The 2016 federal budget was Wednesday passed by the Senate.
The lawmakers approved a total of N6.060trn made up of N1.587trn capital expenditure of the budget and the recurrent expenditure of N2.646.3trn.
The sum of N351.37bn was approved for statutory transfers, N1.475.3trn for Debt Service, and N2.2trn for Fiscal deficit.
Based on the soon to be passed 2016 Budget, the Federal Government intends to inject N350 billion into the Nigerian economy in the next few months.
The money is intended to revive significant activities back into the economy.
The Minister of Finance, Kemi Adeosun disclosed this to State House correspondents at the end of the two-day National Economic Council (NEC) Retreat at the Presidential Villa, Abuja.
It will partly be used to offset contractual debts in the country.
Despite the huge revenues oil generated under past administrations, the economy was in shambles when President Muhammadu Buhari took over last May.
Although it was called the largest economy in Africa, it had minimal or no impact on the life of the ordinary man on the street.
Infrastructural decay was the order of the day in the various sectors of the economy.
The main reason for the poor state of the economy was traceable to the massive treasury looting and mismanagement in the country.
The treasury, which was to hold resources for the commonwealth and benefits of Nigerians, was leaking from various points into private pockets.
The situation was so bad that Buhari had to raise the alarm on assumption of office that he met almost an empty treasury.
Buhari and the ruling All Progressives Congress (APC) had to declare that it will take some time for the mess left behind by the 16 years rule of the Peoples Democratic Party (PDP) to be cleared.
Only time will tell how long it will now take to clear the mess and fix the economy for the man on the street to start feeling the positive impact of the CHANGE agenda of the Buhari administration.
To stop the trend, several steps, however, have been taken by the new administration in the past ten months to patch the leaking treasury and block conduit pipes some fraudulent Nigerians have been using to siphon money into their pockets.
The implementation of the Treasury Single Account (TSA) by Buhari, which is one of the measures taken so far, will be the main focus of this write-up.
TSA is one of the financial policies being implemented to consolidate all inflows from all the Ministries, Departments and Agencies (MDAs) in the country by way of deposit into Commercial Banks traceable into a single account at the Central Bank of Nigeria (CBN).
The policy, which was aimed at reducing proliferation of bank accounts operated by MDAs and also to promote financial accountability among all organs of the government, was introduced under the administration of former President Goodluck Jonathan.
But due to lack of political will and other factors, implementation of the TSA was not thoroughly followed under Jonathan.
Even with opposition from majority of the MDAs, Buhari ensured full compliance with the policy by the MDAs from the 15th of September, 2015.
He then brought on board Mrs. Kemi Adeosun on the 11th of November, 2015 as the Minister of Finance to propel the TSA policy among other assignments.
The London-born Kemi Adeosun, who holds a Bachelor of Science degree in Economics from the University of East London and a Postgraduate Diploma in Public Financial Management from the University of London, is also a member of the Institutes of Chartered Accountants, England and Wales, as well as Nigeria.
She has worked with British Telecom Company, London, Goodman Jones, London, London Underground Limited, Prism Consulting, the Price Waterhouse Coopers, London.
The Minister has also worked with Chapel Hill Denham Management and Quo Vadis Partnership.
Her last appointment before becoming a Minister of the Federal Republic of Nigeria was serving as Commissioner of Finance in Ogun State from 2011 to 2015.
One of her achievements in Ogun State was the implementation of TSA which saved the state billions of naira.
Speaking with State House correspondents, Ogun State Governor, Ibikunle Amosun had said: “Look at the Treasury Single Account (TSA), I’m happy to report that Kaduna did and we did that in August, 2011 in Ogun State.
“That was the first thing I did when I came into office and we moved from about N730 million to over N6 billion under these four years.
“And I’m happy that people are now seeing the importance of doing things the way it should be in line with world best practice,” he added
Adeosun has been able to transfer her professional skills in handling the TSA at the state level to the federal level in her over four months tenure as the Finance Minister.
As at December 2015, TSA at the federal level has yielded N2.2 trillion.
During a meeting with Nigerians resident in London in February, Buhari had said: “So we enforced TSA and by the end of December, coming to January this year, that is last month, we mopped up more than N2.2 trillion.”
