The Nation Newspaper

Tag: financing

  • Weighing the options for infrastructure financing

    Weighing the options for infrastructure financing

    To reduce the $300 billion infrastructure deficit and unlock the real sector’s potential to reflate the economy, Nigeria needs about $25billion yearly, according to experts. But the government’s attempts to find the cash to build infrastructure through external borrowing or the N6 trillion pension funds, among other options, are embroiled in controversies, provoking fears that some projects will either be delayed or abandoned them. This has cast doubts over the sector’s capacity to haul the economy out of recession. Assistant Editor CHIKODI OKEREOCHA reports.

    Vice President Yemi Osinbajo has never stopped declaring his confidence that the economy would bounce back. At local and international fora, he spoke of the Buhari administration’s commitment to pulling the economy out of recession, hinging his optimism on massive investment in infrastructure.

    For instance, at the World Economic Forum in Davos, Switzerland, Osinbajo said: ‘’The Muhammadu Buhari administration is committed to investing more in infrastructure than in previous times by ensuring that 30 per cent of the budget goes into capital expenditure”.

    The vice-president, who chairs the Economic Management Team (EMT), said the government was working on how to tap into the N6 trillion pension fund to finance infrastructure development. He added that there was a need to de-risk such financing models for infrastructure.

    However, his belief that the economy would rebound appears to vary with the anxiety among operators in various sectors, particularly the real sector.

    Operators in the real sector, which comprises manufacturing and agriculture, are apprehensive of delays or abandonment of infrastructure projects planned for this year, following the controversies over various government’s infrastructure financing options.

    Last December President Buhari presented this year budget of N7.3 trillion to a joint session of the National Assembly. Christened “Budget of Recovery and Growth”, he said on expenditure, the government proposed a budget of N7.298 trillion, a nominal 20.4 per cent increase over last year’s estimates.

    According to him, 30.7 per cent of the expenditure will be capital in line with the government’s determination to reflate and get the economy out of the woods as quickly as possible.

    The fiscal plan, he also said, would result in a deficit of N2.36 trillion for the year, which is about 2.18 per cent of GDP.  The deficit, he said, would be financed mainly by borrowing, which is projected to be about N2.32 trillion.

    However, despite the 30 per cent allocation to capital expenditure, the Federal Government appears to be at the crossroads on how to generate enough revenue to meet its obligations, especially capital projects.

    This is so because its attempts to turn to international financial institutions for loans to finance critical projects have been rebuffed by those critical of the administration’s economic policies.

    Last October, Buhari requested the National Assembly to okay a foreign loan of $29.9 billion to execute key projects across the country. But the request died on arrival. It was thrown out by the Senate for lacking a borrowing plan.

    The move also did not go down well with experts and Nigerians. Many of them kicked, insisting that borrowing would do the country more harm than good. Renowned economist and industrialist Henry Boyo was one of them. He said the $29.9 billion loan would affect Nigeria.

    Boyo noted that though there was nothing wrong in borrowing to improve social welfare and infrastructure, it was improper for the government to borrow when it owed so much that it was using about 40 per cent or more of its real income to service debts.

    The economist also expressed concern over the government’s plan to borrow to build infrastructure given that the government-funded infrastructure had never been well managed.

    He said with the sad record of poor performance of government agencies and institutions, it was worrisome for anybody to suggest borrowing to create more infrastructure that would be managed by government.

    Human rights lawyer Mr. Femi Falana (SAN) cautioned the government against taking the loan. Rather than go aborrowing, he called on the government to adopt an “aggressive policy” to recover looted funds.

    Insisting that the government’s request for loans would be detrimental to the country’s future, he said there was a need to fight those who stole Nigeria’s money.

    The Chairman, Senate Committee on Land Transport, Gbenga Ashafa, agreed with him. While urging Buhari to fund the 2017 budget deficit with recovered fund by the anti-graft agency, he appealed to the government to ensure 100 per cent funding of infrastructure.

    Such appositions may have put the government on the spot over how to close the nation’s huge infrastructure deficit, which, according to the African Development Bank (AfDB), is estimated at $300 billion. The Minister of Finance, Mrs. Kemi Adeosun, said about $25 billion is needed yearly to meet the country’s infrastructure deficit.

     

    Row over use of pension funds

    Apart from borrowing, the Federal Government is also considering turning to the nation’s pension funds to building infrastructure. The Nation learnt that as at last November, the fund had risen to a staggering N6.02 trillion.

    With the National Pension Commission (PenCom) projecting that the country’s total pension asset may hit N20 trillion by 2020, it is surprising that the government, according to Osinbajo, was working on how to tap into this huge fund to finance infrastructure development.

