The Nation Newspaper

Tag: Economy

  • How to revive economy, by NECA

    How to revive economy, by NECA

    The  Federal Government must be prudent to get the economy back on track, the Nigeria Employers’ Consultative  Association   (NECA) has said.

    In an interview with The Nation, its Director-General, Mr Segun Oshinowo, said much still needed to be done to rescue the economy from recession.

    He said: “To get the economy back on track, the government must first accept the basic principle and imperative of prudent spending as a way out of recession.

    “Such spending should target key social and physical infrastructural development; the settlement of the huge domestic debt and institution of an outcome – based and cash- backed budgetary system for the MDAs.’’

    He stressed the need for the government to complement its monetary policy with appropriate fiscal policy such as the abrogation of arbitrary tax waivers/exemptions, deliberate increase of fiscal savings into the  Sovereign Wealth Fund, improved tax collection with emphasis on widening the tax net as against introduction of new taxes or increase in value added tax (VAT), which could further reduce disposable income, slow down growth and lead to disincentive for investment.

    On the government’s drive to diversify the economy from its over-dependence on crude oil, NECA wants President Muham-mdu Buhari to, in addition to his focus on agriculture, take advantage of linkages between oil and related industries through the development of energy-intensive   industries and those that use by-product derived from oil such as petrochemicals, aluminum, steel production, fertiliser and bio electronics.

    Oshinowo, however, praised the government’s efforts to revamp the economy and stimulate growth in the face of the global economic downturn.

    He lauded the Federal Government’s courage in embracing the policy of deregulation of the downstream oil sector,   renewed interest in revamping the rail system, guided liberalisation of the foreign exchange market, among others.

    He said this would impact positively on the economy in the short and long terms. He appealed to Nigerians to be patient with the government.

  • Oil price falls, economy groans

    Oil price falls, economy groans

    Despite the fall in crude oil prices, which has made it imperative for government to source for funds, experts argue that borrowing locally to meet long and short-term needs is inappropriate. The alternative is to seek foreign facility because of the rising interest rate, which has raised the cost of domestic loans. With loans available to private sector affected by public borrowing, these are indeed tough times, writes COLLINS NWEZE.

    Just when many Nigerians were beginning to cheer the rising prices of crude oil, where the country derives over 85 per cent of her revenues, the prices slumped to a new low last week.

    Oil prices had crossed $50 per barrel late July, before dropping significantly last week to $41.80 per barrel. Fueling the oil price decline is the worry that the net Chinese oil imports will weaken this year, and with global and domestic demand for oil on the decline, the prices of crude oil are bound to fall.

    Rebalancing the oil market has proved to be long and frustrating  as oil-exporting countries, including Nigeria, are hit hardest by the 2014 and 2015 price slump. The countries are counting their losses.

    Oil prices had declined by more than 70 per cent from about $115 in June 2014 to $27 in February, this year. Since 1973, this reverse oil shock is matched only twice: in the 1980s,when oil prices fell below $10; and in 2008 to 2009, when it fell from about $147 to about $40, but proved short-lived.

    With oil prices still down, the impact on revenues, the government’s ability to deliver on major developmental projects remains challenging. The way out remains to borrow from the right places to fix Nigeria’s infrastructure needs.

    The Debt Management Office (DMO) Director-General, Dr. Abraham Nwankwo, believes borrowing to fix the country’s infrastructure should come from outside.

    He explained that in contrast to external borrowing, domestic borrowing would not be appropriate because of some reasons. First, Nwankwo says, is high average cost of domestic debt, which is significantly higher than the average cost of external debt.

    He said in the public debt portfolio, the domestic debt ratio against external debt ratio of about 85:15 needed to be changed towards 60: 40 mix.

    According to him, such mix is appropriate in Nigeria’s Medium-Term Debt Management Strategy formulated by the DMO.

    “Significant additional domestic borrowing would exacerbate the domestic debt service revenue ratio, which has already become unacceptably high. To avoid crowding out the private sector, the government domestic borrowing should be minimised. Specifically, as the government provides the policy and infrastructure environment for rising economic activity, the private sector is expected to respond by playing the lead role in direct production in the real sector,” he said.

     

     

    Eurobonds

     

    According to DMO, beyond the  more attractive multilateral and bilateral borrowing sources, the quantum of money required and the various projects to be financed dictate that Nigeria should also establish a programme for issuing Eurobond in the international capital market, to tap the market repeatedly over the next three to five years.

    Nwankwo explained that although global market conditions and local economic challenges have become quite tough since mid-2014, the country can still take advantage of its experience of successfully issuing Eurobonds in 2011 and 2013.

    The debt to GDP ration with the proposed additional borrowing will be about 17.8 per cent by the end of next year. More importantly, because of the long-tenor and low interest on the external debts, the new borrowing will not impact significantly on the debt service-revenue ratio.