The implementation of the policy at the federal level has also streamlined the over 200 bank accounts been operated by the Federal Government and its agencies and parastatals.
Before the implementation of the policy by the Buhari’s administration, most government agencies that generate revenue always made sure they retired all revenue generated as expenses and management cost, leaving nothing in the account. That practice has now been halted.
Even with the support of the bankers committee for the policy, the commercial banks in the country have lost over N2 trillion worth of deposit with full implementation of the policy.
Besides the achievements being recorded under the policy, it will not be out of place to scrutinize further the past records in order to trace ‘who’ and ‘who’ had been involved in diverting government revenues to private pockets.
The roles played by the commercial banks under the past administrations, which might have aided such diversion, should also be looked into.
All those indicted should be made to face the law as a way of deterrence to others.
To bring the ailing Nigerian economy back to track would require diligent work and time, the All Progressives Congress (APC), said at the weekend.
The party urged Nigerians to give the Federal Government the opportunity to straighten things out.
Deputy National Chairman (South West) of the party, Engr. Segun Oni, urged Nigerians to be patient with the government in its efforts to turn around the flailing economy.
Oni assured Nigerians that the President Muhammadu Buhari led administration would bring the economy back on track with the 2016 budget.
The former governor of Ekiti State, who spoke in Abuja at the launch of a book titled: “Who says Government has no Business in Business?,” written by Engr. Anthony Madagua, blamed the previous government for mismanaging the economy.
He said: “The economy is down not going down. It is down because it was badly managed; it was mismanaged by the previous government that went on a looting spree, debasing everything. It was almost as if it is a form of madness.
“Nigerians should not worry. Yes we are impatient but the economy will be brought back but it will require diligent work and time and we should give the government the opportunity to straighten things out.
“I will say we are a bit hasty, we are in a hurry. This government came in middle of last year. The budget in place for last year was prepared by the previous government. The government in place now is going to be operating in its own budget very soon.
“What can be done outside budget lines and budget items government has done appreciably well, prosecuting the war against corruption, prosecuting the war against Boko Haram.
“We should now wait to see prosecute its own agenda via its budget. That has not started and i don’t think we should judge the government on the performance in a few months when the government is actually in place for four years.”
In his address, the author of the book, Engr. Anthony Madagua, called on government to create enabling environments for businesses to growth.
“The government must not only create the enabling environment, it must also take a role in businesses. There is no reason why government cannot make our refineries to work,” he said.
Minister of Information and Culture Alhaji Lai Mohammed has refuted reports, which claimed he said the economy had gone out of the control of the President Muhammadu Buhari-led administration.
Mohammed spoke on a radio show on Saturday.
Reacting to the reports and criticisms, the minister yesterday issued a statement through his Special Assistant, Segun Adeyemi, saying his words were distorted.
The minister described the comment as a gross misrepresentation of what he said at the radio show.
Speaking earlier on Saturday night at the Third Kannywood Award in Abuja, Mohammed said: “I know we are here for entertainment and glamour, but when a matter of national interest or importance is involved, everything else takes a back seat, if only for a moment.
“Earlier today, I appeared on a radio show here in Abuja at which I spoke extensively on the issues affecting our country, especially the economy.
“To my surprise, my views were twisted and I was reported to have said that the economy of our country is beyond the control of the President.”
According to him, this is a gross misrepresentation of what he said.
“I could not have said that the economy is out of the control of the President or the administration that he is leading.’’
The minister said the Buhari administration decided to turn the economic disaster that it inherited to a blessing by diversifying the economy.
To devalue the Naira or not? How do the states get out of the woods? What new avenues for investments? How do we bring life to the factories now turning into carcasses?
Answers to these and a major boost to states of the federation through a focus on inter and intra-regional competencies, comparative advantages and trade relationships will be put in motion as the re-scheduled The Nation’s “ First National Forum On The Economy” holds on April 7th and 8th, 2016, in Lagos.
The event, which was initially slated for December, last year, was shifted because of the bad weather which affected flight schedules and principally to also accommodate broader stakeholders of the economy, including newly appointed ministers.
A concept of Vintage Press Ltd, publishers of THE NATION, in partnership with CEEDEE Resources, the national forum will be hosted by the Lagos State Government. Major partners across the country, including the Bank of Industry and Lagos Airport Hotel Ltd, Ikeja, which is putting up its facilities as the venue, and several others have signified interest in the event that is expected to attract the participation of all the state governments, the private sector and the public.
