The Nation Newspaper

Tag: Economy

  • Report: Nigeria, South Africa likely out of recession

    Report: Nigeria, South Africa likely out of recession

    Nigeria’s economy is out of recession, a report said on Sunday

    The economy broke out of a long slump in the second quarter with a median forecast for 1.55 per cent year-on-year growth, the Reuters report said.

    The report also shows that South Africa quit shrinking with 2.2 per cent quarter-on-quarter growth.

     South Africa and Nigeria have a lot in common. They are Africa’s two biggest economies and are both making their ways out of recession.

    Nigeria entered recession late 2015. South Africa confirmed a technical recession in the first quarter of this year.

    Reuters report shows strong growth will not show up until business confidence is restored.

    The report indicated that Nigeria and South Africa have both benefited from a recovery in commodity prices since early 2016.

    CEO of Rich Management in Nairobi Aly-Khan Satchu said: “Both countries have bounced off the bottom, but the sustainability is in question. Nigeria needs a single FX policy and South Africa needs more policy certainty.”

    “We expect a return to positive year-on-year growth in Nigeria, helped by improved foreign exchange availability and a recovery in oil production,” said Razia Khan, head of Africa research at Standard Chartered.

    Gaimin Nonyane, head of economic research at Ecobank, said she expected the positive growth trajectory to be maintained.

    In South Africa, catering and accommodation sector was the worst performer in the first quarter. The sector contracted 5.9 percent.  The key manufacturing sector shrank 3.7 percent.

     “Recovery in manufacturing in the second quarter should help drive a quarter-on-quarter acceleration, but growth is expected to remain weak overall,” said Khan.

    Khan added that agriculture should provide some lift to growth but other sectors are likely to only see negligible growth because of waning confidence.

  • Osinbajo okays issuance of 615 land titles

    Osinbajo okays issuance of 615 land titles

    Acting President Yemi Osinbajo has approved the issuance of 615 pending land titles to the applicants.

    He gave the Minister of Power, Works and Housing, Babatunde Fashola approval to sign the land titles.

    The Minister briefed State House correspondents after a closed door meeting with the Acting President at the Presidential Villa Abuja on Tuesday night.

    The approval, he said, is to enable land transactions, mortgages, assignments and debentures across the country.

    According to him, the letters were already being issued to the applicants.

    The Ministry, he said, received the delegation of authority on July 27, and was awaiting another delegation of authority to issue the Certificates of Occupancy (C of O) for the approved titles.

    He said “Just to update the members of the public about the delegation of authority to issue consent for land transactions.

    “It has accumulated for a while but we received the delegation, I believe, on 27th of July.

    “On the first week of August my office approved all of the 615 pending applications for land transactions, mortgages, assignments, debentures and all of those things,” he said .

    He added “So, letters are being issued now to all the applicants and those who haven’t received theirs should just tally a while.

    “In a matter of a few days to fortnight from now we would have cleared that backlog then we go and deal with the pending applications for Certificates of Occupancy.

    “Again, we are expecting delegation of authority for that one.’’ he stated

    Fashola said that the applications had piled up which should not have happened adding that it was important to tell the public about the approvals.

    According to him, the implication is that it is a further boost to the economy.

    He said that those who wanted to borrow or lend money or had sold or planning to sell their land could complete those transactions and money could move round.

    The Minister explained that titles could change hands as all businesses related to land whether the person was running a school, bank, a newspaper agency or catering outfit.

    “Everything revolves around it so it helps to drive us closer to our journey out of recession and implement the Economic Recovery and Growth Plan,’’ he said‎.

  • How to grow economy, by Awolowo

    One way to grow the  economy is to make it export-driven so it could become resilient to the vagaries of oil prices, the Chief Eexcutive Officer, Nigerian Export Promotion Council (NEPC) , Olusegun Awolowo, has said.

    He spoke during the Nigeria Initiative Economic Development luncheon in Abuja. He said services were already driving the economy, an indication that the country is already on the path of diversification.

    “The current development in the country will force Nigeria to shift its focus to non-oil exports as was the case in the 1960s. Nigeria is also facing challenges in the decline in non-oil export as reflected in the drop of income from $2.7billion in 2014 to $1.6billion in 2015.

    “While non-oil products are still exported to key destinations around the world, the immediate priority is to concentrate on new export products where Nigerians can earn between 40 and 50 per cent of what it earns from oil in the past.

