The Nation Newspaper

Tag: Economy

  • Lagos champions ‘green economy’ campaign

    Lagos champions ‘green economy’ campaign

    The Lagos State Commissioner for the Environment, Dr Samuel Adejare, has called for the integration of tree planting and other environmentally-friendly mechanisms into national policy to enhance development.

    He made the call at the third annual forum and seminar of the Lagos State Parks and Gardens Agency (LASPARKS) held at the Adeyemi Bero Auditorium, Alausa, Lagos State, on Tuesday.

    Adejare said the seminar was a forum to educate, inform and exchange ideas by the public and policymakers on how best to integrate tree planting into the national economy for sustainable development.

    He said when tree planting is integrated into the national economy, the benefits would be fundamental to militating against the adverse effects of global warming and its attendant climate change impacts. It will also reduce poverty level through job creation and gainful engagement of youths; ensure production of food and other essential goods; ensure sustainability of agricultural production for export; ensure availability of woods, furniture and other allied products; and ensure environmental sustainability and improved socio-cultural value of greening.

    Adejare stressed the state’s commitment to protecting the environment for the present and future generation through its pace setting programmes and actions, including the ‘Operation Green Initiative’, which has been lauded locally and internationally. He encouraged Nigerians to embrace good policy framework as regards tree planting, public awareness campaign and positive attitude toward all the ,state’s greening programmes.

    He noted that despite challenges that may be encountered, regenerating the environment can only be done through collaborative efforts of the government and the private sector.

    In this regard, he called on non-governmental organisations (NGOs), private organisations and government to partner to develop the state through holistic tree planting programmes and creating a green national economy.

    The General Manager of LASPARK, Mrs Abimbola Jijoho-Ogun, said from a recent survey conducted by the agency, Lagos State citizens have called for the planting of more trees in the state.

    Stating the benefits of tree-planting, she said: “It has been long established that trees absorb pollutants in our cities with measurable benefits to people’s health such as reducing asthma levels. Yet, trees also deliver a host of other extra ordinary economic and social benefits as source of foods, medicine and shelter for all.”

    She said more empirical studies have shown that employees are more productive and have greater sense of job satisfaction in an environment adorned with trees. Also, she further said, trees have the potential to increase economic wellbeing of the people with properties and values boosted by their presence.

    Jijoho-Ogun decried the population’s negative attitude to trees, saying fears over safety or disturbances to foundations and properties, which lead to felling of such trees, rather than its integration, were unfounded.

    “The development of the space in which we live and work represents an opportunity for change that may not be repeated for many years. Making the right decision at this pivotal moment can influence peoples’ sense of place, health and wellbeing for generations,” she said.

    The LASPARK boss encouraged Nigerians to think positively about trees and to become advocates for greening and beautiful environment.

    Prof Musiliu Onilude of the department of agriculture, University of Ibadan and Dr Julius Agboola, an environmental scientist, were major speakers at the seminar.

  • How to grow economy, by Gowon

    The former Head of State,  Gen Yakubu Gowon yesterday said continuity in governance is the way forward to diversify the  national economy.

    He spoke at this year’s Fellows Luncheon of the Institute of Directors (IoD), Nigeria at Civic Centre, Lagos.

    He said the global fall in  oil prices is a lesson to all that a mono-economy in contemporary times is an invitation to economic disaster. The elder statesman said there is need to revisit agriculture particularly in the area of growing food to feed the nation.

    According to him, there is need to reconsider development plans for infrastructure development, adding that the road network must integrate all the geo-political zones to facilitate easy movement of people and goods.

    “We must be concerned about policies and pronouncements that inhibit doing business in the country and create co-operation and continuity for business and governance. We must pay attention to the power sector and ensure it works,” he said.

    Gowon noted that the national grid must be expanded to reach every nook and cranny of the country and the state governments should aim at boosting rural electrification.

    He said the third National Development Plan 1975 to 80 which he launched in 1975 is still implementable today, especially if all areas of economic development are taken into consideration as an organic whole. He added that economic development should be inclusive, not exclusive.

    Former Chairman of the Board, Eco Bank Nigeria Plc and past President, Lagos Chamber of Commerce and Industry (LCCI), Chief John Odeyemi said to diversify the economy there is  need for total resolve, commitment, passion and dedicated action.

    According to him, all hands must be on deck, various government policy makers, professionals, traders and association working in the same direction must seek and concretise opportunities for wealth creation and job mobilisation for gainful employment and self-sufficiency.

    He said government must articulate immediate medium and long term goals measurable and achievable over a period of 25 years without.

    “The leadership of the country at the national and state levels must have the courage to take tough decisions and make sacrifices in the near term which will in the long run make our economy stronger and sustainable and consequently result in prosperity across all regions of Nigeria,” he said.

    He noted that to resolve revive the economy, there will be need to explore and expand inter-state relations and strengthen regional competiveness by maximising economies of scale, regional optimisation of assets and endowments, and mitigation of affiliations and natural disasters.

    “For effective inter-sate collaboration, we must also ensure transpiration, infrastructure to facilitate market linkages, education, market development, human capacity building, security and intelligence sharing among others,” he said.

    President/ Chairman Governing Council, IoD, Mr Samuel Yemi Akeju said the event is to foster a way for Nigeria to move forward following the present state of the economy.

  • Economy: Buhari is on right path, says Dangote

    Economy: Buhari is on right path, says Dangote

    •Firm begins construction of $1b Okpella cement plant 

    President and Chief Executive of the Dangote Group Alhaji Aliko Dangote said yesterday that the President Muhammadu Buhari administration was on the right path in the diversification of the nation’s economy.