    On the other hand, significant additional domestic borrowing would push the debt service burden over the cliff. Therefore, overall, it could be recommended that an additional $15 billion per  year could be sustainably borrowed over the next four years to build a strong economy.

    Moreover, in the context of financing a de-recession and structural transformation programme of an economy, distinction should be made between conventional debt sustainability, which is essentially static, and structural debt sustainability which is based on a forward view of the economy.

    For many weak economies forced into recession by exogenous commodity-based or other shocks, and in need of recovery, it would be expected that their public debts are not sustainable; hence it would not be reasonable to expect that with sizeable additional borrowing, their debts would be sustainable, when the assessment is based on the macroeconomic indicators.

    West African Institute for Financial and Economic Management (WAIFEM), Director-General Prof. Akpan Ekpo argues that with declining government revenues from oil, budgetary allocations alone may not be enough to finance the infrastructure deficit in the country.

    Prof. Ekpo admitted that the debt option is still the most viable at this time. He said Nigeria’s rebased $510 billion Gross Domestic Product (GDP) economy gives it more room to borrow more to bridge infrastructure gap.

    To Ekpo, Nigeria could borrow up to 40 per cent of its GDP externally, adding that the DMO has in the past, demonstrated good negotiation skills in dealing with the country’s debt matters, either with internal or external creditors.

    He believes the viable option for the government to take is to borrow from the World Bank or African Development Bank (AfDB) to fund the key developmental projects.  The government can also borrow internally to achieve the feat, but disclosed that internal borrowing is short term while external borrowing has longer tenor.

    Besides, the Nigeria Trust Fund with the AfDB can be used as a leverage while borrowing from the bank, adding that borrowing from the International Monetary Fund (IMF) will be expensive because Nigeria is classified as a Middle Income Country on the Fund’s list.

     

    Funding projects with borrowed funds

     

    The DMO captures the benefits of using debts to fund projects more succinctly. “If you want to build a railway from Lagos to Aba, there are two options. Firstly, you can save up the money for 10 years, before starting the project. The second option is to borrow and build the railway, and within 10 years, generate enough revenues to offset the debt,” DMO’s Head, Policy Strategy and Risk Management, Joe Ugolala said.

    He sees the second option as more plausible as it captures the  benefits of borrowing to build infrastructure that is in the interest of the economy. He explained that for one to borrow, there must be that inherent capacity to repay, whether the debt came from internal or external sources.

    He explained that the Federal Government has the capacity to borrow from outside to fund budget, and support specific projects including infrastructure.

    He said that despite challenges with external and internal economic volatility, the DMO is committed to supporting opportunities for employment generation. “We are more than ever committed to doing what we know how to do best, democritisation of public debt. We need to use debt to tackle poverty. We are committed to employment generation. Now that things are tight, we need to show that we are resilient people,” he said. “We need to reassure ourselves that we have what it takes to achieve a sustainable growth”.

     

    Deployment of funds

     

    According to Nwankwo, the proceeds of the external loans will be used for capital projects (physical and social infrastructure), programmed to achieve turnaround, generate self-sustaining growth with maximum employment, and guarantee repayment of the debts. Rigorous prioritisation, sequencing and justification guide will determine the capital allocation.

    He explained that given the size of the borrowing required, the coverage and mix of prospective lenders, and the need to ensure that the loan proceeds are available as programmed, the loan negotiation efforts will need backing at the highest level of the political leadership.

    Besides, Nigeria’s diplomatic capabilities and instruments will need to be deployed to complement the financial and technical efforts towards obtaining the loans. Therefore, the Ministries of Finance, Industry, Trade and investment, National Planning and Foreign Affairs will need to work closely.

  • ‘Economy depends on production, export’

    The future of the Nigerian economy is no longer depended on oil, but production of goods for  export, Senator Shehu Sani,, representing Kaduna State, has said.

    Sani, who stated this during a visit with local investors to the  Executive Director/CEO of the Nigerian Export Promotion Council (NEPC), in Abuja,, said individuals with entrepreneurial spirit should begin to think of what they can do by way of production and exportation so that government could assist them.

    He said, “Nigerian entrepreneurs should gear towards producing and packing goods that will attract foreign currency. The key to Nigeria’s diversification is export.

    “When we are going into the field of export, we are going into a very competitive field of political economy. As much as we are diversifying, we have to harness our potentials and use it to better the economy. NEPC is the brain box of the economy so we have to work closely with the council.”

    NEPC’s  Executive Director/ CEO, Segun Awolowo,  said oil cannot drive the GDP because it accounts for only 10 per cent, saying that what will drive the economy effectively is agriculture which the government is seriously venturing into.