    “Nigeria top oil products include cocoa and cocoa product preparation which enjoy a 36 per cent increase from $556.8 million in 2012 to $758.6 million in 2013 but a slight decrease of 12 per cent in 2014. Sesame seeds and cashew nuts also performed well with 35 per cent and 25 per cent increase in 2013 and 13 and nine per cent in 2014.

    “NEPC’s vision is to replace oil as the major national foreign exchange earner by growing non-oil exports to $30billion in the next 10 years and eventually reach 20 per cent of non–oil export to gross domestic (GDP) or approximately $100 billion yearly based on its zero oil plan.

    “At present, the trade in indigenous products and services is conducted by large numbers of desperate SMEs operating on their own as exporters and importers.”

    He said though there is no sufficient statistics on the details of the trade, he said there is reason to believe that the trade is not well organised, a situation that does not augur well for growth and sustainability.

    Awolowo said in foreign countries where the Federal Government has diplomatic missions, it is estimated that Nigeria residents in theses countries total over 15million.

    According to the World Bank, Nigerians living abroad remitted over $20.77 billion 2015. Many Nigerians living abroad have excelled in their various fields and professions.

  • How to stabilise Nigeria’s economy – Obi

    How to stabilise Nigeria’s economy – Obi

    Adeyinka Akintunde

     

    Former Governor of Anambra State, Dr. Peter Obi the country needs to save aggressively, diversify the economy into knowledge based exports and invest in developmental education to come out survive the present economic challenges. 

    He stated this at the first annual conference of the Guild of Corporate Online Publishers (GOCOP), held in Lagos on Thursday. 

    According to the Obi, failure to save well enough, and failure to invest well in developmental education is responsible for our current economic situation. 

    “The Nigerian economy has for the past decades been growing until the country recently experienced the economic recession.  From August 2016, Nigeria experienced negative growth in the economy, because we failed to save for the rainy days, as countries as China, South Korea, Thailand did as at the 1980’s.

    “So for us to bounce back economically as a nation, we must save be able to aggressively, diversify the economy into knowledge based exports and invest in developmental education. Our economy is fairly diversified. The oil is actually contributing 80% of our GDP”

    The Minister of Information and Culture, Alhaji Lai Mohammed in his speech said that the federal government is committed in making a paradigm shift in the economy, as it pays attention to agriculture.

    Represented by the Managing Director of the News Agency of Nigeria (NAN), Mr. Bayo Onanuga, Mohammed noted that when the economy is affected positively or negatively, the first sector to be affected is the media. He further commended GOCOP for coming under one platform to chart the course of online journalism.

    He further commended GOCOP for coming under one platform to chart the course of online journalism.

    “I commend GOCOP for coming together, but I appeal that GOCOP establish a code of conduct for online publishers and bloggers as it was done years ago, to avoid the spread of false news and deceits around.

    ” I charge online newspapers to find a way of posting stories that are catchier to the eyes, such that anyone that sees the headline would not resist it. This will make online papers take the lead from the social media handles, which are on top in terms of making money today.

    The event, which was attended by the Special Adviser to the President on Media and Publicity, Femi Adesina, representatives of the Chairman of the Economic and Financial Crimes Commission (EFCC), and the Inspector General of Police, ended with the inauguration of the new executives of GOCOP.

  • ‘Economy out of recession since June’

    The Bankers Committee of the Central Bank of Nigeria and other financial institutions yesterday said the economy may have come out of recession as far back as the second quarter of 2017.

    Addressing reporters at the end of the Bankers Committee meeting in Abuja yesterday, CBN’s Director, Banking Supervision Mr. Ahmed Abdullahi, said “the Bankers Committee noted the turnaround in the economy regarding the progress that has been made in getting the economy out of recession, we have strong belief that the second quarter of the year may have seen the economy emerging out of recession.”

    Abdullahi added that “there are reasons to believe this; the non-oil sectors have witnessed growth, although the numbers are not yet out from the National Bureau of Statistics but the fact that major non oil sectors have witnessed positive growth and the growth is driven largely by the oil sector. Then, there is this belief that a number of analysts believe that the economy could have been out of recession by the second quarter of 2017.”

    The director cautioned that “we await the numbers from the NBS, but there is this strong belief and a number of other reasons as well. “If you look at the confidence in the economy, if you look at the upsurge in the capital market, stability of the forex market, you will know that a lot of efforts have been made in getting the economy out of recession.”