    His assertion followed new policies implemented through the Ministry of Industry, Trade and Investment as well as Ministry for Solid Mineral Development.

    Dangote spoke at the ground-breaking ceremony of Okpella cement financed by his group.

    He hailed efforts of the President in revitalising the solid mineral sector, noting that the sector could provide employment and improve non-oil revenue.

    Dangote noted that the new plant could transform the economy of Okpella and Edo State.

    Dangote said investment in local cement plants saved Nigeria $3 billion spent on importing cement.

    He urged the private sector to invest in critical areas of the economy since the Federal Government has expressed readiness to resuscitate the industrial sector.

    Dangote said he would always invest in Nigeria, adding that Nigeria remains the best place to invest in the world.

    He said: “While others are sitting and waiting, the Dangote Group is thinking ahead by investing in additional cement capacities in Okpella in Edo State and Itori in Ogun State. We have also invested in a 100MW Power Generation Plant for Itori and Okpella.

    “A key factor that drives investments in an economy is the presence of an investor-friendly business climate. Indeed, Edo State is one of the most attractive investment destinations in Nigeria.

    “The economic reforms in Edo State, especially in tax, innovations in rural finance and investment on infrastructure, have produced an enabling environment that has further provided a platform for future growth. These factors encouraged us to consider Edo State as the right destination for this investment.

    “By this investment, Dangote is increasing its production capacity, thus maintaining its leadership in the industry. The Okpella six million capacity plant will take our local capacity to 35m mtpa, and with the coming on stream of the 6m mtpa plant at Itori in Ogun State, our local capacity will go up to 41m mtpa.”

    The project, he added, “is only one of our several successful projects in parts of the country and outside in more than 15 other locations in African countries, in line with our Pan African investment strategy”.

    Edo State Governor Adams Governor said his administration has created enabling environments for businesses to strive in the state.

    However, impressed at the continuous investments in cement production despite having met local demands, the Federal Government said the gains of backward integration in the cement sector, as championed by the Dangote Group, is saving the nation billions of foreign exchange.

    Minister of Solid Mineral Development Dr. Kayode Fayemi and his counterpart in Trade and investments, Dr. Okechukwu Enelamah, said government was pleased with Dangote Cement in ensuring that the nation frees itself from endless importation and becoming net exporter.

    This said tallied with the change agenda of the Buhari government to substitute importation with local production and consume only products produced locally.

    They said the volatility in the international oil market and the excessive dependent on importation have put pressure on the naira, adding that the government would free the naira from such pressure.

    Fayemi said the Federal Government would meet with the 36 governors to simplify access to land by investors in solid minerals.

    He said continuous investment in the mining sector would earn the nation $25 billion annually by 2025.

    The $1 billion cement plant has the capacity to hire 6,000 new jobs.

    The new six million metric tonnes per annum capacity cement plant is coming on the heels of similar arrangements in Itori and Ibeshe, Ogun, with 12 million metric cement in combined capacity.

    By this investment, Dangote cement’s production capacity will increase to 41metric tonnes per annum in Nigeria alone.

  • How to rescue Nigeria’s economy, by stakeholders

    How to rescue Nigeria’s economy, by stakeholders

    Overdependence on crude oil for revenue has stunted Nigeria’s development. A holistic and sustainable economic diversification strategy has become imperative in view of dwindling fortunes triggered by crashing oil prices at the international market. This was the position canvassed by participants at The Nation’s National Economic Forum in Lagos. They also came up with robust, far-reaching recommendations, which can put the economy back on track. SIMEON EBULU, CHIKODI OKEREOCHA, EMEKA UGWUANYI, TOAFIK SALAKO, OKWY IROEGBU-CHIKEZIE, LUCAS AJANAKU, DEJI ADEMIGBUJI and COLLINS NWEZE report.

    Nigeria looks good to weather the economic storm triggered by the sustained sliding oil prices. For the first time, a refreshing mindset and political leadership with positive thinking and pragmatic actions has taken charge. Those at the helms of affairs have finally woken up to the reality that the party is over. To them, the days of crude oil as a money-spinner for the economy are over.

    For the first time last week, the long-standing argument and advocacy of critical assessors of the economy that Nigeria’s overwhelming dependence on crude oil for its revenue to the neglect of other sectors is fraught with dangers hit the right chord in the ears of the political leadership. The political leadership appears to have seen the need for a holistic and sustainable economic diversification strategy.  The consensus was to take the bull by the horns. It was at the National Economic Forum, organised in Lagos by The Nation. It was the newspaper’s first, organised in collaboration with CEEDEE Resources. It has “National Economy: The Way Forward” as its theme.”

    Vice President Yemi Osinbajo personified this changing mindset when at the opening of the two-day talk shop at Oranmiyan, Hall, Lagos Airport Hotel, when he said: “It is pathetic that a nation with over 170 million people benchmarked its budget on the price of oil. We must look beyond oil because it disturbs us from looking at other sectors. In order to move the country forward, we must reduce the Federal Government’s and states’ dependence on sharing revenue made from oil sales.”

    The forum, according to the Chairman, Board of Directors of Vintage Press Ltd, publishers of The Nation, Mr. Wale Edun, was an initiative and platform to assist in structural repositioning of the economy.  The event, which drew top government officials, politicians, media chiefs, members of the Organised Private Sector (OPS) and Nigerians from all works of life, lived up its billing of providing a platform for experts and stakeholders to jaw-jaw and chart a way forward for a bruised economy. No thanks to the tumbling oil prices at the international market.

    For once, the two-day intellectual engagement was adjudged by participants as the first time the economic policy direction of President Muhammadu Buhari administration would be dissected with clear, measurable action plans on how to turn the economy around.