    “For diversification to be effective, our products must be competitive enough to compete with other products in the international market and that is what we at the Council are working towards. We have to make agriculture work by paying more value to agricultural products.

    “Agricultural products constitute the bulk of Nigeria’s non-oil exports. The shares of these products both processed and unprocessed in total value of non-oil export is as high as 70 per cent, “Awolowo said.

  • Economy, businesses stumble in the face of recession (1)

    Economy, businesses stumble in the face of recession (1)

    With rising inflation, poor growth, declining consumer demand, high interest rate, and businesses struggling to post positive figures, the state of the economy is worrisome. The trend could worsen with a confirmation by the figures released by National Bureau of Statistics (NBS) that the economy slipped into recession last month. Will the economy ‘quickly’ recover as government is promising? COLLINS NWEZE writes on the intricacies of looming economic recession.

    AS a rule, Mrs. Rita Martins keeps a shopping secret she hardly shares with anyone. The Lagos-based civil servant, who has spent over 18 years in the city centre, knows that weekends are not the best of days to visit one-stop ware point – Shoprite – in Ikeja Shopping Mall. Her reason: Many customers usually queue at the pay points for the cashiers’ attention.  A shopping that should not last more than 30 minutes takes more than two hours.

    But on Sunday, June 26, Mrs. Martins decided to visit the mall to buy groceries. To her chagrin, the mall, usually a beehive of activities was virtually empty. Within 15 minutes, she picked all she needed from the shelves and made payment at the counter. “I was so surprised and thought something terrible had happened,” she said.

    Three weeks after, Mrs. Martins understood that the reduction in traffic to the mall was the corresponding effect of the decline in the economy which has cut every household’s disposable income.

    The National Bureau of Statistics (NBS) data showed that the Gross Domestic Product (GDP), which measures volumes of economic activities in the economy, contracted by 0.36 per cent in the first quarter of this year.

    A further contraction of 1.5 per cent is expected in the second quarter, pushing the economy into a recession. Two consecutive quarters of negative economic growth as measured by a country’s GDP leads to recession. Nigeria’s case was triggered by a dip in government revenues and spending in the wake of the fall in prices of crude oil prices at the international market.

    As at today, every sectors of the economy is in turmoil. From energy to housing; maritime to banking; insurance to manufacturing and textiles to service industries, there is huge economic crisis.

    The Executive Vice-Chairman, ENL Consortium Limited and Chairman Seaport Terminal Operators of Nigeria, Princess Vicky Haastrup, painted a picture of what is happening at the ports when she said: “If you look at the port terminal like ours, the number of ships we have handled from January to date is equal to the number of volumes we usually handle on monthly basis. The reason is that the importers do not have access to foreign exchange (forex).

    “That affected their operations and for us, it was a major constraint. So, the volume of importing dropped drastically. I have never seen that level of decline in my life.”

    Earnings from both oil and non-oil segments of the economy have been plunging. Going by the Central Bank of Nigeria (CBN) data, the gross monthly collections of non-oil revenue from January to December last year stood at N3.12 trillion figures. But from January this year, non-oil revenue dropped to N196 billion compared with monthly average of N477 billion projected in this year’s budget.

    Besides, Nigeria earned N143 billion from its non-oil exports in the fourth quarter of last year, a drop of 39.1 per cent (or N90.6 billion) from N234.43 billion recorded in the third quarter of the year.

    Average oil price in June was $49.99 per barrel while headline inflation spikes to 16.5 per cent, making the country the eight highest inflation rates in sub-Saharan Africa, 6.6 per cent above the nine per cent inflation ceiling of the CBN.

    The Customs and Excise is the weakest of the four components of gross non-oil revenue. Customs Service contribution of N50 billion in January this year compares with a pro rata average of N72 billion in the budget is worrisome.

    The Nigerian Customs Service (NCS) has blamed the shortfall on CBN policies. To the Service, the CBN circular classifying 41 import items as finished products and barring their importers from accessing forex reduced import revenues.

    Haastrup urged the CBN to review the 41 items on the forex restriction list.

    His words: “They said those products are not valid for forex. So, what people do is to go to the parallel market to source for it. That is not good for the business. It is not even good for local manufacturers.”

    The recession fever has become so deep that not a few Nigerians have been seeking more knowledge on the matter. According to search results released by Google Nigeria last week, interest in the search for ‘recession’ peaked in July after CBN Governor Godwin Emefiele and Finance Minister Mrs. Kemi Adeosun announced that the economy is in ‘technical’ recession. Growth was negative in the first quarter for the first time since 2004 and a recession, or two consecutive quarters of contraction, is imminent, the Emefiele predicted.