    To Abdullahi, “this is a welcome development because it is going to have a rob-on effect on the banking sector and other sectors of the economy generally and the Bankers Committee generally expressed its delight with this development in the economy”.

    FSDA Merchant Bank Managing Director Mrs Hamda Ambah  said while some of the figures on the positive turn of the economy were not yet out, “we do know that NBS released figures that showed the Purchasing Managers Index (PMI) months after months for four consecutive months, that things were improving in the manufacturing sector. All these together help to buttress the point that we may not be totally out of the woods, but things are certainly looking up and in the right direction.”

  • Open up economy, experts urge

    The Federal Government has been urged to open up the economy to foreign direct investment to put Nigeria on the path of sustainable economic growth.

    An Economist and Chief Executive Officer of Economic Associates, Dr. Ayo Teriba, made the call during a breakfast session of the Financial Services Group of the Lagos Chamber of Commerce and Industry (LCCI), with the theme: Economic Recovery and Growth Plan: Roadmap to a Sustainable Economy held in Lagos yesterday.

    The forum was sponsored by Sterling Bank

    Teriba, who spoke on Nigeria’s economic outlook: Getting out of recession cycle, said “there is need to open up Nigeria to receive massive foreign investments, just like Saudi Arabia and India. This will unlock vast and latent opportunities in the country.”

    He urged the Federal Government to sustain its recent issuance of 1.5 Eurobond and must plan to issue a Diaspora bond.  Teriba advised the Central Bank of Nigeria (CBN) to complement the Federal Government’s effort by issuing Eurobond to ensure stability in the forex market.

    He said the Federal Government should learn how to manage cyclical shocks such as the remarkable drop in oil earnings which led to the devaluation of the naira in 2016, high level of inflation as well as increase in the interest rate.

     

     

    While urging fiscal responsibility, Teriba called on the Federal Government to halt the mis-alignment in some sectors of the economy where government parastatals were building expensive corporate offices and official cars without appropriation through the aid of revenue collecting agencies.

    Chairperson of the group and General Manager, Corporate Banking, Sterling Banking, Mrs. Mojisola Bakare, said the lender was keen on the resolution of issues affecting Nigeria’s economic development, adding that it has become necessary to discuss the theme of the breakfast session.

    She said the topic of the session was motivated by the recent launch of the Economic Recovery Growth Plan (ERGP) by the Federal Government with the three broad strategic objectives of restoring growth to the economy, investing in the people and building a globally competitive economy as a blueprint for recovery in the short short-term and a strategy for sustained growth and development in the long-term.

    Mrs. Bakare said there was no doubt that the economy was in the recovery mode with inflation rate coming down from 18.45 per cent last February to 16.25 per cent in June.

    According to her, the capital market is also on the upward swing though at a slow pace coupled with renewed effort of the Federal Government on the ease of doing business, adding that “Generally, the other economic indices are pointing towards our exit from recession by September 2017 as predicted by the World Bank.”

    Also speaking, the President of LCCI, Chief Dr. (Mrs.) Nike Akande said with the economy highly import dependent, consumption driven and undiversified, it has become necessary for government to draw a roadmap for economic diversification that would drive sustainable growth and development.

    Represented by the Deputy President, Mr. Babatunde Ruwase, she also said it has also become imperative for government to create initiatives that would restore growth, a competitive economy and provide an enabling business environment that would empower the private sector in delivering its mandate towards the actualisation of the EGRP.

    Dr. Akande said while the Economic Recovery and Growth Plan (ERGP) is perceived as a laudable initiative, commitment to its implementation is critical if the plan would foster growth in the economy within the next couple of years, adding that driving these plans require the collaborative efforts of Federal Government, state government and the private sector.

    She said Nigeria remained one of the developing nations with high returns on investments, noting that with governments’ renewed focus on growth sectors like agriculture, solid minerals, creative and entertainment, power, automobiles, infrastructure and technology, Nigeria will remain a major investment destination on the African continent.

    The president also said the Federal Government was also committed to the creation of an enabling environment through the creation of the Presidential Enabling Business Environment Council (PEBEC.)