    Osinbajo set the tone for a thought-provoking session in his remark when he pointing out that the foundation for a strong economy demands appropriate fiscal policies that will help the country that is arising from a very low rate of Value Added Tax (VAT) and a low taxpayer’s base.

    “We are focusing on increasing the country’s taxpayers’ base. We are committed to expanding the tax net,” he told his audience.

    The vice president, a professor of law and Senior Advocate of Nigeria (SAN), raised the hope of Nigerians when he said the government was aware of the overwhelming challenges confronting them and that the President Buhari-led administration remained committed to addressing them.  The ongoing reforms in the various sectors, he said, would soon reverse the economic fortune and return the country to the path of progress.

    It was not an empty promise. Osinbajo stressed. For instance, he informed that 30 per cent of the this year’s budget has been set aside for capital expenditure, while non-oil sources, comprising company income tax, VAT and others, are expected to contribute N1.5 trillion. All these put together, would make the earnings from oil insignificant.  “This is unprecedented in the history of the country,” he said.

    His message of hope did not stop there. He also said that in line with Federal Government’s ongoing reforms, it will not reverse the privatisation in the power sector because past experience has proven the government as not being good managers of businesses. This gladdened the hearts of not a few Nigerians considering the fact that it was a break from the past when policy reversals was the norm.

    The clarification was necessary in view of calls by some electricity consumers, including organised labour for a review of the privatisation exercise and the suspension of the tariff introduced in February. According to them, privatisation has not translated to improved electricity supply across the country. But, the vice president said the government will sustain the privatisation of the sector while pushing for the provision of gas to power the existing power generating plants.

    Aside being wary of the possible backlash of reversing the privatisation, Osinbajo listed the moribund Nigerians Telecommunication (NITEL) and the defunct Nigeria Airways Limited (NAL) as examples of while government should not be directly involved in running businesses.

    Pointing out that Nigeria has in excess of 12, 000 Megawatts of installed generating capacity, he described as unacceptable the inability to distribute above 5, 000 Megawatts because of weak transmission infrastructure.

    “Even if we transmit the 5, 000 Megawatts currently generated, over half of it will be lost because of inadequate infrastructure,” Osinbajo said, noting that more investment is required to provide the transmission infrastructure to transport the excess to the end users.

     

    More push for diversification

     To Osinbajo, diversification is inevitable. “We now have to move beyond the neglect of other key sectors such as agriculture, manufacturing, solid minerals and high value services…..These sectors have the potential to create jobs, boost domestic demand and just as important, generate significant foreign exchange earnings, which is why the Federal Government has put diversification of the economy on its agenda this year.”

    Governors and other participants at agreed with Osinbajo’s position.  Oyo State Governor  Abiola Ajimobi highlighted the importance of diversification along the lines of states’ natural resources. “There is no advantage whatsoever in monoculture and mono-economy,” he said, underlining the importance of diversification.

    Represented by his deputy, Chief Moses Adeyemo,  the governor emphasised the need to diversify from crude oil and refocus on the array of resources, especially agriculture. He pointed out that the Cocoa House in Ibadan, the first high-rise building in Nigeria built 50 years ago, and the Airport Hotel,  built 40 years ago, were built with proceeds from  cocoa by the defunct Western region.

    He expressed his administration’s willingness to explore opportunities in inter-state relationship, noting that the state will be willing to partner with Lagos in the area of agriculture.

    Oyo State, The Nation learnt, has a landmass of 32,000 hectares for farming. This means that Lagos State, with its enormous capital and appetite for agricultural investments, can partner with the Pacesetter State to explore the agricultural potential of the state and create wealth and jobs across the states. “We will like to sign Memorandum of Understanding (MoU) with Lagos State in the area of agriculture, Adeyemo said.

    Ogun State Governor Ibikunle Amosun said Nigeria should move beyond agricultural produce to processing the produce. He described the crashing oil prices as a blessing in disguise, as it has offered an opportunity for the nation to reassess its consumption pattern and taste in favour of local production and consumption.

    Amosun, who was represented by his Commissioner for Industry, Otunba Bimbo Ashiru, said Nigeria should develop the agric value chain to take maximum advantage of its agricultural resources. He said the time has come for the country  to look inward by supporting local production by advocating for and consuming locally made products as a matter of patriotic duty.

     

    Call for power devolution takes centre stage

    Because Nigeria is going through a difficult time, Imo State Governor Rochas Okorocha insists that diversification has not only become desirable, but also inevitable. He argued that the central wields a lot of power and control on the economy, which impedes speedy economic development.

    He said the federal should devolve more powers and responsibilities to other tiers of government, noting that nations going through similar serious economic challenges seek wisest course of action and not sentiments.

    Okorocha said: “Nigeria’s problem is not the fall in oil prices. The fact is that if you do a thing the same way, you achieve the same result. We must do things differently if we want to move the economy forward and meet the expectations of the populace.”

    He insisted the federal has overburdened itself with a lot of powers and responsibilities, including those that are most appropriately undertaken by state and local governments, he said the local government, which is the closest to the grassroots, has the least powers and funding.

    Besides, he pointed out that state government, which is closer to the people depend on handouts from the Federation Account. Okorocha described as abnormal an arrangement that has reduced governors to mere executive cashiers who wait for monthly allocations to carry out their responsibilities.

    “How long shall we (state governments) depend on the Federal Government for survival?” governor Okorocha asked, calling on the Federal Government to devolve power.

