The Nation Newspaper

Tag: external

  • ACCI backs Fed Govt’s external borrowing

    ACCI backs Fed Govt’s external borrowing

    The Director-General, Abuja Chamber of Commerce and Industry (ACCI), Chijioke Ekechukwu has said Federal Government’s plan to borrow $5.5billion Euro bond loa will not strangulate the economy.

    In a statement endorsed by its Media and Protocol Officer, Gena Reuben Lubem, the DG said when the government got approval of the National Assembly to source for the foreign loan,  many  believed it would hut the economy.

    He said: “The borrowing is targeted at infrastructural projects and refinancing of maturing domestic debt with less expensive long-term external debt, there is no cause for alarm; many other countries have borrowed far above what Nigeria is taking from the Eurobond.

    “We shouldn’t be shy to borrow money to fund the deficit of the budget, infrastructural development and local projects. There is no problem with that and Nigerians should not worry.

    “On hiring of Malaysian expatriates to fix the economy, such actions should be discouraged as Nigeria has competent hands that can successfully navigate the country out of the economic quagmire it has found itself.”

  • Nigeria seeks reversal of Common External Tariffs on drugs

    The Federal Government is considering a review of the Common External Tariffs (CET) because the subsisting order is hurting the pharmaceutical industry.

    The Ministry of Health and his counterpart in Investment, Trade and Industry  are coordinating the government’s bid to reverse the CET, which has been widely criticised as unfair to the Nigerian pharmaceutical manufacturing industry.

    The Economic Community of West African States (ECOWAS), CET, which implementation began last year, reduces import duty tariff on finished pharmaceutical products to zero per cent compared with the five to 20 per cent duty on raw and packaging materials respectively. This scenario hugely favours importation to the detriment of local production.

    Nigeria accounts for about 75 per cent of the region’s pharmaceutical manufacturing with Ghana accounting for about 20 per cent, as against  other sub-regional countries that depend  mostly on importation. This development has prompted stakeholders  to impress it on government to take  measure to protect the local industry by invoking the Import Adjustment Tax of the CET, while working on a medium to long-term review of the agreement.

    Minister of Health, Prof. Isaac Adewole, said Nigeria has written a letter to the Ecowas seeking a reversal of the CET as it relates to the pharmaceutical industry, noting that the CET undermines the huge investments that had been made in the Nigerian pharmaceutical industry.

    “It doesn’t make sense to allocate higher tariffs to raw pharmaceutical materials, it doesn’t make sense, government is looking at the reversal,” Adewole said.

    Adewole recently undertook factory tour of the N9 billion World Health Organisation (WHO)-standard new pharmaceutical plant of Fidson Healthcare Plc.

    At least four companies, including May & Baker Nigeria Plc, invested in WHO-standard plants to further upscale  domestic manufacturing into global competitiveness.

    Adewole said the government would support the development of the pharmaceutical industry by patronising locally produced drugs and ensuring prompt payment for government orders.

    The Minister of Health, who was impressed by the breathtaking plant of Fidson Healthcare, said the government may consider granting waivers to the company to support it.

    He added that the Nigeria Sovereign Investment Authority (NSIA) will also be encouraged to consider supporting Fidson with funding for its raw materials and additional equipment.

    The Fidson Healthcare’s new plant, located in Ota, Ogun State, is reputed as the largest pharmaceutical manufacturing facility in Africa. It is one of the few that had been shortlisted for WHO certification in Nigeria. The new plant is equipped to produce six distinct product lines-tablets, capsules, oral liquids, creams and ointments, dry powder and intravenous infusions to meet Nigeria and regional medicine needs.

    The new manufacturing plant is expected to save and generate foreign exchange (forex), create employment, reduce health tourism and contribute meaningfully to the achievement of the Millennium Development Goals (MDG) of the Federal Government through job creation and reduction in infant mortality and maternal death.

  • External debt hits $9.71b

    External debt at the end of last year stood at $9.71 billion, equivalent of 1.7 per cent of estimated 2014 Gross Domestic Product (GDP), the Debt Management Office (DMO), has said.

    A report by FBN Capital, said the increase of $190 million over the quarter is accounted for by bilateral creditors, but the data are not data to associate with a government in heightened borrowing mode.

    It said the DMO’s medium term strategy of May 2013 set a target of 60/40 for the optimum mix of the Federal Government domestic and external debt obligations.

    “Our estimates suggest that the blend was 83/17 in December. The target may well be revised in the context of the slide in the oil price and resulting pressure on the naira exchange rate,” it said.

    The strategy, it said, was driven by relative servicing costs, which the DMO estimated at the time as favouring external debt obligations by about 800 basis points. The differential is little changed currently in the middle of the curve.