     

  • Improved forex supply lifts economy

    Improved forex supply lifts economy

    The Investors & Exporters (I&E) FX Window may be the elixir of life for the domestic economy. Since its introduction by the Central Bank of Nigeria (CBN), the window has attracted $3.8 billion into the market, enhanced transparency and made forex available to end-users. The operations of companies, especially manufacturing, is on the upward swing and there has been improvement in inflation figures as well as equities market performance, reports COLLINS NWEZE.

    Manufacturers and other foreign exchange (forex) end-users seem to be having a great time.  The Investors’ & Exporters’ (I&E) FX window is rubbing off positively on their operations, less than three years after its introduction by the Central Bank of Nigeria (CBN).

    The I&E FX window (also known as willing-buyer, willing-seller window) was launched by the CBN on April 24. It has not only enhanced local manufacturers’ access to forex but engendered stability in the exchange rate management.

    The improved access forex by local manufacturers is positively impacting on the economy as the manufacturing sector, which was in comatose for nearly two years, has been upbeat in the last three months.

    The Purchasing Managers’ Index (PMI) survey report released for last month by the CBN showed improvements in business and investment sentiment. The PMI has expanded for the third consecutive month, rising from 52.5 in May to 52.9 in June.

    The expansion was majorly due to faster increases in inventory (52.3 in June against 50.8 in May), employment (51.1 in June against 50.7 in May), new orders (51.0 in June against 50.5 in May) and supplier delivery time (50.3 in June against a contraction in May) which offset the impact of the slower pace of expansion in production level (58.2 in June relative to 58.7 in May).

    Also, the non-manufacturing sector sustained its momentum as the June PMI was estimated at 54.2 as against  52.7 in May, signaling the second consecutive month of expansion in activities. The four sub-indices of the composite measure including business activity (57 in June relative to 56.2 in May), new orders (54.6 in June relative to 53.2 in May), employment (53.4 in June relative to 50.2 in May) and inventories (51.8 June relative to 51.4 in May) expanded at a faster pace to put the recovery ongoing in the sector beyond doubt.

    Reacting to this development, Afrinvest West Africaa Limited Managing Director Ike Chioke said the three consecutive increases in PMI reading has reinforced an earlier forecast that the economy will record positive Gross Domestic Product (GDP) growth as early as the second quarter of the year. He estimated second quarter 2017 GDP growth at 0.6 per cent.

    He said: “Noteworthy is the fact that the recent improvements in the business environment coincide with the launch of the I&E FX window as well as higher oil prices and domestic crude oil production which have both culminated in increased FX supply.

    “As the economic recovery is still fragile, the business cycle going forward will remain anchored by stability in the Niger Delta, developments in the oil market and domestic FX policies.”

    Chioke spoke through an emailed report to investors.

    Besides, the headline inflation rate has trended lower since peaking in January at 18.7 per cent, while the exchange rate and the equities market have also stabilised.

    Chioke also said the I&E nvestors’/Exporters’ FX window is winning the confidence of foreign investors.

    The CBN Governor, Godwin Emefiele, has predicted the country’s return to a single-digit inflation rate.

    He said the inflation target “is achievable in the course of time” going by the improvement seen in growth from the negative 1.7 per cent in the last quarter of last year to the negative 0.5 per cent in the first quarter of this year.

    The inflation rate fell for a fifth straight month last month, dropping to the lowest in a year as growth in prices of most goods, except food, eased. It (inflation) slowed to 16.10 per cent from 16.25 per cent in May, according to data released yesterdayby the National Bureau of Statistics (NBS).

    Emefiele attributed the huge success in exchange rate stability to some of the actions taken by the apex bank in the last couple of months.

    The CBN chief said: “In 2017, with the improvement we have seen in growth, from the negative 1.7 per cent in the last quarter of last year to the negative 0.5 per cent in the first quarter of this year. We have seen exchange rate stability with some of the actions we have taken in the last couple of months.

    “We do expect that if this trend continues, we should get better. Firstly, with inflation trending downwards, we are hopeful that in the course of time, we will get back again back to single-digit inflation.”

    According to him, the country has developed homegrown solutions to its economic challenges and the feedbacks from those decisions have been positive.

    Emefiele said: “We needed to adopt Nigerian option, because of our peculiar reasons. On inflation, the CBN had a target of six to nine per cent, unfortunately, it grew to 18.8 per cent and I am happy it is coming down, and I am hopeful it will continue to get better.

    “We looked at the foreign exchange market, and today, we have ensured that forex is not N500/$1. It is now between N360 and N370/$1 and we will ensure it gets even better from where it is right now.”