    “Nigeria has practised top to bottom (federal to local government) process of governance for so long and has continued to achieve unfavourable result. It is time to practise bottom to top (local government to federal) system of governance where the bulk of funds goes to the local government and the least to the federal,” he added.

    He noted that apart from Lagos, other states run on allocations from Abuja, most of which go to payment of salaries.  The governor wondered why the Federal Ministry of Agriculture gets fat budgetary allocation despite not having land to farm.

     

    Education as game changer

    Okorocha also pushed for the overhaul of the nation’s educational system, which, according to him, does not encourage economic development.

    “We still practice neo-colonialism,” he said, asking, “Why should it be mandatory to have credit pass in English and Mathematics before gaining admission into a higher institution, especially the university?”

    Insisting on the need to tailor education to specialties, the governor said: “There is need for special schools to develop expertise. In Imo State, we have where we train people on painting, plastering, and building among others, so that wherever they go in any part of the world, they will have the competence to compete with others.”

    Bornu State Governor Kashim Shetima also agrees that education holds the key to turning around the fortunes of the economy. While calling for more investment in education, he said the sector is vital because the few that are rich cannot be protected by the many that are poor.

    Shetima, who spoke on the second day of the forum, said with the destruction done to the state by Boko Haram insurgency, which is estimated at $6 billion, his government is committed to rebuilding fallen schools and other social amenities.

    Shetima said more investment in education will result in increased school enrolment, which in turn would prevent youths from being tools in the hands of insurgents.

     

    Inter-state relations, regional competitiveness

    To Lagos State Governor Akinwunmi Ambode, Nigeria must begin to explore and expand the opportunities that abound in inter-state relations and strengthen regional competitiveness by maximising economics of scale, regional optimisation of assets and endowments.

    Ambode said: “States and regions must, once again, begin to leverage on their respective areas of comparative advantage by establishing partnerships towards establishing inter-state or inter-regional commodity value chain. We must re-start inter-state/regional cooperation.”

    The governor lamented that past Federal Governments failed to take advantage of the oil boom to grow other sectors of the economy, adding that the fall in oil prices, coupled with many years of corruption, made the economy vulnerable.

    He said: “It is very unfortunate that we wasted the golden opportunity to deploy the trillions of dollars earned from our oil exports to develop the critical sectors of the economy, including power, agriculture, industries, solid minerals, transportation infrastructure, among others.

    “No doubt, if we had done the right thing as some other oil producing countries did, keeping in mind that crude oil is a finite resource, we would not be experiencing the devastating effect of oil price crash on the scale we are experiencing it now. We are now being forced to do, with pains, what we should have done with ease years ago.

    “The task of charting a new direction for the economy is not going to be a tea party. Various policy options must be identified and assessed on the basis of our current situation and needs.  Moving our economy forward requires thinking outside the box and doing things differently. We need creativity, innovation and the courage to take difficult and tough decisions.”

    He urged the leadership at national and state levels to muster the political will to take tough decisions and make immediate sacrifices, which will, on the long run, strengthen the economy and make it sustainable.

     

    Engaging global investment community

    Beyond strengthening inter-state relations and regional competitiion, the Italian Consular-General in Nigeria, Mr. Andrea Pompermaier urged Nigerians to make more concerted effort at engaging the international investment community to showcase Nigeria’s latent potential and resources.

    Pompermaier noted that the country has so many resources that could attract global investments but the country’s international profile has been largely dominated by its crude oil and sleaze.

    According to him, the time has come for Nigeria to market its abounding opportunities to the global investment community for a broader view of the country, its resources and people.

    The envoy said his personal experience has shown that some of the international opinions about Nigeria were misplaced, as there is much more to the country than oil.

    He assured that his consulate would work to further strengthen the bilateral relationship between Nigeria and Italy by bringing Nigerian and Italian businessmen together.

     

    Entrepreneurship as magic wand 

    With about 37 million Medium, Small and Micro Enterprises, (MSMEs) captured in the data base of the  Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Bank of Industry’s (BoI’s), Acting Managing Director , Mr. Waheed Olagunju, said the MSME sector is the tonic to rejig the economy.

    Olagunju, represented by the General Manager, BoI, Mr. Joseph Babatunde, said if the MSMEs are encouraged, more jobs will be created. According to him, if each of the 37 million MSMEs employs one person, its multiplier effect would be tremendous and the economy the better for it.

    The BoI chief, who spoke on the second day of the forum, however, said the bank has been collaborating with the Central Bank of Nigeria (CBN) and the International Finance Corporation (IFC) to develop a credit bureau and collateral registry to ease MSMEs’ access to funds.

    He also informed that the bank has a plan to establish industrial parks in strategic locations across the country.

     

    Manufacturing, solid minerals, taxation to the rescue

    Other areas identified as holding keys to economic recovery are manufactring and solid minerals. The Director-General, Manufacturers Association of Nigeria (MAN), Remi Ogunmefun, described the manufacturing sector, especially agro-allied manufacturing as the economy’s live wire.

    According to him, this is because of the sector’s capacity to add value to local crops, like cashew and tomato, by processing them into finished products for the local market, as well as the export market to earn foreign exchange.

    On his part, the Former Nigerian High Commissioner to Australia, Ambassador Ayo Olukanni, said mining and solid minerals should be growth areas in the diversification agenda. He urged the government to take a cue from Australia, which rakes in millions of dollars yearly from its mining industry.

    Also suggesting a way out, the Founding President of the Association of National Accountants of Nigeria (ANAN), Mr. Omooba Olumuyiwa Sosanya, there is no better time to maximize taxation through decentralisation of VAT administration than now.

    To him, Nigeria has not really realised its tax potentials. “There is therefore, need to widen the tax net, and not necessarily increase in taxation,” he said.

