over trade (U.S. vs China) presented a growing risk for global financial stability.

    He said: “The prospect of trade restrictions and counter-restrictions threatens to undermine confidence and derail global growth prematurely.

    “While some governments are pursuing substantial economic reforms, trade disputes risk diverting others from the constructive step they would need to take now to improve and secure growth prospects.’’

    The IMF encouraged each national government to advance growth by resolving issues of climate change, infectious diseases, cyber-security, corporate taxation and corruption, among others.

    The global financial body said “each national government can do much on its own to promote stronger, more resilient and more inclusive growth,” saying  that global interdependence will only continue to grow and that “unless countries face it in the  spirit of collaboration, not conflict, the world economy cannot prosper.”

  • Experts differ on Nigeria’s economic recovery

    One year after the federal government issued executive orders to drive the key sectors of the economy, the consensus out there is that a lot of the changes that have happened are purely cosmetics but not far-reaching.

    Speaking with a cross-section of experts, they expressed mixed feelings over the numerous policy pronouncement of the federal government in the last 12 months, especially as it concerns ease of doing business.

    In the view of Chief Cyprian Arinze, a haulage contractor, the Executive Order if anything amount to putting the horse before the cart. “If the government takes care of the roads, we can achieve over 95% Ease of Doing Business. Without this, we will just be going round and round the circles.”

    Echoing similar sentiments, Chief Remi Ogungbemi, Chairman, Association of Maritime Truck Owners (AMATO) argued matter-of-factly that the Executive Order is far from a reality as basic infrastructure aimed at turning things around at the ports are still missing.

    To achieve the much hyped executive orders mandate, he would rather a deliberate measure to build truck terminals. “I want to use this avenue to appeal to the concerned authorities to see what they can do because things are in terribly bad shape right now.”

    In his assertion, Austin Okere, the Founder and Entrepreneur-in-Residence at the Ausso Leadership Academy, an ideas incubation company express worry that the Economic Recovery Growth Plan laudable as it is already suffering from inertia associated with government policies.

    “I think the problem we have is that we run election economics. Great men think about the next generation but politicians think about the next election. And insofar as the economy is about amassing enough money  to manoeuvre or win the elections by all means, then another four years, we go back to the same square, then if a new government comes in, it starts exposing saying oh, look at the money that was amassed and they say it was for election and say, ok. The point is insofar as we continue to run election economics; we’ll be where we are. In an election year, a lot of time and resources are wasted. So we only have two productive years and if you’re not lucky, the new government comes and rollback everything that has been achieved, it becomes a problem.”

    Expectedly, the government on its part seems to be convinced that it has performed commendably well thus far. David Uzosike, the Reform Lead, Presidential Enabling Business Environment Council/Enabling Business Environment Secretariat with the mandate to lead, coordinate, research and identify the constraints to ease of doing business in Nigeria, in an interview said a lot have been achieved.

    “If you’ve been following our communication, especially looking at our website, you’ll see all the reforms and impacts we have achieved from the Ease of Doing Business perspective. And when you talk about the Executive Orders specifically, we can say there has also been some traction in that area.”

    While acknowledging that infrastructure gaps exists, Uzosike said, a lot has also been done to make documentation process at the port seamless.

    “Truth be told, a lot has changed. For instance, where you used to have 14 documents for inspection, it’s now eight and where you used to have all the agencies inside the ports, with each of them coming one after the other to inspect containers; it has changed. Now all the agents operate with one single window. There are no more multiple points of inspection. So these are things that are really in practice.”