    On some of the stabilisation steps taken by the regulator, Emefiele said the apex bank has opened the market up for more people to come in.

    “We want more people to come and invest in the economy, and that was why we introduced the Investors’ & Exporters’ Window. We want a forex market that will be determined by demand and supply. It has helped in forex flow and led to the appreciation in the naira we are seeing today”, Emefiele said.

     

    Capital market recovery

     

    The bulls returned to the market last week as reflected in the stronger sentiment which drove the benchmark index into the green following the negative performance from the prior week. The All Share Index advanced on all trading days of last week, improving 2.5 per cent Week-on-Week while the year-to-date gain improved to 23.8 per cent.

    Investors accumulated N276.6 billion as market capitalisation improved to N11.5 trillion and the activity level improved as average volume and the value traded rose 11.4 per cent and 12.3 per cent to 236.3 million units and N2.8 billion respectively.

    The investor sentiment towards equities remained bullish since the introduction of the I&E forex window. The CBN Director in charge of Banking Supervision, Abdullahi Ahmad, said the new forex window will continue to attract foreign investors to the economy and that the equities market and the naira will remain the biggest beneficiaries.

    Before the introduction of the new window, the uncertainty built around forex availability and the monetary policies coupled with some tough fiscal policies in the year, weakened investors’ confidence in equities.

    Between January 4 and June 9, the Nigerian Stock Exchange (NSE), mirrored by the All-Share Index and Market Capitalisation, had appreciated by 23.8 per cent and 24.4 per cent respectively. Both indices had opened the year for trading with 26,874.62 base points and N9.247 trillion and grew to 33,276.68 base points and N11.504 trillion within the period under review.

     

    Exchange rate stability

     

    The forex market remains stable, owing to increased volume and frequency of interventions by the CBN as well as the establishment of the I&E FX window. The domestic currency marginally improved last week to settle at N305.95/$1 last Friday, up from N306.00/$1 the previous Friday.

    However, at the parallel market, the rates appreciated from N370/$1 in the previous week to N367/$1 on Monday. Last Tuesday, the naira depreciated to N368/$1 and remained at that level till the end of the week. At the NAFEX segment, the naira/dollar exchange rate at the start of the week stood at N364.83/$1 but depreciated to N365.20/$1 by the end of last week.

     

    Power of I&E FX Window

     

    On April 24, the CBN opened a special foreign exchange window for investors and exporters. The CBN Director, Financial Markets, Alvan Ikoku, said the I&E window, would boost liquidity in the forex market and ensure timely implementation and settlement for eligible transactions by all parties.

    In this market, the FMDQ OTC Securities Exchange (FMDQ) gives a price quote based on its bi-daily survey of market rates. Although investors welcome the new window, not a few are concerned about the rate and the degree to which it will be allowed to truly float. But so far, the feedback from the window has been positive for the market. In its first week, the rate traded between N374-380/$. The window closed at N370/$1 last week.

    The window has impacted positively on the naira. The window, where buyers and sellers are free to agree an exchange rate, was introduced in April to try to attract foreign investors into the country and boost the supply of dollars.

    According to some traders, $407 million were traded last week compared with $354.8 million in the previous week, indicating a gradual return in investors’ confidence to Nigeria’s forex market.

    “We have seen continuous improvement in dollar inflow into the market in recent time from offshore investors and this has also reflected in the volume of transactions at the equity market,” a currency trader told Reuters.

    Before the window was introduced, the CBN was the main supplier of hard currency on the interbank forex market, after foreign investors fled naira assets in the wake of an oil price slump in 2014.

    The window, however, has effectively introduced yet another exchange rate to the five already in operation. These include a retail rate set by licensed exchange bureaux, as well as official and black market rates.

    At the forex window, market regulator FMDQ OTC Securities Exchange quoted the naira at N364.56 to the dollar on Monday and N367 to the dollar at the black market.

    The Global Markets Group Head at Access Bank Plc, Dapo Olagunju, said the new window allows investors to sell dollars at any rate they chose and that it is expected to restore investors’ confidence into the market.

    He said: “Investors /Exporters FX window help participants execute deals as based on their own market agreement. Today, both the dollar demand and supply sides are beginning to talk to each other and there is likely to be rate convergence soon”, he said.