The programme also received the blessing of the Federal Government. The Vice President and Chairman of the National Economic Council, Prof. Yemi Osinbajo, accepted to be part of the events and deliver the keynote address at the opening ceremony. A delegation led by the Chairman, Editorial Board of The Nation, Mr. Sam Omatseye, held a meeting with the Vice President early last month in his Aso Villa office, during which he expressed the government’s happiness at such a positive response effort by The Nation to complement government’s initiatives to reposition the economy.
Mr. Omatseye, at the meeting, briefed the Vice President that the major focus of The Nation’s First National Forum On The Economy is national growth through inter- regional cooperation, stressing the interest of the organisers to stimulate internal revenue growth through inter and intra trades and also through the promotion of recognised, hidden and untapped competencies, including solid minerals, which will ultimately lead to the boosting of international trade and foreign exchange earnings.
The major objective of the forum is to push a new momentum for awareness among the states and geo-political zones of the country, for a genuine assessment of peculiar competencies, capacities and comparative advantages. This is conceptualised to achieve the Forum’s two-way focus of the programme’s agenda of dynamic discourse and general exhibitions among participants.
There have been lots of inquiries since the postponement from governments, investors and the public. These can now be channeled to 08169289167, 080255997994 and 08060205914.
There is a cacophony of voices asking President Muhammadu Buhari to convoke a summit on the economy presumably to find a solution to the foreign exchange scarcity and the impecunious state of several of the federating states of the Nigerian Union. It seems the president is predisposed to just doing that. But exactly what will those invited be talking about that the averagely educated Nigerian cannot guess.
Economics is not rocket science. We know what is wrong. Because of the collapse of the price of hydrocarbons, the export of which our economy depends on, our country is not earning as much as it used to earn. The fact is that our income has gone down by about 70 percent. To complicate matters our export of agricultural produce has also been affected by the fall in global price for them. China which was the driving force behind the global economy has slowed down and India another demographic and possible economic juggernaut is a story for the future. We import virtually everything including things that we do not need. Apart from spare parts, automobiles, medical equipment, drugs chemicals and educational materials, we can shut down our ports and force ourselves to produce what we need while whatever foreign exchange we have is devoted to providing necessary infrastructure for our present and future development.
Mazi Mbonu Ojike, one of our early nationalists used to say we should boycott the boycottable and use whatever we produce. Whether we harken to this call now or in the future is a moot point. At the end we have to look inward to move our country forward. If we had saved well against a rainy day, we would not have found ourselves in this pitiable situation. The mindless looting of the public treasury in recent times has made things worse.
The kind of looting we are being told happened is enough to depress any sane and patriotic Nigerian. The level of looting poses existential threat to this republic. In China some of what happened in the recent past would have attracted ultimate punishment .There is no doubt about it. Some of the stories sound like stories from Arabian night and Alibaba and the 40 thieves. People walk into the office of the National Security Adviser, sign a piece of paper, and walk out with a mandate to go to the CBN or banks where government has money to go and collect billions for some spurious work for government or the ruling party or for no work at all!
Nigerian oil was sold without the treasury being credited with the proceeds. People have come out to say their accounts were credited with huge amount of money without their knowledge or without having performed any assignments for government. Billions if not trillions were shared among party bigwigs as if people were playing the game of monopoly with the nation’s money.Government ‘s decision to bring the guilty parties to book had better been hastened and speeded up before people lose their patience. Money taken from these economic saboteurs had better be deployed to pay the millions of Nigerian miserably awaiting the payment of their salaries and pensions. The TSA must not be used to delay payment of salaries and pensions . The present situation of scarcity not only of foreign exchange but also scarcity of the Naira must not be allowed to drag on indefinitely. Instead of succumbing to the call for an economic summit, government must continuously engage the public to apprise it of the situation. The president should broadcast to the nation about the dire state of the economy and what he is going to do about it. Nigerians are not fools. They know the president did not cause the present economic collapse and paralysis. People need to be told this to blunt the ridiculous allegation of the opposition that they did better while in office.