    Again, this option appears not to be enjoying a smooth sail. For instance, the Trade Union Congress of Nigeria (TUC) condemned comments by some federal lawmakers that the accumulated pension funds should be deployed for infrastructure development.

    TUC President Comrade Bobboi Kaigama said the pension scheme was informed by the need to tackle the difficulties being faced by retirees and not to raise money for any infrastructure or investment being pushed by the rich.

    He argued that infrastructural development remains the duty of the government and that it is a key driver and a critical enabler of sustainable growth all over the world. According to him, it provides a unique avenue for the public and private sectors of the economy to thrive. It is also critical in attracting foreign investors.

    Kaigama said rather than appropriating the monies saved from workers’ contributions to perform the government’s responsibility to fix roads, provide electricity and other social infrastructure, the funds should be utilised in projects that are of direct benefit to the retirees and other workers, such as fixing the housing deficit.

    He said this must be done with rules for proper accountability in place.

    Perhaps, to douse the tension over whether or not the government should fall back on the pension fund, PenCom Director-General Mrs. Chinelo Anohu-Amazu clarified that there was need for the government to provide adequate guarantees to secure investment of the fund in infrastructure.

    Speaking at the African Pension Awards, organised as part of activities marking the 2016 World Pension Summit, she said while the Commission was not opposed to the idea of deploying the pension fund for infrastructure, adequate mechanism must be put in place to ensure its safety.

    Mrs Anohu-Amazu, however, explained that pension funds alone would not address the infrastructure needs of the country, adding that other sources of funding, such as Public-Private Partnership (PPP) arrangements, should be explored.

     

    Govt sticks to its gun, despite opposition

    Despite the opposition against taking the loan, the Federal Government has refused to budge, insisting that it has no choice, but to borrow.

    The Minister of Finance, Mrs. Kemi Adeosun, said the government’s inability to generate enough revenue to meet its obligations had left it with no choice than to turn to international financial institutions for loans to finance critical infrastructure projects.

    According to her, the government has a huge monthly personnel expenditure of about N210 billion, with more debt service burden of N120 billion. This, she said, translates to a total of N330 billion monthly.

    Adeosun said it had, therefore, become difficult with the low receipts from oil to generate enough revenue to meet these obligations as well as fund capital projects. She insisted that realities on the ground made it imperative for the country to get the loan, if it must survive the economic crisis.

    While pointing out that it would be futile to wait for oil price to rebound, as the prediction is that it will not go back to $110 per barrel soon, the Minister said Nigeria has no choice but to look for low-cost funds and put infrastructure in place, “because it is the infrastructure that will unlock the economy”.

    The Minister has an ally in Dr. Alaba Olusemore, an economist, who said the $29.9 billion external loan being sought by Buhari would help stimulate the economy and also create jobs. Olusemore, a Managing Consultant, Nesbet Consulting, a Lagos-based firm of management and finance consultancy, said he expects the Green Chamber to okay the loan once the executive furnishes it with the loan’s  breakdown.

    “I expect the Senators to approve the loan request as soon as President Buhari resubmits it with the necessary documents and borrowing plan, because at a time like this when the economy is in a recession, there is need for a stimulus to execute capital projects and create employments,” Olusemore told The Nation,

    The loan management expert and Fellow, Chartered Institute of Bankers of Nigeria (CIBN), said: “Capital projects are not divisible. You need a bulk sum to finance capital projects”. Besides, capital projects, he said, are easier to monitor than recurrent expenditures since the multilateral development agency advancing the loan do on-sight and off-sight monitoring to ensure such loan is applied for intended purposes.’’

    Pointing out that multilateral development agencies have affiliates in the country to monitor the deployment of loans for capital projects, Olusemore said there was no cause for alarm over perceived fear that the loan may not be properly applied or misapplied.

    He said because of its anti-corruption drive, the Buhari administration has put itself on self-censorship, which ensures that funds, whether corporate credit or sovereign loans are not diverted but deployed for intended purposes.

     

    Real sector operators fret

    The vice president’s confidence over prospects of salvaging the economy through aggressive investment in infrastructure gladdened many real sector operators. Their hope was that their productivity, competitiveness and profitability, which have been eroded by dearth of infrastructure, would receive a major boost this year.

    However, with the stalemate over how to fund infrastructure projects, operators are at a loss over how the expected boost in their productivity would come. Some of them who spoke with The Nation, said the hope of riding on the sector’s back to pull the economy out of recession might not be realised, if infrastructure projects are delayed or abandoned.

    For instance, the former Director-General, Nigeria Textile Manufacturers Association (NTMAN), Mr. Jayeola Olarenwaju, said infrastructure deficit,particularly poor electricity supply remained one of the stumbling blocks to the country’s road to economic growth and development.