    Anambra State tops the list of states in the country combing the search engine for all terms related to “recession”, trailed in the second position by the Federal Capital Territory (FCT). Rivers State is third with cosmopolitan Lagos following. Apparently, other states do not have a significant number of queries. Not surprisingly, related questions asked on Google include “what is recession / recession definition”; “how to survive in economic recession” and “how to make money in a recession”.

    More data releases, which are leading indicators of economic activity, continue to underperform. The manufacturing and non-manufacturing Purchasers Managers Index data for May were disappointing. It indicated activities contracted across both sectors, although at slower pace.

    The resumption of hostilities in the Niger Delta region which has disrupted oil production has also constituted a headwind on fiscal revenue, budget implementation, net exports/imports and aggregate consumption expenditure.

    Mrs. Adeosun said Nigeria will face only a short recession if economy contracts again in the second quarter as the removal of fuel subsidies and policies to lower dependency on oil will pay off.

    According to the International Monetary Fund (IMF), Nigeria’s economy is likely to contract by 1.8 per cent this year due to a slump in oil prices and a shortage of hard currency.

    “I think if we are in recession. What I will like to say is that we are going to come out of it and it is going to be a short one”, Adeosun said.

    “I don’t think we should panic”, she said in government’s first reaction to the IMF forecast.

    The minister assured that measures such as the removal of fuel subsidies and boosting of non-oil production would lift the economy out of the doldrums.

    Her words: “We were subsidising around 45 million litres of fuel per day.  These are real savings to the economy which we are now redirecting into the essential infrastructure that will keep the economy going.”

    Also talking on the economy, Budget and National Planning Minister Udoma Udo Udoma admitted that the forex restrictions adversely affected the economy in the first half of the year.

    The minister explained that inflation hit 16.5 per cent in June; unemployment increased to 12.1 per cent in March from 10.6 per cent in December 2015 and created challenges for some state governments in the areas of paying salaries, in addition to the Federal Government giving bailout to states.

    An economist and Chief Executive Officer of Nextnomics, Dr. Temitope Oshikoya, described the falling living standard with worsening misery index as woprrisome.

    “It paints a bleak future for the country but other oil producing countries are also affected”, Dr. Oshikoya said.

    He said oil prices had declined by more than 70 per cent from about $115 in June 2014 to $27 in February this year.

    Since 1973, this reverse oil shock was matched only twice: in the 1980s, when oil prices fell below $10; and in 2008 to 2009, when it fell from around $147 to about $40.

    He said: “The real question to ask is why is Nigeria’s economy so susceptible to the vicissitudes of oil commodity boom and bust cycle in spite of the devaluation of the naira from less than N1 to N350 to the dollar over the past three decades?

    An economist and Managing Director of Financial Derivatives Company Limited, Mr. Bismarck Rewane, said: “We expect June 2016 GDP data to confirm the economy to be in a recession with our forecast pointing at a real contraction.

    “However, dividend of a more accommodative forex regime, strong harvests in the last quarter of the year due to improved security in Northern Nigeria as well as implementation of the 2016 Federal Government of Nigeria budget will likely move the economy towards a rebound in the second half of 2016.”

    Co-founder and Board chair at ReadyCash Nigeria, Richard Obire, said: “The implications of the recession are already affecting the economy and businesses but whether they will get worse after the announcement remains to be seen. What happens next would depend on what the government does with a critical tool in its hand, which is the N6.06 trillion 2016 Budget.”

    Also key in tackling the impact of the recession are the budget for the 36 states of the federation and that of the FCT.

    Obire said: “Right now, governments at all levels need to stimulate growth and create jobs for the people. If governments spend more, businesses will grow and make new investments that will lead to more hiring. For now, what companies are doing is disengaging their staff and that has to stop.”

    He noted that the devaluation of the naira and removal of 16-month currency peg by the apex bank has made more cash available to government from petrodollars  as seen in the money shared by the three tiers of government from Federation Accounts Allocation Committee (FAAC) rise from N305 billion in May to N559.032 billion last month.

    “The economy has witnessed rising inflation and poor demand for goods and services which should not be the case. People are not buying company products and prices are also rising”, Obire said.

    He argued that the devaluation of the naira has made investing in the country cheaper, because foreign investors will need fewer dollars to invest in local companies.

    He said: “Government should also release the N500 billion Social Welfare Fund (SWF) vote and start immediate disbursement to stem the tide of job losses. Right now, government is not acting fast and intelligently. When the flexible forex policy was announced, President Muhammadu Buhari distanced himself from the policy and that made foreign investors to adopt wait and see attitude, hence depriving the economy of expected benefits.”

    He said investors in real asset will still come, adding that “it takes time and due diligence to attract such investments. Government should create stable polity to attract new investments. If government works hard in a coordinated manner, there will be positive results.