    Continuing, he said that previously, the CBN had over $4 billion forex backlog, and found it difficult to settle ticket remittances of airlines. “Today, we are seeing customers buying Business Travel Allowances and Personal Travel Allowances with ease. It has been a difficult time for banks. We also see a regulator that is ready to sanction any bank that violates its set rules.”

    Olagunju spoke at a forex seminar organised by Access Bank in Lagos.

    The Afrinvest report also said that in the last two years, foreign investors’ appetite for local assets waned significantly on the back of currency crisis which in turn, fundamentally weakened macroeconomic performance, dragged corporate earnings and also impacted on equities market viability.

    The condition also lingered into the year 2017 as investors dumped equities for less risky investment opportunities in the fixed income market especially given the current relatively high yield environment.

    “Accordingly, the negative performance of the Nigerian Bourse in 2016 (-16.9 per cent) was sustained as the year-to-date return of the benchmark index deteriorated as low as -8.5 per cent in March before marginal improvements were subsequently recorded,” it said.

     

    Forex interventions continue

     

    The CBN recently intervened in the forex market with $195 injection into key segments of the economy.

    The forex inflow, which came on the first day of transaction after the Eid-el-Fitr, went to various segments of the inter-bank market.

    The intervention was part of CBN’s plans to shore up the value of the naira against the dollar and achieve its exchange rate stability goal. The naira continued its stability in the forex market, closing at N370/$1 in the parallel market, from N520/$1 on February this year.

    The narrowing of the rate gap was achieved after the CBN pumped over $6 billion in nearly five months into the interbank, bureax de change, wholesale spot and forwards auction segments of the market.

    Also, supporting the naira is the newly introduced Investor/Exporter Forex window which has continued to help the naira rally against the greenback.

    Analysts said that the introduction of a new forex window for investors and exporters targeted at increasing forex supply in the market and allowing the timely settlement of transactions helped achieve the current exchange rate.

    A breakdown of the intervention indicates that authorised dealers in the wholesale window segment received a $100 million offer from the bank, while the Small and Medium Enterprises (SMEs) and invisibles windows were allocated the sums of $50 million and $45 million, respectively.

    The CBN has been intervening on the official market in the last few months to try to narrow the spread between rates on the official market and black market.

    The local currency came close to converging at the investor forex window and black market last Friday, with analysts attributing the development to increased dollar liquidity in the forex market.

    Nigeria is contending with a currency crisis brought on by low oil prices, which has tipped the economy into recession and created chronic dollar shortages.

    But the CBN is keen on attracting foreign investors and at the same time maintaining a strong currency to ward off inflation.

    It has at least six different exchange rates, including a retail rate set by licensed exchange bureaux, official and black market rates and a window for investors where the naira can be traded at rates set freely between buyers and sellers.

    The CBN’s Acting Director, Corporate Communications Department, Isaac Okorafor, confirmed the figures and affirmed the apex bank’s satisfaction with the high level of transparency exhibited by stakeholders in the market.

    The CBN had also allocated the total sum of $240 million to the retail Secondary Market Intervention Sales (SMIS) for spot and forward deals. With the rate of inflation dropping from its April 2017 figure of 17.24 per cent to 16.25 per cent at the end of May, 2017, the CBN spokesman says the CBN remains upbeat that the fortunes of the naira will improve further in the months to come.

    But JPMorgan Chase & Co. and Renaissance Capital have said the naira rally, sparked by increased sales of forex forwards and looser capital controls, is contingent on the CBN continuing to sell down its foreign reserves.

     

  • Buoying the economy with promisory notes

    Not a few policies and strategies have been adopted by the President Muhammadu Buhari’s administration to revamp the Nigerian economy since inception of the administration in May 2015. The government had then complained of inheriting a battered economy that would need time to fix. So in the past 26 months it had exploited several measures in order to put the economy on the path of recovery and growth.

    With all the efforts, the economy is still in bad shape and has not been able to snap out of recession.

    But the Presidency last Wednesday decided to exploit another policy in order to boost the economy. This time around, it plans to issue promisory notes to offset huge debts being owed contractors and State governments in the country, which have weighed down the economy as far back as 2006.

    According to economists, promisory notes in this context are written formal commitment by the Federal Government to make a payment at a certain date and time.

    Since the promisory notes can be traded on the financial markets, they enable the recipients to realise market based cash value for them whenever they want.

    They could also be granted liquidity status by the Central Bank of Nigeria, making them both tradable and discountable.