    He said improving power supply and addressing other infrastructure challenges was holding the sector down. He lsited these problems as poor road and rail network, lack of portable drinking water, and affordable housing.

    He said funding options remained the only way to unlock the sector’s productivity, improve business competitiveness and create employments.

  • MAN, RMRDC, others seal deal on equipment financing

    MAN, RMRDC, others seal deal on equipment financing

    The Manufacturing Association of Nigeria (MAN), Raw Material Research & Development Council (RMDC) and Clarion Events West Africa have sealed a deal to host this year’s edition of the Nigerian Manufacturing and Equipment Expo come March in Lagos.

    MAN President. Dr. Frank Udemba Jacobs at a media chat said the idea of the event was  in response to government’s commitment to industrialisation and its quest to diversify the economy.  He said it would also provide a veritable platform for Small, Medium Enterprises (SMEs) to learn processes on how to boost their output, reduce cost, drive quality improvement, manufacture for new market and also secure funding for growth.

    He said the 2016 maiden edition of the expo made great impact as participants cut across various sectors of the economy. Jacobs stated that a key effect of the maiden expo was the provision of cheaper funding for the industrial sector from the Bank of Industry (Bol).

    On expectations for this year, he said: “This year’s event will again give top stakeholders in the private and public sectors opportunity to appraise developments in manufacturing and jointly propose quick-in solutions that will help our country revive its manufacturing sector.”

    According to him the event is expected to attract 3,700 visitors and exhibitors including multinationals, large, medium enterprises and other manufacturing equipment distributors from over 120 leading local and international suppliers.

    He also said that the expo would provide a rare opportunity of exposure to the entire manufacturing value chain, which includes machinery, equipment, financial support, professional consultancy and raw materials as a result of the merging of the annual Nigeria Raw Materials (NIRAM) expo with it.

  • Agric financing: Heritage Bank leads way

    Agric financing: Heritage Bank leads way

    The news of the slight rise in the price of crude oil in the international market and the seemingly relative calm in the Niger Delta (as reflected in the reduction in the breaching of pipelines and other oil production or lifting facilities in the zone), will ultimately translate to more foreign currency in the coffers of the Federal Government.

    This is especially given that the 2017 budget is largely predicated on earnings from oil – pegged at projected production and export levels of 2.2 million barrels per day. Nevertheless, it is doubtful if the country, at least in the short term, can earn enough foreign exchange (forex), particularly dollars, to meet the between $3 billion and $5 billion needed for the sustenance of projected expenses on the importation of food item this year. Experts agree that even if the requisite volume of forex ever becomes available, the Muhammadu Buhari administration would be cautious given the dangers the continuous reliance on imported food items pose to its efforts to create jobs as well as develop and diversify the economy.

    Indeed, the essence of the administration’s Agriculture Promotion Policy (APP) launched some months ago is to encourage massive local investments in the critical agricultural sector with the aim of achieving key goals of food security, import substitution, job creation, and economic diversification.  The Minister of Agriculture, Chief AuduOgbeh, captured this during the policy’s launch. He said  government expects the private sector to lead in the implementation of APP through promotion of agricultural investment and financing programmes or initiatives.

    The provision of a N2 billion facility by Heritage Bank in collaboration with the Central Bank of Nigeria (CBN) under the Commercial Agriculture Credit Scheme, to Triton Aqua Africa Limited (TAAL), for setting up of fishery production chain, has been widely acclaimed as a worthy example of what the government is aiming at.

    Though it is estimated that Nigerians consume about 2.7million metric tons of fish yearly, only 800,000 metric tons is produced locally. As such, just like several other food products, the country has had to rely on importation to augment the shortages with an estimated cost implication of about $700million yearly in terms of forex. The partnership between Heritage Bank and TAAL, also known as Triton, will help reverse this trend. Specifically, the firm is expected to use the  facility to expand its aquaculture businesses with the setting up of nursery/hatchery for the production of fingerlings and brood stock, and earthen ponds for catfish and tilapia in Lagos, Oyo and Osun states.

    With the support of Heritage Bank and the CBN, the firm of Triton Aqua Africa Limited is executing a strategy of backward integration of increasing local production to reduce importation of fish. The company will also help small-scale farms increase their fish production by making fingerlings available to them. In the short term, the loan is expected to help Triton double its current production capacity of 25,000 metric tonnes with a projection to scale it up to 100,000 metric tonnes in five years. Ultimately, the partnership between Heritage Bank and Triton Farms would help boost local production, conserve scarce forex and enhance food security, and ultimately result in the creation of hundreds of new jobs, thus fitting snuggly into the Buhari administration’s APP agenda.