    “For instance, I want to see the passage of the Petroleum Industry Bill (PIB) that makes clearer, the terms on investment in the oil and gas sector. There is need for dynamism, focus and speed. I do not see any sense of urgency in this government.”

    Head of Treasury at Ecobank Nigeria, Olakunle Ezun, explained that when a country gets into recession, there is slowdown on consumer expenditure, which is expected to stimulate the economy.

    “During recession, companies lay off workers. Export is usually nowhere. Most economies do everything to avoid getting into recession because getting out is very tough because you need to do more than enough to get out. The fiscal authorities have so much to do on spending for the economy to recover,” Ezun said.

     

    Companies’ earnings dip

     

    With the NBS data still being awaited, companies’ performances have been thrown off balance. Analysis of results of Flour Mills of Nigerian (FMN), Unilever Nigeria, Nigerian Breweries, Lafarge Africa, First City Monument Bank (FCMB) and Diamond Bank all showed disturbing trends.

    The FMN fourth quarter ended March 31 results showed no positives. The FMN reported a pre-tax loss of –N8.3 billion, driven mainly by a 48 per cent year-on-year and 58 per cent year-on-year rise in interest expense and other (non-operating) losses, compared with Profit Before Tax (PBT) and Profit After Tax (PAT) of N4 billion and N6.8 billion in same periods of last year.

    The pre-tax loss was mainly driven by a combination of factors including a 58 per cent year-on-year rise in other (non-operating) losses, a 49 per cent rise in interest expense to N5 billion.

     

  • The economy in recession

    The economy in recession

    If anyone was ever in doubt about the depth of the crisis rocking Africa’s so-called largest economy, Finance Minister Kemi Adeosun’s parley with the senators on the state of the economy on July 21finally settled that. Now, it is official: The Nigerian economy is tending precipitously to the abyss. According to Adeosun, “… if you have two periods of negative growth, you are technically in a recession… we are in a tough place, whether you call it recession or not, we are in a tough place, but the most important thing is that we are going to get out of it…I don’t think we should dwell on definitions, I think we should really dwell on where we are going.”

    Talk about finally terminating the pretence of being sub Saharan Africa’s fastest growing economy;the exaggerated claims of macro-economic stability – touted asderivative of PDP’s interminable reforms and,of course,the dubious claims of superlative growth in non-oil export earnings etc. That these “achievements” are coming undone within a year of the latest cycle of oil price shocks obviously says a lot about the 16-years legacy of the PDP.

    My sympathies goes to the Buhari administration’s Economic Management Team on whose lot it falls not just to explain the cause of the current crisis but totackle them headlong. While I have struggled to understand what the minister meant by “technical recession”, it seems to me that the luxury of some semantic indulgences is one the administration can ill-afford at a time when fire is literally on the mountain. In this, the minister ought to have known better than stoke controversies on the distinction that comes to nothing really.

    I assume that Nigerians already know the meaning of recession. One online dictionary defines it as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales…” The implication is that recession does not last for long.

    Most Nigerians would probably contest the latter considering that the phenomenon has come to define the way they live and have their being. Indeed, most would consider it the ‘standard normal’ given the many cycles of booms and busts they have had to endure. Whether in the context of families’ ever-shrinking disposable incomes in the midst of hyperinflation at the best of times; or at the worst of times as in thecurrent acute scarcity of forex that has meant nothing but trouble for the manufacturer who need to import raw materials and spares to keep his factories working, Nigerians are only too aware of the frightening statistics of economic underperformance that have come to define their existence.

    By the way, did anyone ever come to the point of doubting the destination of a country whose manufacturers and other key real sector playershave been on a death row for as long as anyone can remember; an economy where power supply is a rarity and other infrastructuresare at best at pre-industrial levels; where the small and medium scale enterprise dieby the scores – daily;where banks have long shifted from their traditional function of financial intermediation to focus instead on servicingthe crazyindulgences of irresponsible bankers and their promoters; a country where consumption trumps production andspeculation trumps wealth creation? That is the Nigerian economy for you.

    Minister Adeosun therefore discloses nothing new when she says that the country is under technical recession. What would have been refreshing is if the minister availed Nigerians of a concrete pathway out of the problem and in such a way and manner to suggest an appreciation of the dire emergency.What we had instead is anapparent gross understatement of the problem on one hand, and an exaggerated optimism about the prospects of recovery on the other. I found that troubling.

    I do not think that anyone should be mistaken about what is at the heart of the current crisis: virtually every sector is in a state of meltdown. From factories that are drawing shutters on their operations to the anaemic financial institutions plagued by internal operational inadequacies, the story of scale-back is the same. The collapse in global oil prices has merely exacerbated the problem of an underperforming economy. The consequence is the current situation in whichfar more Nigerians are out of work than those in productive pursuits.