    Briefing journalists on the new policy after the Federal Executive Council meeting, the Minister of Finance, Kemi Adeosun, said: “The

    Federal Executive Council has approved process to validate and pay inherited Federal Government contractor and employee liabilities

    “Obligations accumulated over the last two decades to be paid through bond and promissory note issuance to resolve long outstanding dues and stimulate economic activity

    “The Federal Executive Council has today approved the Ministry of Finance’s proposed validation process and promissory note and debt issuance programme to resolve a number of inherited and long outstanding Federal Government (FG) obligations to contractors, State governments and employees.

    “This will be followed by a request to the National Assembly to approve the programme ahead of implementation.

    “These obligations largely consist of dues owed to State governments, oil marketers, power generation and distribution companies, suppliers and contractors by Federal Government parastatals and agencies, payments due under the Export Expansion Grant (EEG), outstanding judgement balances as well as pension and other benefits to Federal Government employees.

    “Some of the obligations date back as far as 1994. The resolution of this will significantly enhance liquidity in critical sectors of the economy.

    “Following an exhaustive process of reconciliation, the committee has been able to provisionally confirm a discounted total of N2.7trillion of obligations, consisting of N740billion of outstanding pensions and promotional salary arrears (not discounted) and N1.93 trillion (discounted) of other obligations including dues to Federal Government contractors and suppliers.

    “These numbers are aligned with existing Federal Government estimates, and in some cases, are lower than previously estimated.” she said

    To check fraud in the system, she had maintained that the supplier and contractor obligations will be resolved through a strict and rigorous process of final validation.

    Those confirmed for payment, she said, will be settled through the issuance of liquid promissory notes (ten-year tenure) phased over a three-year period to minimise impact on liquidity and with preference given to those willing to offer the largest discounts.

    For obligations owed to individuals like pensions and employee benefits, she said, will be resolved through the issuance of specific bond instruments, to be phased over next three years.

    The obligations will then be incorporated into the Medium- Term Expenditure Framework by the Ministry of Budget and National Planning.

    Harping on the benefits of the new policy, she said: “We cannot get our economy moving at the pace we need to if we do not address the legacy issues we have inherited, which act as a significant drag on economic activity.

    “The government must be a driver of growth, and enable private sector activity. It should not be the most significant obligor to many value creating businesses.

    “At the same time, we have an obligation to our Federal Government employees to address these long-outstanding pension and employment benefit issues.

    “We are doing this systematically, and we want to do so once and for all. We are enhancing the Government’s controls and processes to ensure we do not find ourselves in this situation again.

    “Over the last two decades the Federal Government has built up over N2.7 trillion of obligations which were not cash backed, and remain outstanding to this day.

    “We have developed a solution that will simultaneously resolve these issues, and deliver a boost to economic performance. Our solution will remove the drag on economic performance these obligations cause, improve liquidity in key sectors, especially the power sector where we will resolve Federal Government dues to the distribution and generation companies, and so boost investor confidence.

    “It will also help to improve Non-Performing Loan (NPL) ratio’s in the banking sector, where an unacceptable number of NPL’s are presently linked to Government contracts.

    It is really hoped that when the National Assembly finally gives its nod, the policy will go a long way to free the Nigerian economy from the adverse impact of the huge indebtedness.

    Its hightime the accumulated economy mess over the years be cleared once and for all.

  • Lagos reforms lands registry to improve economy

    Lagos reforms lands registry to improve economy

    Lagos State Governor  Akinwunmi Ambode has said reforms to reposition land administration for efficiency and ease of doing business have been put in place by his administration. These include the deployment of cutting-edge technology.

    Ambode made this known while inaugurating the upgraded and redesigned Land Registry in Alausa, Ikeja.

    The reforms, he said, were reasons for the accelerated issuance of land documents. About 11, 034 documents have so far been issued. The breakdown is: 4,602 Certificates of Occupancy (CofO), as well as 6,118 Governor’s Consent and 314 Deemed Grant Consent.

    Describing the new Land Registry as another major step towards the ideal situation in land administration and management, Ambode said the essence of the reforms were basically to boost private enterprise considering that land is a vital asset with which capital can be accessed, leading ultimately to increased economic activities. The governor expressed optimism that with the land administration reforms, entrepreneurs and individuals will now be able to register their titles faster and have access to capital, which he said will in turn create opportunities for jobs and also wealth creation.