What I expect government to do is to declare economic emergency and austerity by radically reducing the cost of governance. I know that there may be constitutional impediments to doing this but we just can not continue to do nothing. This will involve drastic cut in executive and legislative expenditure and even reduction of diplomatic missions abroad and merging of parastatals and universities and polytechnics at home. We may have to merge local governments and make parliament across board part-time instead of the wasteful practice of the present Naira-guzzling legislative houses at the centre, states and local governments. If we do this, it will send a message to all and sundry that these are unusual times requiring unusual measures and solutions. All these can be achieved through a declaration of economic emergency and economic siege.
There must exist in the law books legal devices to make this happen. Some may argue that this can still be done through the economic pow-wow being suggested. Then it behoves government to put before the summit a well-crafted agenda instead of allowing the Nigerian mania of a useless talkfest to go on.
This reminds me of the Bismarckian approach on national issues of not leaving the fate of the nation to verbal display and debates. What we need to do is clear. Cut down all the jargon,cut down all frivolous importation of luxury goods, wines, champagne, rice, wheat and all kinds of imported confectionaries. Let us eat for starters the much ballyhooed cassava bread. There is also nothing wrong in eating yams and other local staples. While doing this we can then begin to produce all we need at home. Necessity is the mother of invention. The Chinese that we all admire today went through the same trajectory. For the sake of all black peoples at home and in diaspora, let us try and prove that the black man is not all talk and no action. Let us prove to the world that we can endure some pain in order to get the gain of sustainable development. A philosophy of providing what we need rather than what we want ought to be our new credo from this time onwards. If we do not take this route least travelled, we will all end in the broad way leading to national ruin.
We must remind ourselves that our situation is not the worst of all possible worlds. We are neither Venezuela nor Libya! There is no need to panic. The problem we have is a global problem. We mustn’t lose sight of that fact. Thank God we still have a second chance to get things right. Indeed in adversity we must have hope. This is not the hope of religious sermon but the hope that we can come out of the economic woods in which through our past action we have put ourselves. If we are determined and if we are prepared to work hard, we can get out of this economic doldrums. Perhaps we can begin by looking at the 2020 economic plan put together as a blueprint to make Nigeria one of the biggest 20 economies in the world. We can also look at other economic blueprints put together by previous governments instead of reinventing the wheel. If the civil servants cannot do this, then government must look for willing and competent people in industry and the universities. We must go back to agriculture as well as mechanize our mode of production. We need not put all hope on solid or hard minerals alone as some are wont to suggest. Of course we must diversify our economy to tap all sources of revenue. But our priority must be agriculture and industrialization. All this can go pari passu with the current economic diplomacy embarked upon by the president. But in all this, charity must begin at home.
If Nigeria needs to turn around its economy, it must rethink its dependence on the export of crude oil and diversify into cargo and agro allied export. Such paradigm shift will guarantee food security and create a window for Nigerian exports to Europe and the global markets where it could earn over $52 billion yearly, in addition to creating jobs. The Managing Director of ABX World, Captain John Okakpu, in this interview with KELVIN OSA-OKUNBOR speaks on these and other issues.
There have been calls on the government to convert some airports to cargo airport; because of the availability of agro-allied products in the area where such airports are located. Do you agree with this?
Who goes to Akure airport? It is not the government that would go there. So, the government can designate more than 100 airports, are they the ones that will fly there? It is the private sector. The government has a lot of role to play in this part, but as far as the 13 cargo airports are concerned, they are blue-sky projects that will not work. The only airport that I can say is fit for a cargo airport in Nigeria is Ilorin. Ilorin is at the entrance and the exit point of Nigeria. But the problem with Ilorin is the road network that will take you to other areas. There is no road network. It is easier for a cargo airline to come into Nigeria, drop its cargo in Ilorin, pick some of the produce and off it goes. If you start taking a European flight to Calabar, that is crossing the airspace, when they get to Calabar, what are they dropping there? Did they have enough cargo from their origin into Calabar to go and carry whatever you say you have there?
What does Nigeria stand to gain if it invests in agro allied products for export?