    “These were estimates for market borrowing, whereas loans on concessional terms from multilateral agencies accounted for 70 per cent of external debt in December. The differential in favour of external borrowings should therefore be adjusted upwards. The debt stock/GDP ratio is popular with the ratings agencies, and therefore widely cited in the financial media,” it said.

  • External reserves may drop to $30b, say analysts

    External reserves may drop to $30b, say analysts

    Analysts at Financial Derivatives Company (FDC) see external reserves dropping to $30 billion from current $34.5 billion in the coming months.

    Its Chief Executive, Bismarck Rewane said the naira under pressure, could cross N200 to a dollar and that further depreciation of three to five per cent at the official market is expected.

    He explained that said the Monetary Policy Rate (MPR) will be reduced cumulatively by 1.5 per cent per annum adding that economic growth is weaker but outlook remains positive.

    Rewane had said the reserves which stood at $37.87 billion as at April 3, had about $10 billion of which is in hot money. He said reversal of capital flows into the economy will intensify, further depleting external reserves.

    Hot money is the flow of funds (or capital) from one country to another in order to earn a short-term profit on interest rate differences and/or anticipated exchange rate shifts.

    These speculative capital flows are called “hot money” because they can move very quickly in and out of markets, potentially leading to market instability.

    Rewane said there would be further external sector imbalances in a run-up to this year’s elections even as equity market imbalance is likely to increase with stock market correction continuing.

    He said spill over from Russia-Ukraine crisis poses downside risks for neighbouring countries and Europe with 20 per cent of European Union (EU’s) energy consumption is from Russia with 32.5 per cent of Nigeria’s imports coming from the EU.

    He said countries that have tried to prop up their currencies stood the risk of depleting their foreign exchange reserves adding that Nigeria’s Gross Domestic Product (GDP) growth is estimated to spike to 7.22 per cent during the past quarter as against 7.72 per cent recorded last December.

    GDP rebasing is expected to boost Nigeria’s estimated size by about 40 to 70 per cent and is almost certain to push it ahead of South Africa to become Africa’s biggest economy.

    The National Bureau of Statistics (NBS) changed the base year for calculating Nigeria’s GDP to 2010 from 1990 to reflect changes in the economy of Africa’s most populous nation, and more accurately assess the size of its current output.

    Most governments overhaul GDP calculations every few years to reflect changes in output and consumption, but Nigeria has not done so since 1990, meaning sectors such as the internet, telephoney and even the “Nollywood” film industry have had to be newly factored in to give a truer picture.

    He said Nigeria’s GDP growth is accelerating but hampered by insecurity, which currently has five to eight per cent negative impact on nominal GDP.

    Also, data from the CBN showed that gross external reserves as at December 31, 2013 stood at $42.85 billion, representing a decrease of $ 0.98 billion or 2.23 per cent compared with $43.83 billion at end- December 2012.

    The reserves have further dropped to $38.79 billion as at March 12 after dropping by $3 billion in one month.

    The reserves were at $42.77 billion on February 3, and dropped to $39.72 billion on March 3. It has further dropped to $37.8 billion in March 28. Analysts said the reserves declined as imports of fuel and foods soared.

  • NACCIMA faults ECOWAS common external tariff

    NACCIMA faults ECOWAS common external tariff

    The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has raised the alarm over the proposed Economic Community of West African States (ECOWAS) Common External Tariff (CET).

    President, NACCIMA, Alhaji Badaru Mohammed, Mohammed spoke to The Nation on the sideline of the Review of the state of the Nation in Lagos.

    The NACCIMA chief, who was represented by the First Deputy National President, Chief Bassey Edem, said there is a gap between the savings and lending rate.

    He said the chamber is concerned  that the nation’s borders will be thrown open to goods from within the West African sub-region from next month when it will be operational.

    He said it would pose a huge challenge for the nation’s growing industries that are battling with the devaluation of the Naira, among other challenges.

    He cautioned on the need to ensure compliance to all protocols signed by ECOWAS to eliminate dumping of goods in the country to protect the growing industries to realise the nation’s proposed Industrial Revolution Plan.

    He said: “The cost of funds currently hovers between 22-35 per cent depending on the profile of the firms, which is too high for any productive venture and has significant implication on the global competitiveness of Nigerian firms and their products.”

    On the power sector, he advised the government to work with the Generating and Distribution Companies (GENCOS and DISCOS) to achieve the desired energy requirement of the country in view of the critical role the sector plays in the development of the national economy.

    In his words: “It is imperative that all stakeholders in the power sector should collaborate to improve on the current output, which hovers between 3,200 Megawatts Mw and 3,500 Mw. We also want to counsel government to demonstrate the political will needed to drive the alternative sources of power so as to significantly improve on the power supply in the country.”