    Quality, far-reaching recommendations no doubt! The question is: Will the authorities demonstrate the political will to implement them? That is the questing agitating the minds of stakeholders. However, going by Osinbajo’s assurances, a new dawn may be in the offing for the economy.

  • ‘Corruption insanity’ killing our economy, says Shettima

    ‘Corruption insanity’ killing our economy, says Shettima

    Bornu State governor, Kashim Shettima has attributed the poor state of the nation’s economy to large scale corruption.

    Shettima spoke of at the second day of the first National Forum on the Economy organised by Vintage Press Limited held in Lagos on Friday.

    He said President Muhammed Buhari is working hard to address the “corruption insanity”, adding that the Panama paper’s revelation is a tip of the iceberg.

    According to him, the economy of his state was brought down by Boko Haram with over  20000 men, women, kids killed.

    He said millions were displaced, along with destruction worth $6billion.

    “30 percent of the houses were destroyed in the state including schools, primary health centres, infrastructure, including  water supply  and electricity.

    He called for more investment in education, noting that it is vital because the few that are rich cannot be protected by the many that are poor.

  • Enterpreneurship will solve economic problems, says BoI

    Enterpreneurship will solve economic problems, says BoI

    The Bank of Industry (BoI) has identified entrepreneurship as one of the ways to take the economy out of the woods.
    Its Acting Managing Director, Waheed Olagunju in a presentation at the second day of the first National Forum on the Economy organised by Vintage Press Limited, titled National Economy: The Way Forward, said the time has come for action having been speaking about challenges and pains.
    Represented by the GM, Joseph Babatunde, Olagunju said if the SMEs are encouraged, more jobs will be created.
    He said research by SMEDAN had shown that there are 37m SMEs in the country, adding that if they are encouraged and each of them employs one person, its multiplier effect would be tremendous.
    He said Nigeria is number 3 next to US and India in the movie industry, adding that if the strength of the country is explored in the area of the production of goods and services for which the country has comparative advantage, the economy would prosper.
    He said BoI is working with the CBN and the International Finance Corporation (IFC) to develop credit bureau and collateral registry to ease access to funds to SMEs.

    According to him, the bank is also working towards the building of industrial parks, adding that the bank also has cottage agrofund, fashion fund, Nolly fund and the N5m microfinance fund.
    He urged governments at all levels to address the issue of multiple taxation.

  • VP, Ambode, Okorocha, proffer solution to Nigeria’s economic woes

    VP, Ambode, Okorocha, proffer solution to Nigeria’s economic woes

    Vice President Yemi Osibanjo, Lagos State Governor, Mr. Akinwunmi Ambode, his Imo State counterpart, Rochas Okorocha and other dignitaries have identified measures to solve the economic challenges in the country.

    They spoke Thursday at the maiden edition of  National Forum on Economy organised by Vintage Press Limited, publishers of The Nation Newspapers, held at Lagos Airport Hotel.
    Osibanjo in his keynote address blamed the nation’s economic challenges on oil dependence and corruption saying that the time has come for the country to look beyond oil and celebrate integrity over corruption.
    According to him, “It is pathetic that a nation with over 170 million people benchmarked its budget on the price of oil. We must look beyond oil because it disturbs us from looking to other sector. In order to move the country forward, we must reduce the FG and state dependence on sharing revenue made from oil sales.”
    He said government is fully aware of the overwhelming challenges confronting Nigerians, assuring that ongoing reforms at various sector is a pointer to the fact that the situation will soon be a thing of the past.
    “The foundation for a strong economy demands that we have appropriate fiscal policies that will help the country that is arising from a very low rate of VAT and a low taxpayer’s base. We are focusing on increasing the country’s taxpayers base. We are committed to expanding the tax net.
    “At the federal level, the implementation of the country’s 2016 budget will stimulate the economy rather than impose undue austerity on the citizens. For instance, 30 percent of the country’s budget has been earmarked for capital expenditure.
    “Non-oil sources comprising company income tax, VAT and others are expected to contribute N1.5 trillion which is more than the estimated revenue from oil. This is unprecedented in the history of the country.”
    Vice President said there is urgent need for the country to take full advantage of the oil sector, adding that rather than extract and exporting, the country must take full advantage of the oil sector and entire value chain.
    He explained that government would soon commence work on the Lagos-Kano and Lagos-Calabar rail routes, as well as 31 major road projects across the country, just as he stressed the commitment of the current administration to give a quantum leap to infrastructural development.

    He said the governments this year will focus on key areas such as oil and gas Agriculture, social investment among others to tackle the situation.
    Governor Ambode in his remark said the nation’s economy was at a critical threshold and thus, will require its leaders to think outside the box and come up with creative innovations that will trigger economic growth nationwide.
    He lamented the fact that previous governments at the federal level failed to take advantage of the oil boom to grow other sectors of the economy, saying that the fall in price in the international oil market coupled with many years of corruption has made the economy vulnerable.
    “It is very unfortunate that we wasted the golden opportunity to deploy the trillions of dollars earned from our oil exports to develop the critical sectors of the economy including power, agriculture, industries, solid minerals, transportation infrastructure among others.  No doubt, if we had done the right thing as some other oil producing countries did, keeping in mind that crude oil is a finite resource, we would not be experiencing the devastating effect of oil price crash on the scale we are experiencing it now.

    “We are now being forced to do, with pains, what we should have done with ease years ago. The task of charting a new direction for the economy is not going to be a tea party. Various policy options must be identified and assessed on the basis of our current situation and needs.  Moving our economy forward requires thinking outside the box and doing things differently. We need creativity, innovation and the courage to take difficult and tough decisions.