We have over 10 million Nigerians living outside the country. Do not forget that the market is geared towards Nigerians out there, who are looking for home food and products. So, if one Nigerian spends $100 on a particular food item for a day, multiply that by how many items he will need in a week, month and a year, all through, with the amount he will be paying for these food items if they are available. The amount will be unimaginable. Nigeria is a mono-economy country, depending on only crude oil to run its budgets. We need to wake up now that the oil price has fallen to low index. This is the time to diversify the economy and invest heavily in agriculture and agro-allied products. To focus on agriculture, you need huge number of well-trained farmers, who will in turn form co-operative societies. You also need the supply chain that will get the products to their destinations, as well as warehouses, storage and packaging facilities. Our goal is to create 20 million jobs in two years, while Nigeria will be able to generate $52b annually from the export of agro allied products alone. There should not be any reason Nigerians should suffer in the midst of plenty, especially as 70 per cent of all exportable farm produce comes from Northern Nigeria.
What are your targeted farm produce?
We have 75 products and out of that, one of the major and the top line product exported out of Nigeria is a leaf called Ugwu, (Pumpkin). You cannot believe that today if you bring a 40-feet container full of Ugwu, it will go on a daily basis. That is one of the high products out of Nigeria. The list goes on; Ugwu is there, bitter leaf is there, sweet potato, ginger, and garlic.
How do you preserve them for export?
We don’t preserve them, ours is transportation. We have experts who do that. For example, ours is to take it from Nigeria to Europe. They get it fresh. If you go to SAHCOL, which is our processing centre, I can proudly tell you that today SAHCOL built first class world standard warehouse. And the cold room they have there today is only ABX world that is making use of it because of the dimension we are taking Nigeria to.
Preservation is not our goal; our goal is logistics, bring in supply chain, get the farmers, put them together to be trained and certified.
We all know today that brown beans is banned from Nigeria, you can’t take it into Europe because of the chemical used in preservation. Then in terms of cassava peel, nothing out of cassava is a waste, including the peel. If you bring 100 container of cassava peel, it will go the same day from Nigeria.
Crude oil prices are failing and one of its spiral effects is the huge cut in revenue accruing to the government. How did we get to this stage?
Fundamentally, as a government and a people we got it all wrong many years and decades ago when we solely depended on crude oil export as the mainstay of the economy. No reasonable government or a nation will do that considering that it would have attendant effects on her economy. Now, the reality has hit us economically and we are running around. It is time to stop complaining and strategise to move ahead. It is time government launched a serious return to the land campaign, by that I mean agriculture. That is why our firm is interested in the promotion of cargo and agro allied export.
How does your cargo freighting and handling firm fit into this?
My goal here is to bring Nigeria back to where we are supposed to be. To stimulate the promotion of cargo and agro allied export. It was a very painful task and journey; it has taken a lot of time and hard work, but the bottom line is that we are here now in Nigeria. In ABX world, our goal is to champion agro airline in Nigeria to create a revolution. Agro Allied has to do with agricultural products, in conjunction with transportation and logistics, mostly in aviation.
Why did it take us this long to realise we have to go back to agro allied and cargo export promotion?
You know the price of crude oil in the market today. Nigeria is one dimension economy, mono-economy, crude oil and import, that is it. God wants to redirect Nigeria. That is why we are now facing the issue of crude oil and falling price by the day. People like me will say let the crude oil be zero, one dollar per barrel because that will wake us up from the slumber.
For Nigeria to balance its budget, crude oil has to be sold at a higher price per barrel. How do we make up for the difference?
We have no choice than to go back to basics, which is agriculture. At ABX World, we have partners in Europe, around the world, we are here to make a difference, create agricultural revolution whereby we take agricultural products as long as they meet the international standard and requirements to the world.
What strategies do you have in place to achieve good marketing of Nigerian products in Europe and other continents?
First of all we have to engage a lot of supply chains around the world, especially in Europe because about 60 per cent of what is going out of Nigeria will target the market in Europe. What we do is to engage a lot of supply chain, bring in the supply chain, then try and liaise with the government, both state and federal and get the farmers, through their co-operative societies because most of these farmers have to be fully registered through their co-operative societies. And these farmers have to be trained on the dos and the don’ts involved in what they are into. When you bring in the farmers, you bring in the co-operative societies, then you put both of them together to be trained and certified to be able to supply the products they are into. Once you get certified you can be guaranteed about three years contract. So there is a need for the training and certification, which is the most basic.
What is your take on efforts by the government to construct 13 cargo airport terminals across the country?