    And what has been the federal government’s response? Considering what is clearly an emergency, I would say too little.Imagine an apex bank supposedly sworn to attract funding to critical sector raising interest rates from 12 to 14 percent all because, it claims it wants to attract savings in an economy where disposable incomes are at the lowest levels ever! Does anyone see the contradiction? So, how will a manufacturer, forced to borrow at 21 percent, compete with peers outside that can easily access credit at four percent?

    Let’s be clear: the situation, far from being insoluble, calls for imagination and clear sighted leadership of the federal government. It’s certainly not true to say that bold and revolutionary measures have not been undertaken before in similar circumstances. While there are copious examples from other jurisdictions, one ready example is when, at the height of the subprime mortgage crisis, the Americans came up with the Troubled Asset Relief Program (TARP) under which the country’s financial institutions’ toxic assets were purchased to strengthen the sector. That legislation,signed into law by U.S. President George W. Bush on October 3, 2008 was initially projected to cost the American treasury $700 billion, but total disbursements would later be reduced $431 billion.

    Back home in Nigeria, we had the local version of TARP in 2009 when the then CBN Governor Sanusi Lamido Sanusi bailed out the nation’s financial sector with an unprecedented N620 billion after their managements took them under.

    At a time millions of our youths pound the streets looking for what to do, has anyone thought of the paradox of keeping these bodied Nigerians idle at a time our roadsare begging to be fixed? Has anyone figured out the multiple benefits from setting aside a tiny fraction of the N268bncommitted in the 2016 budget to getting out-of-job contractors back on site to organise hundreds of thousands of youths across the country into work gangs,even if on temporary basis, to fix our crater-ridden highways? What would it cost to train young Nigerians in the emerging solar technology considering that that is the way of the future? How much? Does anyone even know?

    Time we began to think outside the box.

  • Ayade praises OAAN’s contributions to economy

    Ayade praises OAAN’s contributions to economy

    •Association holds 31st AGM in Calabar

    Cross River State Governor Ben Ayade has hailed members of the Outdoor Advertising Association of Nigeria (OAAN) for its contribution to the growth of the economy.

    Ayade, who spoke at the weekend during the 31st annual general meeting (AGM) of OAAN in Calabar, the state capital, said the body had maintained an advertising sector, which was boosting businesses across the country, especially in Cross River State.

    Represented by his deputy, Prof. Ivara Esu, the governor said: “I am confident to say that OAAN is a major driving force in the economy.”

    Ayade said OAAN enjoyed a good relationship with Cross River State through its collaboration with the state’s outdoor advertising regulatory agency, CRISSAA.

    Giving the report card of the association in the last 12 months, OAAN President Babatunde Adedoyin said the association had done well in view of the challenging economic environment.

    The OAAN chief said the association was devising ways for members to survive and thrive as a business.

    He said one of such avenues was to work with independent media agencies and advertisers to seek beneficial ways for all.

    Adedoyin said the association would ensure that only members, up-to-date in their dues, were certified to practise.

    The association’s chief warned those who had not paid their dues to do so.

    He said certificates would be printed to render the previous ones invalid.

    Adedoyin said the association was planning to amend the OAAN constitution to align it with global trend in outdoor advertising.

    The president thanked everyone who contributed to the success of the 10 Poster Award,  in Lagos.

     

  • Silver lining in the economy

    Sir: Something very significant happened few days ago but, somehow it passed almost unnoticed even in the ever busy cyber community. The almost graveyard silence about the unexpected increase in monthly

    revenue generation forced me to believe Nigerians are more keen on spreading stories of failure and always seem skeptical and reluctant to share stories of success. Well, here’s President Buhari’s story.

    Due to aftershocks of the hard economic knocks Nigeria suffered in recent times caused by global recession, monthly revenue generation of the federation has been fluctuating between N200bn – N300bn hardly enough to allow most State’s to shoulder basic responsibilities like paying workers’ salaries while capital projects were a thing of the past.

    Out of the blues, the month of July witnessed an astronomical increase in the monthly revenue generation of the federation by more than N300bn up to N559.03bn from last month’s N237.46bn, a whopping increase of N301.32bn; the highest in almost two years. Quite astonishing! That’s not all the story. What made this performance a feat to celebrate is the fact that the improvement was mostly from non-oil revenue by FIRS.

    The FIRS improved its performance between last month and this month by N165 billion and that accounted for the significant change in Nigeria’s revenue profile. There was also an improvement of N12.6 billion by Nigeria Customs Service, as well as the exchange gain of N79.2 billion.

    The fact that there was an outstanding increase in Companies Income Tax and Petroluem Profit Tax with complementary increases in import duty and royalties suggest seriousness of President Buhari and

    his team to block leakages in the revenue generation system for the benefit of Nigerians.