    “The leadership of the country at national and state levels must have the courage to take tough decisions and make sacrifices in the near term which will, in the long run, make our economy stronger and sustainable and, consequently result in prosperity across all regions of Nigeria,” he said.

    Recommending strategies to improve the economy, Governor Ambode said that the nation must begin to explore and expand the opportunities that abound in inter-State relations and strengthen regional competitiveness by maximizing economies of scale, regional optimization of assets and endowments and mitigation of afflictions and natural disasters.

    He listed other viable areas for inter-State collaboration to include transport infrastructure to facilitate market linkages, education, market development, human capacity building, security and intelligence sharing, saying that it was high time to move away from an oil driven economy.

    “Prior to the oil boom era, Agriculture was the mainstay of Nigeria’s economy and contributed about 65 per cent to the country’s GDP and represented close to 70 per cent of total exports. Through farming, Nigeria was able to feed its population while major cash crops were exported to earn foreign exchange.

    “From the cocoa and rubber plantations in the West, the groundnut pyramids and cotton in the north, to palm oil in the east; each region was identified by its economic areas of comparative advantage which were collectively harnessed towards ensuring food security and inclusive growth across the country.

    “Given our current economic challenge, I believe it is time we take a cue from our old ‘playbook’ for a viable ‘game plan’ to revive our national economy. States and regions must once again begin to leverage on their respective areas of comparative advantage by establishing partnerships towards establishing inter-State or inter-regional commodity value chain. We must re-start inter-state/regional cooperation,” he said.

    Governor Ambode said that Lagos has already taken the bull by the horn with its recent partnership with Kebbi State aimed at developing a commodity value chain that will see the local production of 70 per cent of Nigeria’s rice needs with a multiplier effect that will ensure job creation, the development of ancillary industries as well as strengthen the Naira.

    The Governor however added that for regional integration to thrive a functional modern rail and water transportation system must be in place, noting that movement of goods, materials and people by road was not only inefficient but fraught with risks, safety hazards and detrimental to the roads.

    Earlier in his opening remarks, Chairman of Vintage Press Limited, publishers of The Nation Newspaper, Wale Edun said the forum was put together not just to lament the challenges facing the country but for government and members of the critical sectors of the economy to dialogues and chart a way out.

  • Issuing bonds, revamping economy

    Issuing bonds, revamping economy

    The oil price crash hit Nigeria hard. The country’s revenue fell, affecting the funding of critical infrastructure. The Debt Management Office (DMO) has risen to the challenge, issuing bonds to fund such projects in the 2016 budget. Will local investors take a cue from DMO? COLLINS NWEZE writes.

    For Nigeria, the worst era seems over. That was last January when crude oil price touched nearly $25 per barrel, with little hope that it would rebound. But the black gold has inched up slightly, touching $41 per barrel last March 30.But, there is still a decline on large chunk of government revenues. Low crude oil prices meant that the government must borrow to realise its spending plans.

    In 2005, Nigeria struck a deal with Paris Club lenders to write off over half of the country’s $30 billion debt. Since then,  the government’s debt has crept back up, but it remains relatively low as a percentage of its Gross Domestic Product (GDP).

    Oil revenues from oil have dropped, and the only way to fund over N1.84 trillion deficit in the N6.06 trillion 2016 budget is through the issuance of the Federal Government of Nigeria (FGN) Bonds as being done by the Debt Management Office (DMO).

    The DMO last month, sold N100 billion FGN bonds through three bond offerings: re-openings of 15.54 per cent FGN February 2020, three-year, 11 month-bond; 12.50 per cent FGN January 2026 nine-year, 10 months bond and a new 20-year bond, 12.4 per cent FGN March 2036. The stop rates were 11.334 per cent; 12.090 per cent and 12.4 per cent.

    The DMO Director-General, Dr. Abraham Nwankwo explained that a bond is a loan and the investor or holder of the bond is the lender. “When you purchase a bond, you are lending money to a government, local government council, state government, federal agency or a corporation, known as the issuer. The government uses it to fund budget deficit, for instance, or to build roads, electric power stations, finance factories, among others. When you purchase a bond, in return the issuer promises to pay you a specified rate of interest during the life of the bond and to repay the face value of the bond (the principal) when it ‘matures’,” he explained.

    The debt office said when investors buy FGN bonds, they are lending funds to the federal government for a specified period of time. “The FGN bond is considered as the safest of all the investments because it is backed by the ‘full faith and credit’ of the government. They have no default risk, meaning that it is virtually certain your interest and principal will be paid as and when due. The income you earn is exempted from state and local taxes,” it said.

    It added that the government-sponsored enterprise bonds help support project relevant to public policies, such as helping certain groups, such as farmers, homeowners, students, etc to raise money for financing specific projects. These bonds do not carry the full-faith and-credit of the government. The investors are likely to hold them in high regard because they have been issued by a government agency.

    However, corporate bonds are debt obligation issued by private or public corporations. The corporations use the funds for building facilities, purchase of equipment to expand the business, among others. “When investors purchase corporate bond, the corporation promises to return your money, or principal at maturity date, but they are being paid interest semi – annually,” he said.

    He continued: “FGN bond fosters economic development by promoting the use of long-term funds for long-term investment in the economy. It serves as an efficient way of mobilising domestic financial resources for productive investment in a non-inflationary manner. It also allows self reliance of the country by reducing over reliance on short-term borrowing from the Central Bank Nigeria (CBN) & commercial banks while providing a basic infrastructure for the development of the financial system and the overall economy,” the DMO said.