    Industry experts insist that the long-term tenure of the facility from Heritage Bank is a vivid demonstration of the fact that Nigeria’s financial institutions are positively responding to the complaints or fears of investors and farmers about the peculiarity of funding the agricultural sector. The complaint over the year was that while agricultural projects have long-term gestation periods, the funding provided by the banks was always of short-term duration. This mismatch in expectation between the lenders and the loan beneficiaries had over the years proved to be a major hindrance especially in the funding of big tickets projects in the agricultural sector of the economy.

    Farmers and potential investors in the agric sector had consequently always accused the banks of preference for funding only projects with quick turnaround but without much value to the country in terms of job creation and contribution to the country’s development. However, living up to its philosophy of Create, Transfer and Preserve Wealth, Heritage Bank has taken agriculture as one of the prime sectors, which can be used to empower individuals and communities in terms of creating wealth from the soil and through the entire value – chain using value addition and industrialisation. Therefore, the bank, in spite of its relatively young age, has been supporting various agricultural ventures across the country.

    Key among such initiatives is Heritage Bank’s multi-billion naira partnership with the Oyo State government. Under the initiative, the lender is supporting the Oyo State Agricultural Initiative (OYSAI), a programme designed to revive agriculture, boost agro-allied businesses and massive empowerment programme for both youth and women across the state through the creation of thousands of jobs in the sector. This huge, and laudable project that is spread across 3,000 hectares of land in 28 of the 33 local government areas of Oyo State, is in three stages: food crop cultivation, cash crop/horticulture and food processing. Heritage Bank is supporting agro investors involved in this initiative with funds and advisory services and indications are that the programme has already led to more than 20 per cent increase in food production in the state.

    Outside Oyo State, Heritage Bank is also supporting thousands of small holders’ farmers in Kaduna and Zamfara states in rice and soybeans production under the Anchor Borrowers Programme.

    The management of Heritage Bank believes that such funding supports in the critical agric sector are necessary if the objectives of the Buhari’s administration to diversify the nation’s economy using, particularly the agricultural sector, are to be attained. The administration targets a gross domestic product (GDP) growth of between six and 12 per cent, allowing agricultural household income to double between six and 12 years. Undeniably, most of the ventures in the agric sector fall within the Micro, Small and Medium Scale Enterprises (MSME) sectors of the economy, which Heritage Bank in close collaboration with CBN has been championing.

    Heritage Bank’s initiatives in the agric sector can therefore be seen as extension of the strong support it has provided to MSMEs with specific targets on key sectors pivotal for national economic growth like information communication technology (ICT), creative industry and of course, agriculture. It was in recognition of the bank’s track record on this score that apparently influenced its selection by the CBN as its pilot partner for the execution of the N3billion Youth Innovative Entrepreneurship Development Programme  (YIEDP). The programme is aimed at creating sustainable wealth and employment in the country with focus on dependable job creating sectors such as agricultural value chain (fish farming, poultry, snail farming), cottage industry, mining and solid minerals, creative industry (tourism, arts and crafts), and Information and ICT. Also, the bank in partnership with the Centre for Values in Leadership (CVL) empowered 100 aspiring start-up entrepreneurs under the Young Entrepreneurship Business Training Programme (YEBTP), a six-month intensive course involving grooming, mentoring and financing.

    In addition, the lender has also been in partnership with the Nigerian Youth Professional Forum (NYPF) to support entrepreneurship and education in the country with N500 million Young Entrepreneurs and Students (YES) grant. The bank’s focus on empowerment of the youth population stems from its belief that the nation’s youth population would ultimately produce future leaders that would help to positively reshape and reposition Nigeria, hence the imperative that they be properly groomed and provided with enabling opportunities and platforms to actualize their potentials.

    With its assortments of innovative support for the growth of the productive sector of the economy, Heritage Bank is not only actualizing its vision of partnering with individuals, organisations and governments to create, preserve and transfer wealth across generations, but is also playing a crucial role in helping to achieve the government’s ambition of diversifying the economy.

    Clearly, Heritage Bank is showing the way as financial institutions in the country are becoming resolute about financing the critical agricultural sector and by extension, aiding efforts to diversify the nation’s economy.

     

    • Dr. Awih-Williams, an Agric-Economist, wrote from Abuja

  • Govt warned on poor health financing

    Healthcare providers have advised the Federal Government against poor health financing as it may affect the planned Universal Healthcare Coverage (UHC).

    President, Healthcare Providers Association of Nigeria (HCPAN), Dr. Adenike Olaniba, gave the advice in her lecture at the 30th anniversary of Healthcare Magazine/ 2016 HCPAN’s Mid-Year Capacity Building Meeting in Lagos. It was titled Universal Health Insurance Coverage: The Role of Healthcare Providers.