    President Buhari and his team have proved themselves competent and set to carry Nigeria out of the woods without the usual noise of having Harvard trained economic experts who always seem capable of turning stone into diamonds but always ended up a disaster to Nigeria. I simply can’t help but doff my hat for President Buhari.

     

    • Usman Mohammed,

    Lapai-Niger State.

  • Fighting corruption of fixing the economy?

    SIR: President Muhammadu Buhari during his campaigns focused on three key sectors: revamping the economy, fighting corruption to stand still and, tackling the security menace.

    Thirteen months in office, the issues are begging to be tackled headlong. Although, President Buhari is not the cause of our woes as most of the problems predated his administration, but some of the decisions he has made so far has hardly helped matters.

    The National Bureau of Statistics has just released inflation rate for the month of June to be 16.5% – the highest in 11 years.  The CBN governor recently opened up that the economy is in bad shape with indications that the federal government may not be able to pay federal workers in few months’ time should the situation persist. The perilous times, was according to him, due to the bombing that is currently going on in the Niger Delta. As if the situation is not grim enough, the finance minister finally and officially admitted that the Nigerian economy is in recession. According to her “there are several other nations that are experiencing the turbulent time worse than Nigeria” – justification I guess?

    What does this government want?  Fighting corruption to the end before attending to the fragile economy? Eradicating corruption is a process and not instantaneous as President Buhari wants it. Nigerians presently are in pains and agonies. Crime rate is on the rise. There appears to be no sign of relief to the economic kerfuffle.

    We can’t continue this way.  The President should give the economy a serious priority as he is giving corruption. Other countries that found themselves in similar quagmire got it solved through thinking within and openness. By now I expect a revolution in agriculture and other sectors as a means of diversification, but it seems we are in limbo, because, nothing concrete has been done aside statement of intent. How do we get it right from this cycle if we are not sincere in our approach?

     

    • Alifia Sunday,

    Ilorin, Kwara State.

  • Forex restrictions adversely affected economy, Fed Govt laments

    Forex restrictions adversely affected economy, Fed Govt laments

    The Federal Government yesterday lamented that the foreign exchange restrictions by Central Bank of Nigeria (CBN) in the first half of this year adversely affected the economy.

    Minister of Budget and National Planning Udoma Udo Udoma, who spoke at the stakeholders’ consultative forum on the 2017- 2019 medium term expenditure framework held at the Banquet Hall of the State House in Abuja, also enumerated such activities as oil production disruptions in the Niger Delta, low oil revenue, low power generation, fuel supply problems in the first quarter (which have been resolved) and insurgency.

    Udoma said inflation hit 16.5 percent in June; unemployment increased to 12.1 percent in March from 10.6 percent in December 2015 and created challenges for some state governments in paying salaries, in addition to the Federal Government giving bailout to states.

    The consultations for 2017 to 2019 medium term expenditure framework and fiscal strategy 2017 to 2019 is in keeping with the dictates of the Fiscal Responsibility Act and the final draft is the material upon which those years’ budget would be based.

    The Federal Government has projected a modest revenue of N7,418,631,892,072 as distributable revenues next year, but the exact amount for next year’s budget, Udo Udoma said, is expected to be ready before members of the National Assembly resume from their recess in September.

    Giving a breakdown of this year’s budget performance so far, Udoma disclosed that 35 percent or N2.123 trillion of the N6.060 trillion vote has already been spent so far.

    Debt servicing he said, took N598.63 billion; statutory transfer- N175.68 billion (including prorated capital expenditure of N78.58; overhead- N125.4 billion; Pension and gratuity- NN79.18 billion and personnel cost- N891.31 billion.

    As at July 18, Udoma stated that N253 billion had been released as capital expenditure (capex). “This has largely been released for MDAs’ utilisation on investment in critical infrastructure projects. However, the release of these funds to the MDAs has to be justified with possibilities of job creation,” Udoma said.

    “Total aggregate capex, inclusive of capex share in statutory transfers, is N331.58 billion as at July 18, 2016, made up of the N253 billion already released and statutory transfer which includes a prorated capex of N78.58 billion.

    The revenue projection for 2017 is made up of N5.402 trillion net accruals from mineral sources, customs and excise and taxes (statutory revenue) as well as N2.016 trillion from value added tax (VAT).

    The minister added that N7, 858,105,163,246 and N10,162,111,175,201 are the revenue projections for 2018 and 2019.

     

     

    Speaking on the underlying assumptions that will drive the macroeconomic parametres and targets for the Medium Term Expenditure Framework (MTEF), Udoma said the government was considering a conservative oil price benchmark of $42.5 per barrel of crude in 2017, $45 per barrel for 2018 and $50 per barrel in 2019; 2.2 million barrels next year per day production of crude oil in 2017, 2.3 million in 2018 and 2.4 million in 2019 with and exchange rate of N290/$ for the three years.