    Analysts and economists have continued to speak on the impact of buying FGN Bonds on the economy.  Currencies Analyst, Ecobank Nigeria, Olakunle Ezun, said there is need for Nigerians to key into the government bond for infrastructure project by investing heavily in local bonds. He explained that the DMO works closely with the Federal Government to manage the national debts, adding that the government is regarded as the issuers of the bonds, while the buyers are seen as investors.

    Ezun told The Nation that the FGN Bonds have the full credit of the Federal Government, and that the bond issuance option is far better than printing money to meet developmental needs of government. “It is not advisable for government to print money to meet developmental needs. And it is advisable that the citizens invest in FGN bonds, which are safe, profitable and deepens the local bond market,” he said.

    For him, although funds from the domestic bond market are more expensive than the international bond market, investing in the local bond market is in the best interest of the economy.

    The FGN Bonds, he added, help the government funds its deficits in a non-inflationary manner while providing benchmark yield-curve for pricing other securities/bonds. It also engenders rational management of government’s fiscal and monetary operations.

    Chief Executive Officer, Nextnomics Advisory, Dr. Temitope Oshikoya, said the government needs to borrow N900 billion through local bond issuance to fund the budget. He said the DMO would be involved in the exercise, adding that the practice where banks end up buying up the bonds instead of lending their deposits to customers is not the best for the economy.

    “It will be good to have more people invest in the local bond market. Banks are expected to lend to the private sector instead of investing so much in the local bonds,” he said.

    Oshikoya explained that FGN Bonds serve as risk-free investment with tax-free income. The bonds provide relatively high and stable returns while the principal element (collected at maturity) can be used as collateral for securing credit facilities from banks. Also, bond holders, who want cash, can trade the bonds on the floor of Nigeria Stock Exchange (NSE) for immediate cash before maturity even as it qualifies as liquid assets for banks from two years to maturity.

    He said if the debts are well spent, they help to boost liquidity in the economy and investment in key sectors, such as Agriculture, Mining among others.

     

    2016 Budget

     

    A large part of the budget focuses on funding infrastructure, which entails the provision of tangible assets such as housing, power (electricity), transport, education, communication and technology, on which other intangibles can be built on. It also seeks to protect the poor with a social safety net including scholarships and food provision in schools.

    The budget has revenue projection of about N3.86 trillion, with oil related revenues expected to contribute about N820 billion or 21 per cent, while tax collection and public expenditure reforms in Ministries Departments and Agencies (MDAs) will account for the rest.

    The budget is clearly consistent and is part of the three-year Medium Term Expenditure Framework (MTEF). It seeks to stir Nigeria off the path of oil dependence. It hopes to achieve this through a focus on non-oil revenues by broadening the tax base and improving the effectiveness of our revenue collecting agencies. However, the renewed drive to boost non-oil revenues may not be sufficient to cover the gap from low oil revenues.

    The budget has a deficit financing that requires an additional N1.84 trillion for capital expenditure, which must be funded through borrowing from local and international markets through the supervision of the debt office.

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

    The DMO is expected to source the additional N1.84 trillion for capital expenditure, N984 billion of which will come from local investors  and N900 billion from international investors.

    In a report titled: ‘Budget 2016: Changed budget, Changed people, Changed leaders’, Managing Director, Financial Derivatives Company Limited, Bismark Rewane, said the spending and revenue estimate is based on the Keynesian model of counter-cyclical spending to stimulate growth.

    Rewane said significant spending on infrastructure and security would complement reforms in agriculture and solid minerals.

    Infrastructure needs

    The Africa Infrastructure Country Diagnostic (AICD) report for 2011 estimated that Nigeria requires sustained spending of $14.2 billion per annum over the next decade in order to address the infrastructure challenge.

    The above scenario, clearly shows that as a result of the huge funding requirement for present and future infrastructural development and its attendant impact on survival and growth of businesses in Nigeria, traditional funding methods can no longer suffice as the traditional fund providers, various levels of government, do not have such resources at their disposal. Therefore, debts may simply be the solution to bridging the infrastructure funding gap.

     

    Bond issuance option

     

    The DMO captures the benefits of using debts to fund projects more succinctly. “If you want to build a railway line from Lagos to Aba, there are two options. Firstly, you can save 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 revenue to offset the debt,” DMO’s head, Policy Strategy and Risk Management, Joe Ugolala said.

    The second option, according to him, is more plausible as it captures the inherent 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 the budget, and support specific projects including infrastructure. He said there was so much demand for infrastructure because of its immense benefits to the economy.

    Speaking on external and domestic borrowing guidelines for the Federal and state governments and their agencies, he explained that the National Assembly has a role to play in government’s borrowing plan.

    Firstly, the National Assembly is to approve the borrowing programme for every succeeding year and approval of overall limits, for the amounts of consolidated debts of the Federal, State and Local Governments, to be set by the President on the advice of the Minister.

     

    Other borrowing guidelines

     

    The National Assembly is expected to grant prior authorisation in the appropriation or other Act or Law for the purpose for which the borrowing is to be utilised. “The Federal Government may borrow from the capital market, subject to National Assembly’s approval. Government at all tiers shall only borrow for capital expenditure and human development on concessional terms,” the debt guidelines said.

    Any government of its agencies can only obtain external loans through the Federal Government and such loans must be supported by Federal Government guarantee. “No state, local government or federal agency shall, on its own, borrow externally. State governments and their agencies wishing to obtain external loans shall obtain Federal Government’s approval-in-principle, from the Federal Ministry of Finance,” it said.

    However, the borrowing proposal must be submitted to the Federal Ministry of Finance and the DMO for consideration, and must state the purpose for which the borrowing is intended and its link to the development agenda of the government.