    Dr. Olaniba said less than five percent of the country’s population  was insured under the National Health Insurance Scheme (NHIS), adding that there was a need for the review of NHIS Act 35 of 1999 to make it mandatory for citizens to sign up in the scheme.

    Dr. Olaniba, Consultant Public Health Physician, said the existing structure of health financing would not enable the country achieve the desired health outcomes.

    She said Nigeria spends $67 per head on healthcare.

    She continued: “WHO report shows that South Africa spends seven times more than Nigeria while Angola’s health budget is three times more than ours. In the United States, healthcare expenditure is $7,000 per head and $6,000 per head in Switzerland. Currently, 59 percent of Nigerians pay for healthcare out-of-pocket”.

    Dr. Olaniba said health is wealth, stressing that the government should have long-term commitment to increasing health spending and exploring innovative health financing mechanisms.

    “The health indices in Nigeria are poor and need to be improved upon. Nigeria has the eighth-lowest life expectancy at birth and one of the highest maternal mortality ratio (MMR) in the world. Though we have the largest economy in Africa, yet only 3.5 per cent of this year budget is given to health. That is a serious issue with funding.

    “To ensure equity in the distribution of enrollees, NHIS should put a peg on the maximum number of enrollees per facility. For example, 5000, so that all accredited providers can participate in the scheme.”

    On his part, the Chairman, Lagos State, HCPAN, Dr. Ademola Aina said the capacity building meeting was for all health professionals to harness strategies to ensure UHC for all because as professionals health insurance is the only way the rich and poor can access to health.

  • Commissioners call for health reforms, financing

    Lagos State Commissioner for Health Dr Jide Idris, and his  Ogun and Kwara state’s counterparts, Dr Babatunde Ipaye and Mr Abolaji Alege, have canvassed proper financing, capacity building and health reform to move the sector forward.

    According to Idris, stakeholders need to pressure the government to fund healthcare and ensure the sector is reformed.

    Idris spoke in Lagos during PharmAccess Strategy Day on Nigeria. The theme was Making health markets work for low-income people in Nigeria.

    The major problem, Idris said, lies with those who run the country’s health system, stressing that many lacked the capacity to function effectively.

    “Many of them are not computer literate. This was disturbing as it did not allow for improvement in the use technology in the hospitals,” he said.

    He said the reality of poor funding of the sector came to the fore during the Ebola Virus Disease outbreak in the country.

    “When Ebola struck, we saw issues of logistics coming up. But we the government what we need and the money came,” he said.

    Idris whose topic centred on health delivery and sustainability, said technology has a role to play in improving access to healthcare delivery system.

    Dr Ipaye identified poor funding of healthcare as the primary issue affecting the growth of the sector.

    He advised the Federal Government to invest in the sector, adding: “Nobody can give what he does not have”.

    The Ogun State Health commissioner said the present three percent of the country’s Gross Domestic Product (GDP) to healthcare was poor, stressing that more fund should be invested in the sector.

    Ipaye said the country’s per capita income has bearing on the state of health.

    The Country Director, PharmAccess Foundation Nigeria, Njide Ndili said her organisation was interested in increasing access to inclusive quality health care for low income communities in Nigeria.

    According to her, lack of access to inclusive quality health care is one of the primary challenges facing Nigeria.

    This, she said, was in spite of the efforts being undertaken by stakeholders in the industry.

    She said the programme was organised to facilitate discuss among key players to get response from stakeholders, long standing partners, new and potential partners.

    The programme, she said, would enable the company find a way forward to advance access to quality healthcare to low income communities.

  • Govt warned on poor health financing

    Healthcare providers have advised the Federal Government against poor health financing as it may affect the planned Universal Healthcare Coverage (UHC).

    President, Healthcare Providers Association of Nigeria (HCPAN), Dr. Adenike Olaniba, gave the advice in her lecture at the 30th anniversary of Healthcare Magazine/ 2016 HCPAN’s Mid-Year Capacity Building Meeting in Lagos. It was titled Universal Health Insurance Coverage: The Role of Healthcare Providers.

    Dr. Olaniba said less than five percent of the country’s population  was insured under the National Health Insurance Scheme (NHIS), adding that there was a need for the review of NHIS Act 35 of 1999 to make it mandatory for citizens to sign up in the scheme.

    Dr. Olaniba, Consultant Public Health Physician, said the existing structure of health financing would not enable the country achieve the desired health outcomes.

    She said Nigeria spends $67 per head on healthcare.

