The Nation Newspaper

Tag: Ngozi Okonjo-Iweala

  • Budget without human face

    Budget without human face

    SIR: Animals appear to have gained more recognition and attention from the Presidency in the 2014 Appropration Bill, even as the breakdown of the budget shows the wastefulness and insensitive nature of the President Goodluck Jonathan-led regime towards the populace. The provisions of the budget have once more exposed the government non-readiness and lack of foresight in terms of positioning the country’s economy to meet the standard of the developed countries. It is, indeed, appalling that while ordinary Nigerians could barely afford a three square meal a day, our big man in the Villa is busy thinking of how to feed his pets in 2014 with the taxpayers’ money.

    The N4.6trn budget estimate presented before the National Assembly by President Jonathan through the Minister of Finance and the Cordinating Minister of the Economy, Dr Ngozi Okonjo-Iweala, shows that the Federal Goverment will be spending 73 per cent of the proposed budget on recurrent expenditure, while a meagre 27 per would be spent on capital projects. The impication of this is that Nigerians are not likely going to witness any improvement on our dilapidated roads or see any change in the education sector, health and other critical sectors of the nation’s economy.

    A glance at the budget shows that a whooping N2.4bn has been allocated for the President and his deputy’s foreign and local trips in 2014, while another N1.6bn is earmaked for a new presidential jet and yet another N362m for meals and refreshment. And to further show that the government lacks confidence on her so-called transformation in the power sector, it plans to spend N836.6m on fuelling of generators in the Presidency, its ministries and agencies. These frivolous allocations clearly show that the federal government is not keen at pursuing developmental policies that would drive our economy and put food on the average Nigerian’s table.

    The most outrageous is the proposed N38m for Aso Villa’s zoo. The money would be used to buy more “wild animals” and feed some other animals in the zoo. All this is aimed at satisfying the pleasures of the president and his co-travellers in the Villa amidst the growing poverty and pangs of hardship in the country. Sincerely, one does not know how the maintenance of this private zoo will add to the productivity of the president towards delivering on his promised transformation agenda. Similarly, the Nigeria Police is to spend N125.6m on its dogs in 2014, even as the government plans to spend a huge sum of  N7bn on the proposed jamboree called “National Dialogue”, an exercise which outcome is bound to gather dust on the presidential archive like other ones. The impact of the World Economic Forum which would be hosted in Abuja in 2014 at the expense of the country’s budget estimate of N4bn remains to be seen.

    It is instructive that while these frivolities received huge allocations in the proposed budget, key sectors of the economy like education, health, judiciary among others are left with meagre allocations. For instance, under the proposed budget, the judiciary received a paltry N4.7bn which is a sharp decline when compared with the N5.5bn it was budgeted for in the 2013 Appropriation Act. A serious government interested in exterminating corruption and quick dispensation of justice in the country ought to have equipped this sector and empower the fund strapped anti-corruption agencies.

    The federal government should borrow a leaf from the Kano State governor, Rabiu Kwankwaso, whose 2014 budget of N219.2bn would see the capital project receiving a large chunk of N148bn representing the 68 per cent of the budget, while the recurrent expenditure would only receive N70.6bn, that is the 32 per cent of the proposed Appropriation Bill.

    The National Assembly would be doing a great injustice and diservice to the fatherland and the people of this country if it goes ahead to approve these outlandish reckless, anti-peopleallocations. The lawmakers should, therefore, teach the president the principle of frugality and prudent management of our commonwealth by rejecting or altering some of these frivilous estimates.

    • Barrister Okoro Gabriel,

    Lagos.

  • Festival of fabulous figures

    The ritual of budget reading is in season and Nigerians are again being entertained with figures that hardly yield results. It may be an indication of the Federal Government’s unserious intentions that the central individual traditionally expected to make the presentation to the National Assembly was missing, that is, President Goodluck Jonathan. Whatever interfered with his faithfulness to the responsibility deserves to be probed, for his absence sent an unsettling signal about his order of priorities.

    Intriguingly, Minister of Finance Dr. Ngozi Okonjo-Iweala, who also goes by the grandiose title, Coordinating Minister for the Economy, was the face and voice of the administration at the event, a fact that perhaps betrayed the identity of who is actually in control in a government that has often been accused of ceding power to a small circle of dominant, if not domineering, women.

    The immediate puzzle arising from the show is the projected spending of N4.6 trillion for 2014 inadequately backed by anticipated revenue of N3.73 trillion. Next is the mystery that N1.1 trillion, about 27 per cent of the budget, is for capital expenditure, while N3.5 trillion, which represents about 72 per cent of the financial plan, is for recurrent expenditure. It is deplorable that, as the breakdown shows, a disproportionately greater slice of the funds is not meant for development purposes, but to oil the system, so to speak. With such uncreative approach to planning, is it any wonder, therefore, that the country continues to move at snail speed, to put it charitably?

    It is interesting that the budget also mirrored backwardness in a highly symbolic way. Or, what is to be made of the fact that the 2014 budget is lower than this year’s? Okonjo-Iweala’s explanation was food for thought. She said: “You can understand that we have some revenue challenges, which we had been very clear on all along because of the losses we suffered in terms of oil revenue. And also the losses from non-oil revenue due to the lower customs duties.”