    “This new registry is equipped with a Thomson Reuters suite of technology modules designed to conduct rapid inventory of actual/existing land rights, automate and manage land records and ensure integration of geographic data/Survey. This solution also comes with online consummation of all levels of services rendered by the Lands Bureau. It will streamline the process of registering title and remove the bottlenecks previously associated with the process. The redesigned layout of the registry makes it more service friendly to all who have land transactions to process,” Ambode explained.

    He further revealed that the state has introduced the concept of the “Land Administration Campus.” This entails bringing all agencies and Ministries involved in Land Administration to one location to further ease the process of land registration and titling. Consequently, the Office of the State Surveyor General will be relocated to occupy the office of the Ministry of Environment.

    This will enable the creation of a One –Stop-Shop where the Office of the State Surveyor General, Ministry of Physical Planning & Urban Development and the Lands Bureau are located within the same complex, to fast-track processing of land titles.

    With the new arrangement, coupled with the deployment of the new Integrated Land Administration and Automation System and the Geographical Information System, it is hoped that the state government would achieve a combined effect of making the process of securing land title seamless, and also engender the highest level of security and integrity of title document.

  • A nation’s economy and her ports

    SIR: Nigeria is generally known as a mono-economic nation .This is in spite of the varied sources of revenue but underutilized natural resources available in the country, including the nation’s ports.

    Besides underutilizing the nation’s waters and ports, the government has done very little to appreciate the importance of the economic development        of the country. For instance, virtually all the sea ports in the South-south have become moribund and disused: from Koko, Sapele, Burutu and indeed the Warri ports, nothing seems to be working due to government poor understanding of the roles the nations’ ports are expected to play in achieving maximum raking in of forex.

    Unfortunately, with its poor facilities, the ports in Tin-can Island and Apapa, have become the overburdened. While these ports can as well be developed into deep water ports, the government has no reason to improve on the facilities and the dredging of the channels to achieve a deepwater port status. The Niger Delta water channels have long been abandoned and the recent over–praised programme of dredging that portion of the Nigeria waters seems to have been swallowed by the media hoax.

    Now, the situation has led to preventing large vessels from berthing in these ports. They are however dogged with what is commonly referred to as ‘tug boats ’and small ships. This has also led to an ever increasing volume of losses to investors. The federal government has not helped matters with her unfriendly business policies in the ports. Possibly things will improve with the new Executive Orders aimed at government liberalization of activities in the Lagos axis. Most ports operating nations have an average of four days free of demurrage and several charges for the duration of berthing and off loading. Nigeria allows only two days for the same services unlike in Holland and other European seaport nations. This no doubt reduces the volume of traffic in the nation’s port thereby depleting the level of revenue accruing to the country.

    The longer time a visiting ship spends in our ports, the greater its losses through ubiquitous charges and the higher its emissions of local and global pollutants into our environment.

    The poor management of the nation’s water ways had greatly contributed to the underutilization of the Delta Steel Company Limited, Ovwian/Aladja before the place finally went under. The government has deliberately ignored calls for the dredging of the Escravos bar to expand maritime business opportunities. The story has not changed.

    The nation’s ports are the gate ways to international trade and as such could be regarded as the engine room and the fulcrum on which a nation’s economic life revolves. Indeed, the ports are the accelerator of a nation’s economic development. More of Nigeria’s area is covered by waters. It covers about 366,376 sq km of the nations’ compact area of 923,768sq km.

    A port becomes an active wheel of the growth of a nation’s economy only if it is managed inefficiently. Undoubtedly, the functions of a port is not only limited to the traditional activities but has expanded to a logistical platform.

    Basically, the desire of the federal government to diversify the economy in the absence of working port system is an exercise in futility.

    Recently, Nigeria is to export about one million tonnes of yam tubers from across the country. One begins to wonder how effective the movement of these goods will be done using only the ports in the Lagos axis. The government needs to go into partnership with state governments with maximum maritime environment on the rehabilitation of the nations’ ports in Calabar, Warri, Port-Harcourt and Burutu while engaging in the building of deep seaports in states such as Bayelsa State and Akwa-Ibom state.

    How long will the Nigerian government continue to waste the nations’ resources as a result of the negligence suffered by the maritime environment? Time to effect positive changes in the development of the nations’ waterways is now.

     

    • Akporhobo Tataunu,

    akporhobota26@gmail.com