    The government’s growth projections for the MTEF, the minister said, is targeted at “National Real GDP growth of 3.02 in 2017; 4.26 in 2018 and 4.04 in 2019; Nominal GDP (N billion): N108,734,534.85 in 2017, N118,979,374.57 in 2018 and N129,772,715.04 in 2019; population growth of the 3.2 for the three years and inflation rate of 12.92 percent in 2017, 11.88 percent in 2018 and 12.57 percent in 2019.

    The government expects inflation to be higher in 2019 than the preceding year because of the uncertainties of the election year.

    Non-oil revenue receipts for the next three years Udoma said, are expected to increase significantly due to a gradually recovering domestic economy; a projected increase in consumption and the government’s expected improvement in FIRS tax collection efforts, especially with respect to broadening and strengthening of the tax net.

    This, he said, will include Company Income Tax (CIT) projected to increase from N1.788 trillion in 2016 to over N1.86 trillion in 2017 and beyond; VAT collections/receipts to increase by about 42.4 percent in 2017; operating surpluses projection has been moderated downwards for 2017 and, thereafter, a modest growth; customs collections are projected to moderate in 2017 before picking up in the other years and recoveries of misappropriated funds projected  to increase. These recoveries include refunds from strategic alliance contracts and recoveries of other misappropriated funds and fines.

    Udoma said although the projected distributable revenue is higher over the medium term, it will not be sufficient to address the current fiscal challenges at the national and sub national level without substantial private sector investment.

    The key strategies for achieving the fiscal objectives and macroeconomic targets include: support for rapid development of SMEs through increased funding, design agricultural input subsidy for direct benefit for farmers and encourage foreign construction companies to patronise local producers of inputs as well as subcontracts to small indigenous construction firms. There are also  fast tracking the development of the non-oil sector through the diversification of productive base of the economy, encouraging private sector participation in production and marketing, broadening scope of revenue collection, strengthening linkages with Medium Term Development Plans and the SDGs to achieve a more developed infrastructure that supports growth, job creation and increased private sector investment, focus on value chain that will generate wealth and improve sufficiency, promotion of environmental sustainability-by cleaning up oil spillage in the Niger Delta region, building indigenous technology and the implementation of a flexible exchange rate.

    The “Federal Government will intensify its efforts at pursuing non-oil revenue driven economy, but we need some game changers”.

    The state and local governments, the minister urged, are “to consider strengthening their internally generated revenues by focusing on areas of comparative advantage; sustaining the implementation of fiscal sustainability plan; and focusing spending on priorities that will increase productivity and job creation.”

  • Nigeria to explore new opportunities in gas technology – Buhari

    Nigeria to explore new opportunities in gas technology – Buhari

    President Muhammadu Buhari on Thursday said his administration will continue to welcome innovative ideas in the gas, technology and agricultural sectors to reposition the economy.

    Receiving the Letter of Credence of the High Commissioner of the Republic of India, Mr. Nagabhushana Reddy, at the State House, Abuja, President Buhari said Nigeria will strengthen cooperation with the Asian country on education, technology transfer and military training.

    Buhari, in a statement by Special Adviser on Media and Publicity, Femi Adesina, said: “The relationship between Nigeria and India is a long one. The relationship pre-dates Nigeria’s independence and as soon as we got our independence we opened a mission in New Delhi.

    “Our relationship cuts across education, military, trade manufacturing and technology. I recall schooling at the Defence Services Staff College in Wellington from 1970 to 1973 and the significant role India played in establishing the Nigerian Defence Academy.

    “Certainly, you are also the biggest buyer of Nigeria’s crude oil today. We need more of that partnership as Nigeria tries to be more innovative in education, manufacturing and agriculture to diversify the economy,” he said.

    The President said that the strong relationship that had been established between Nigeria and India over the years could be further explored in creating a competitive edge, and mutual advantage for both countries in agriculture, trade and skills transfer.

    In his remarks, Reddy said the Indian government was looking forward to consolidating its relationship with the Ministries of Petroleum, Agriculture, Trade and Investment, and Power, Housing and Urban Development for various projects.

    The Indian High Commissioner said the Indian Chamber of Commerce had already created a Nigerian Chapter, with a view to promoting trade, especially in the energy sector.

    President Buhari also received Letters of Credence from   Ambassador of the Republic of Gambia, Mr. Famara Kassy Gaye; Ambassador of the Democratic Socialist Republic of Sri Lanka, Mr. Thambirajah Reveenthiran and Ambassador of the Islamic Republic of Iran, Mr. Morteza Rahimi Zarchi.