    She continued: “WHO report shows that South Africa spends seven times more than Nigeria while Angola’s health budget is three times more than ours. In the United States, healthcare expenditure is $7,000 per head and $6,000 per head in Switzerland. Currently, 59 percent of Nigerians pay for healthcare out-of-pocket”.

    Dr. Olaniba said health is wealth, stressing that the government should have long-term commitment to increasing health spending and exploring innovative health financing mechanisms.

    “The health indices in Nigeria are poor and need to be improved upon. Nigeria has the eighth-lowest life expectancy at birth and one of the highest maternal mortality ratio (MMR) in the world. Though we have the largest economy in Africa, yet only 3.5 per cent of this year budget is given to health. That is a serious issue with funding.

    “To ensure equity in the distribution of enrollees, NHIS should put a peg on the maximum number of enrollees per facility. For example, 5000, so that all accredited providers can participate in the scheme.”

    On his part, the Chairman, Lagos State, HCPAN, Dr. Ademola Aina said the capacity building meeting was for all health professionals to harness strategies to ensure UHC for all because as professionals health insurance is the only way the rich and poor can access to health.

  • Commissioners call for health reforms, financing

    Lagos State Commissioner for Health Dr Jide Idris, and his  Ogun and Kwara state’s counterparts, Dr Babatunde Ipaye and Mr Abolaji Alege, have canvassed proper financing, capacity building and health reform to move the sector forward.

    According to Idris, stakeholders need to pressure the government to fund healthcare and ensure the sector is reformed.

    Idris spoke in Lagos during PharmAccess Strategy Day on Nigeria. The theme was Making health markets work for low-income people in Nigeria.

    The major problem, Idris said, lies with those who run the country’s health system, stressing that many lacked the capacity to function effectively.

    “Many of them are not computer literate. This was disturbing as it did not allow for improvement in the use technology in the hospitals,” he said.

    He said the reality of poor funding of the sector came to the fore during the Ebola Virus Disease outbreak in the country.

    “When Ebola struck, we saw issues of logistics coming up. But we the government what we need and the money came,” he said.

    Idris whose topic centred on health delivery and sustainability, said technology has a role to play in improving access to healthcare delivery system.

    Dr Ipaye identified poor funding of healthcare as the primary issue affecting the growth of the sector.

    He advised the Federal Government to invest in the sector, adding: “Nobody can give what he does not have”.

    The Ogun State Health commissioner said the present three percent of the country’s Gross Domestic Product (GDP) to healthcare was poor, stressing that more fund should be invested in the sector.

    Ipaye said the country’s per capita income has bearing on the state of health.

    The Country Director, PharmAccess Foundation Nigeria, Njide Ndili said her organisation was interested in increasing access to inclusive quality health care for low income communities in Nigeria.

    According to her, lack of access to inclusive quality health care is one of the primary challenges facing Nigeria.

    This, she said, was in spite of the efforts being undertaken by stakeholders in the industry.

    She said the programme was organised to facilitate discuss among key players to get response from stakeholders, long standing partners, new and potential partners.

    The programme, she said, would enable the company find a way forward to advance access to quality healthcare to low income communities.

  • Fed Govt warned on poor health financing

    Healthcare providers have advised the Federal Government against poor health financing as this may affect the planned Universal Healthcare Coverage (UHC).

    President, Healthcare Providers Association of Nigeria, (HCPAN), Dr. Adenike Olaniba gave the advice in her lecture during the 30th anniversary of Healthcare Magazine/ 2016 HCPAN’s Mid-Year Capacity Building Meeting in Lagos. It was titled Universal Health Insurance Coverage: The Role of Healthcare Providers.

    Dr. Olaniba said less than five percent of the country was insured under the National Health Insurance Scheme (NHIS), adding that there was need for immediate review of NHIS Act 35 of 1999 to make it mandatory for all citizens to sign up under the scheme.

    Olaniba, Consultant Public Health Physician, said the existing structure of health financing will not enable the country achieve the desired health outcomes’

    She said Nigeria presently spends $67per head on healthcare.

    She continued: “WHO report shows that South Africa spends seven times more than Nigeria while Angola’s health budget is three times more than ours. In the United States, healthcare expenditure is $7,000 per head and $6,000 per head in Switzerland. Currently, 59 percent of Nigerians pay for healthcare out-of-pocket”.

    Olaniba said health is wealth, stressing that the government should have long-term commitment to increasing health spending and explore innovative health financing mechanisms.

    “The health indices in Nigeria are poor and need to be improved upon. Nigeria has the eighth-lowest life expectancy at birth and one of the highest maternal mortality ratio (MMR) in the world. Though we have the largest economy in Africa, yet only 3.5 per cent of this year budget is given to health. That is a serious issue with funding.