    It must also state the cost-benefit analysis showing the economic and social benefits to which the intended borrowing is to be applied; cash-flow statements of the Ministries, Departments and Agencies (MDAs), to ascertain their viability and sustainability. There must also be copies of the state’s Executive Council’s approval and the resolution of the State House of Assembly.

     

  • Budget 2016 ‘ll stimulate economy, say LCCI, MAN

    Budget 2016 ‘ll stimulate economy, say LCCI, MAN

    The Organised Private Sector (OPS) is excited about the N6.06 trillion budget for this fiscal year.

    The Lagos Chambers of Commerce and Industry (LCCI) and the Manufacturers Association of Nigeria (MAN) said the budget would stimulate the economy.

    LCCI Director-General Muda Yusuf said the budget’s size  and its reflationary character would have a stimulating effect on the economy.

    He said it is what the economy needs at this time, considering the economic slowdown of 2.1 per cent in Gross Domestic Product (GDP) growth from about four per cent a year ago, rise in unemployment and slow down in industrial activities.

    The LCCI chief praised the budget for giving priority to infrastructure as well as security, noting that it is a step in the right direction given the huge infrastructure deficit in the country and having regard to the security challenges in some parts of the country, particularly the northeast.

    Yusuf, however, said the budget’s debt service provision of N1.5 trillion is a cause for serious concern. According to him, it shows that Nigeria is operating a debt profile that is not sustainable.

    “This amount is about 35 per cent of revenue, which has already exceeded the global threshold for debt sustainability,” he pointed out.

    The LCCI chief added that although debt service is an obligation over which the nation has very little choice, the lesson is that Nigeria needs to review her debt management strategy to reduce the burden of debt services her finances.  “The opportunity cost of current debit service provision for the economy is very high,” he said.

    Yusuf however, identified the drop in oil revenue as a contributory factor to the high deficit in the budget. He said the immediate implication is that the level of borrowing domestically and externally has increased, and this also has implications for debt service burden.

    He maintained that due to increased borrowing, the impact of the reduction in oil revenue has been mitigated.

    While commending the expected increase in efficiency and reduction in leakages in the management of government finances, the LCCI boss observed that the introduction of the Treasury Single Account (TSA) has also boosted government revenues. He expressed hope that the conglomeration of the targeted policies of government will make up for the shortfall in oil revenue.

    His words: “There is need for an appropriate economic policy framework that could inspire investors’ confidence. Private capital is crucial to the progress and diversification of the economy.  Only the right mix of policies would make this happen.

    “There is a need to urgently address the policy shortcomings in the foreign exchange management; undertake urgent reforms in the petroleum downstream sector; review existing trade policies and promote investment friendly tax policy.”

    Also, the President, Manufacturers Association of Nigeria (MAN), Dr. Frank Udemba Jacobs, said the budget would make appreciable impact on the economy if thoroughly implemented. He also commended the huge allocation made to infrastructure. According to him, poor infrastructure remained the bane of the economic development of the country, as the private sector has remained uncompetitive.

    On the allocation to the Ministry of Industry, Trade and Investment, the MAN president said the figure is adequate, adding that what they do is trade promotions, exhibitions and nothing more.

    Dr. Jacobs however, said the removal or reduction of N17 billion by the National Assembly did not make any appreciable difference. The approved N6.06 trillion budget for 2016 was an increase over last year’s N5trillion budget. Under the current dispensation, government budgeted a total of N1.36 trillion to debt servicing while allocating over N16, 296,622,303 billion to the Ministry of Industry, Trade and Investment.

  • Tourism contributes $7.2t to global economy

    The tourism industry contributed over 7.2 trillion in Gross Domestic Product (GDP) to the global economy, a report by the World Travel and Tourism Council (WTTC) has stated.

    Its President David Scowsill in a statement said tourism added 7.2 million jobs to the global economy.

    Scowsill, in the report, titled: ‘The economic impact report,’ which is WTTC’s flagship yearly research, stated that the document provided economic data on the contribution of the tourism sector on a global level.

    The report said: “In spite of uncertainty in the global economy and specific challenges to tourism in 2015, the sector grew by 3.7 per cent, contributing a total of 9.8 per cent to the global GDP.’’

    Travel supported 284 million jobs last year, an increase of 7.2 million, one in 11 jobs on the planet.

    The WTTC chief said though terror attacks, disease outbreaks, currency fluctuations and geopolitical challenges have impacted the sector at a country or regional level, tourism at the global level continues to produce another robust performance.

    He said travel contribution to GDP  outpaced overall GDP country growth in 127 of the 184 countries covered by the research.

    He listed the countries where tourism most markedly outperformed the wider economy last year to include Iceland, Japan, Mexico, New Zealand, Qatar, Saudi Arabia, Thailand and Uganda.

    According to Scowsill, the sector’s growth was stimulated by a worldwide increase in middle-class income households, an ageing population, which tended to travel more, making travel more accessible and affordable.

    The report however, said all regions of the world showed growth in total tourism contribution to GDP in 2015, adding that South-East Asia was the fastest growing region with growth of 7.9 per cent followed by South Asia, which grew 7.4 per cent.

    “In 2016, tourism’s total contribution to GDP is forecast to grow by 3.5 per cent, and is again expected to outpace global economic growth for the sixth consecutive year. Security concerns, border policies, oil prices, the strength of the U.S. dollar relative to other currencies, and other macroeconomic developments will continue to influence travel trends in 2016 and beyond,” the report stated.

    It, however, projected that over the next decade, tourism is expected to continue to outpace the world economy, growing by four per cent on average yearly.