There are some airports designated as cargo airports in Nigeria, but to me I will call that blue-sky project. What I mean by blue-sky project is that it will never work. I had some meeting with FAAN officials about two, three times in the past months and I gave them reasons why it will never work. Part of the reasons is that the projects were poorly conceptualised. The world is changing. Most of the aircraft manufacturers are changing their direction. There will be a time you will not have a cargo airline because of the new trend in technology in aircraft manufacturing. For example, Emirate is taking the lead in this direction. Some time ago Emirate ordered for a hundred and fifty Boeing 777-300ER. This aircraft takes over 400 passengers, takes their luggage plus their excess and still have the capacity to carry 30 tonnes of cargo on two engines. If you designate 13 airports in Nigeria as cargo airports, then you have to ask yourself if it is viable for cargo airline to fly there. The world is changing so much so that most of the passenger terminals have to be the cargo terminals because most of these agricultural produce have to be moved on daily basis. When you harvest them they are moved immediately to their destination within 18 hours. You cannot tell me you load a British Airways with full passengers then you tell them to stop at Enugu to carry five tons of cargo because Enugu is designated as cargo terminal. It does not make any sense.
The board of directors of FBN Holdings Plc, the holding company for First Bank of Nigeria and its former subsidiaries, yesterday alerted the investing public that the group could record significant decline in earnings in the immediate past business year ended December 31, 2015.
In a regulatory filing at the Nigerian Stock Exchange (NSE) signed by FBN Holdings’ company secretary, Tijjani Borodo, the holding company stated that preliminary review of its management account for the 2015 business year has shown that it should be “expected that earnings will be materially below that of the prior year”.
FBN Holdings attributed the reduction in earning to the recognition of impairment charges on some specific accounts resulting from a reassessment of the loan portfolio within the group’s commercial banking business.
“This reassessment was driven by the challenging macro environment, coupled with fiscal and monetary headwinds which have resulted in marked reduction in domestic output. This is a prudent measure being taken while the bank has commenced active remedial action on the specific impaired accounts. Our merchant banking and asset management as well as insurance business remain strong and resilient,” the group stated.
The group however reiterated that its focus in the current business year remains restoring shareholder value by driving improvements in underlying asset quality, cost efficiency, enhancing revenue generation and extracting synergies across the group, as well as growth through innovation.
FBN Holdings’ share price dropped by 4.41 per cent to close yesterday at the NSE at N3.47 per share.
FBN Holdings had distributed a bonus share of one new share for every 10 shares already held and a dividend per share of 10 kobo for the 2014 business year. Key extracts of the audited report and accounts of FBN Holdings for the year ended December 31, 2014 showed that gross earnings rose by 21.3 per cent to N480.6 billion in 2014 compared with N396.2 billion in 2013. Interest income had grown by 12 per cent from N323.6 billion to N362.6 billion. Net interest income rose to N243.9 billion in contrast with N230.1 billion recorded in previous year. Profit before tax rose marginally from N91.3 billion to N92.9 billion. Profit after tax also grew by 17.3 per cent from N70.6 billion to N82.8 billion.
With these, earnings per share had improved from N2.16 in 2013 to N2.55 in 2014, representing an increase of 18 per cent. Total assets rose by 12.1 per cent from N3.87 trillion in 2013 to N4.34 trillion in 2014. Shareholders’ funds improved by 10.8 per cent from N471.78 billion to N522.89 billion.
FBN Holdings’ profit warning came on the heels of earlier profit warning by FCMB Group Plc, the holding company for First City Monument Bank and its former subsidiaries. FCMB Group stated that it would report lower earnings for 2015 financial year.
In the profit warning, FCMB said its earnings in third quarter 2015 will be materially below earnings for the corresponding period in 2014. It added that the fourth quarter 2015 earnings also followed a similar trend with the third quarter 2015.
Managing director, FCMB Group Plc, Mr. Peter Obaseki said the slowdown in the third quarter continued in fourth quarter 2015 and largely emanated from wholesale banking activities, although retail banking showed greater resilience and earnings momentum.
“Third quarter 2015 earnings as at September 2015, will be materially below earnings for the same period in 2014, due to two factors: a spike in impairments particularly in the energy sector and the significant reduction in trade finance-related revenues due to foreign exchange illiquidity,” Obaseki said.