    “To ensure equity in the distribution of enrollees, NHIS should put a peg on the maximum number of enrollees per facility. For example, 5000, so that all accredited providers can participate in the scheme.”

    On his part, the Chairman, Lagos State, HCPAN, Dr. Ademola Aina said the capacity building meeting was for all health professionals to harness strategies to ensure UHC for all because as professionals health insurance is the only way the rich and poor can access to health.

  • Osibogun backs mortgage financing

    The immediate past President/ Chairman of Council, the Chartered Institute of Bankers of Nigeria (CIBN), Mrs. ‘Debola Osibogun, has said that a developed mortgage finance sector impacts on country’s economic growth and development.

    In her valedictory speech titled: ‘Rethinking Nigeria’s Mortgage Financing Policies for Sustainable Development and Global Competitiveness’, she said the mortgage industry could help in cutting interest rate on loans, which will boost housing affordability.

    “The obvious outcome is that there is a gradual shift from the perspective that housing finance is mainly concerned about mobilising short-term household deposit for long-term mortgage financing to a perspective that housing finance is more closely integrated with broader capital market developments,” she said.

    However, she noted that against the background of the challenges of delivering affordable houses to Nigerians, there is need for a rethink of the approaches used hitherto in order to achieve the objectives of the housing policy.

    “Looking at the past, analysing the present and projecting into the future, there is the compelling need to take a second look at what we have done as a nation to promote housing delivery, ensure better development, and global competiveness so as to make Nigeria an investment destination for housing delivery,” she said.

    She said the Nigerian housing policy has always emphasized that housing must be seen in the context of overall national development which includes social development, the generation of employment opportunities, the geographical distribution of the population and the location of industrial, commercial and agricultural activities.

  • Budget financing in period of revenue shortfall

    Budget financing in period of revenue shortfall

    The gross monthly collections of non-oil revenue expected to drive capital expenditure in the 2016 budget is on the decline. This underperformance presents some risks to the Federal Government’s expansionary fiscal stance which pegs its N1.84 trillion capital expenditure on aggressive target of non-oil revenue collection. COLLINS NWEZE writes that while the option of borrowing to meet budget shortfalls in the short-term is plausible, diversification of the economy is needed in the long-run to achieve sustainable growth.

    Two things have kept the Federal Government worrying about funding the ambitious N6.06 trillion 2016 budget. The first is fall in crude oil prices, followed by decline in non-oil revenues which is expected to fund government’s N1.84 trillion deficits in the budget, targeting critical infrastructure.

    The failure of these two options, presents the third, which is borrowing from local and international markets to be supervised by the Debt Management Office (DMO). The plunge in the revenues means that the debt option to funding the budget remains the viable lifeline for the country.

    Besides, slide in crude oil prices, and Nigeria’s production is also of concern. Oil disruption especially vandalisation of pipelines has pushed production to the lowest in 20 years, as attacks against facilities in the Niger Delta increase in number and audacity.

    Last week, Chevron Corp. shut down about 90,000 barrels a day of output following an attack on a joint-venture offshore platform that serves as a gathering point for production from several fields. Even before that strike last Wednesday night, Nigerian oil production had fallen below 1.7 million barrels a day for the first time since 1994, according to data compiled by Bloomberg.

    On Friday, suspected members of the Niger Delta Avengers have attacked another oil facility in the Niger Delta, blowing up the Escravos pipeline linking Warri to Lagos.

    While earnings from oil declined, that from non-oil segment of the economy also keeps dropping. Data from Central Bank of Nigeria (CBN’s) Economic Report showed that from January to December last year, gross monthly collections of non-oil revenue, stood at N3.12 trillion ($15.8 billion) over the 12 months. But decline has set as from January this year, non-oil revenue felled significantly to N196 billion compared with monthly average of N477 billion projected in the 2016 budget.

    Besides, Nigeria earned a total of N143 billion from its non-oil exports in the fourth quarter of 2015, which shows a drop of 39.1 per cent or N90.6 billion from N234.43 billion recorded in the third quarter of the year, CBN figures showed.

    FBNQuest, the investment and research arm of FBN Holdings, disclosed that Customs and excise is the weakest of the four components of gross non-oil revenue. Customs contribution of N50 billion in January compares with a pro rata average of N72 billion in the budget is worrisome.

    The Customs Service has pointed to CBN policies as the reasons for the shortfall. It presumably had the famous circular on the 41 import items which the CBN restricted from accessing forex in mind which has reduced import revenues.

    “We should wait for several months’ data to judge the success of the FGN’s several initiatives, including: the Treasury Single Account, scrutiny of waivers and exemptions, collection of stamp duty (subject to a legal challenge), efficiency gains, possible revision of the standard Value Added Tax rate and regulatory fines,” the firm said.

    Regarding foreign debt, the strategy is to borrow on non-concessionary terms for projects with self-paying capacity and/or job creation potential, and on concessionary terms and grants for social sector projects.

    Experts believe that with the continued slide in government revenues from crude oil, its plan to provide tangible assets like housing, power (electricity), transport, education, communication, and technology, may be hampered by paucity of funds, making it to rely on borrowed funds.

    Loan monitoring

    The House of Representatives’ Committee on Aids, Loans and Debt Management is seeking for more powers that would enable the DMO monitor projects to be financed with borrowed funds.

    The House Committee said that the mandate of the DMO should be strengthened to include monitoring the implementation of all projects of government that is financed with borrowed funds.

    The Chairman of the House Committee on Aid, Loans and Debt Management, Hon Adeyinka Ajayi, advocated for this position alongside other members of the committee at a three-day retreat for members of the committee in Owerri, Imo State, over the weekend.

    Hon Ajayi, in his keynote address at the retreat organised by the DMO, noted that it has become imperative for the agency to be empowered to monitor the implementation of all projects financed with borrowed funds.

    He argued that since it was the duty of the DMO to raise funds to finance budget deficit, “the body should as well be saddled with the responsibility of monitoring implementation”, noting that this would ensure compliance, transparency and accountability.

    The committee praised the DMO management for coming up with the retreat, whose theme was: Debt Sustainability and the Challenge of Financing Economic Recovery, saying that the retreat was timely, coming at a time the nation was facing some economic challenges.

    Hon Ajayi said the workshop is coming on the heels of concerns expressed by some Nigerians over the rising debt profile of the nation. While acknowledging the prevailing economic challenges, the House Committee Chairman said the committee will work with the Debt Management Office to ensure effective implementation of the 2016 budget.

    The Director-General of the DMO, Dr. Abraham Nwankwo, restated government’s commitment to financing capital projects aimed at addressing Nigeria’s huge infrastructural deficit and repositioning the economy.

    The DMO boss who spoke against the backdrop of the agency’s role in the implementation of the 2016 budget, said the nation’s long term debt financing of sustainable economic recovery and growth is feasible given its abundant ideal economic capacity.

    Nwankwo told members of the committee that the administration of President Muhammadu Buhari has taken a bold step to stimulate the economy by making sure that the nation’s huge infrastructure gap was quickly closed through efficient and effective application of all borrowed funds into capital projects.

    Other members of the House Committee on Aid, Loans and Debt Management emphasised the need for the diversification of the economy especially in the areas of agriculture, solid minerals and manufacturing.

    Dr. Nwankwo said the debt body has been helping to country manage its debt effectively. For instance, it began the implementation of the strategic objective of assisting the states of the   federation to develop debt management institutions and capabilities since the last quarter of 2007, as part of its five-year strategic plan.

    The goal, he explained, was to forestall a relapse into debt un-sustainability, as was experienced by the country before its successful exit from the Paris and London Club debts over-hang. The strategy was to redress the very weak debt management institutions, structures and practices at the state levels towards a more effective coordination of public debt management.

    The DMO has also established Domestic Debt Data of States of the 36 states, with framework in place for regular updates. The debt office has also helped in the passage by some states within the federation, the Fiscal Responsibility/Public Debt Management Laws to govern debt management and engender fiscal discipline.

    Priority projects in the budget

    The Minister of Budget and National Planning, Senator Udoma Udo Udoma, who presented the 2016 Budget highlights in Abuja, said the Social intervention projects are in five areas, including job creation, school feeding, conditional cash transfer, enterprise programme.

    The power, rails and road are also very important priority areas.There are a number of specific activities but the need to raise up to 7,000 megawatts installed capacity of electricity remains a priority.

    There is also need to conclude the privatisation of National Independent Power Project plants and improve management and performance of Treasury Single Account.

    On agriculture, N940 million would be channeled into the development of Strategic Grazing Reserves while another N90 million is for Price Stabilisation/Buy-back/Price Gurantee Scheme, just as NN939.7 billion is for extension services.

    National Assembly and borrowing

    The National Assembly is expected 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.

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

    He sees the second option as more plausible as it captures the 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 budget, and support specific projects including infrastructure.

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

    He called for the democratisation of public debt management system, adding that Nigeria’s debt to Gross Domestic Product (GDP) ratio is still low.  “The rebasing of the economy shows it has grown rapidly, and that the larger the economy, the larger the debt. There must be optimum relationship between the equity and debt,” he said.

    Ugolala, said there is 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.