    Tragically, illegal bunkering, vandalism and production shut-ins, which have been long identified as drawbacks to the country’s development, given the centrality of oil to its economy, are finally taking an intolerably destabilising toll on its budget estimates. Specifically, when Okonjo-Iweala in July appeared before the House of Representatives Joint Committee on Appropriation/Finance, she lamented that the country was losing 400,000 barrels of crude oil daily to theft, which represents 20 per cent of the daily production capacity of two million barrels. Against this revealing background, it is time to recall the government’s politically motivated and counter-productive award of unjustifiably costly oil-pipeline surveillance contracts to some prominent ex-Niger Delta militia leaders. It looks like money down the drain, after all. Common sense suggests that it would have been more sensible, institutionally correct and perhaps more effective if the administration had instead reinforced the navy’s capabilities to arrest maritime crime, especially offences related to oil-theft. But it would appear that the administration is cerebrally challenged.

    Not surprisingly, against the background of widespread criticisms of alleged over-travelling by Jonathan, it is reflective of the self-focus of government to the detriment of the very people it is supposed to serve that a fascinating sum of N2.3 billion will be available for his junketing in 2014, according to the estimates. More importantly, to go by the figures, the presidency would spend over N8 billion as total expenditure next year. Significantly, in the outgoing year over N400 million was earmarked for the purchase of foodstuffs at the State House, which translates into over N1 million daily.

    It is difficult to resist the feeling that this episode is another mere celebration of figures, which is exactly what the people do not need. What truly counts are people-consciousness and reasonableness in the planning of government spending, which are clearly not guiding principles for this administration.

     

  • Govt votes N1.56b for 11th presidential plane

    Govt votes N1.56b for 11th presidential plane

    A NEW plane is set to join the presidential fleet.

    The fleet’s 11th plane – is Gulfstream- is to attract a N1.52million deposit, going by the 2014 budget.

    The aircraft is expected to cost about N8 billion, according to industry sources.

    The rest of the payment will be spread over one, two or three years before the jet is built and delivered.

    The expenditure is part of the projected spending contained in next year’s estimate, which was laid before the National Assembly last week by Finance Minister Dr. Ngozi Okonjo-Iweala.

    These items include: the completion of a hanger, N405,500,000; Tyre bay tools and equipment N106,000,000; Towberless tow tractor for aircraft towing for N58,740,000; hanger sweeper N31,870,000; luggage conveyor belt truck N28,898,000; and Harlan tow tug for aircraft equipment towing N27,590,000.

    Others are CCTV and surveillance equipment for N18,000,000; aircraft tools and equipment N11,480,000; battery workshop equipment N5,050,000; complete tool box for general works and vehicles N360,000; heavy duty crocodile jacks N300,000; aluminum ladder N285,000; safety boots N52,500 and foldable ladder, N50,000.

    The aircraft in the fleet of the PAF include two Falcon 7X jets, two Falcon 900 jets, a Gulfstream 550, one Boeing 737 BBJ (Nigerian Air Force 001 or Eagle One) being used exclusively by the President and a Gulfstream IVSP, one Gulfstream V, Cessna Citation 2 aircraft and Hawker Siddley 125-800 jet.

    It is estimated that each of the Falcon 7X jets bought in 2010 cost $51.1 million. The Gulfstream 550 may have cost $53.3 million.

    However, none of the aviation industry Bluebooks will give the simple calculation accuracy of how much an aircraft really costs. A number of issues are responsible for the difficulty in presenting a clear figure for a make/model/year, of an aircraft to help accurately determine how much it really worth.

    Some of the issues include: lack of central reporting of aircraft sales for either tax or licence requirements, the complexity of individual aircraft value calculations, the timing of sales (long timeframes from offer to closing during which time the market can go up or down substantially), multiple synchronous closings for jet aircraft in particular, international currency sales, and non-disclosure-of-price terms included in many transaction documents.

  • Okonjo-Iweala, two others sued over ‘forced’ retirement

    Okonjo-Iweala, two others sued over ‘forced’ retirement

    The Minister of Finance and the Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, has been sued with two others for alleged unlawful termination of the employment of a civil servant who allegedly published a story about the minister.

    The applicant, Yushau Shuaibu, until his compulsory retirement on June 26, was the Chief Information Officer (SGL 14) at the Federal Ministry of Information.

    In the suit filed before the National Industrial Court, Abuja, the applicant faulted the process leading to his forced retirement.

    Sued with the minister are: the Federal Civil Service Commission (FCSC) and the Federal Ministry of Information.

    The plaintiff, in a statement of claim, said he was called sometime in April by the minister, demanding apologies and a retraction over one of his writings published by Premium Times, titled: Still on Okonjo-Iweala over Controversial Appointments. Shuaibu said he would rely on same at the trial of the case.

    The plaintiff said he refused to apologise to the minister because he had written similar articles on President Goodluck Jonathan and other past leaders when they were in government, especially President Olusegun Obasanjo, Vice President Atiku Abubakar, Nasir El-rufai, Femi Fani-Kayode, among others.

    Shuaibu averred that many rejoinders and commentaries were published in reaction to the write-up concerning the minister.

    According to him, he had even written articles praising the minister on the same issues.

    The plaintiff argued that despite not contravening any known law of the civil service, Okonjo-Iweala allegedly influenced his forceful retirement.

    Shuaibu is praying the court to, among others, grant an order directing the FCSC to reinstate him to the civil service and his post as the Chief Information Officer in his former ministry without any loss on seniority, salaries, position and other emoluments.

    He is also praying for an order directing the FCSC and the Ministry of Information to compute and pay him all his salaries, allowances and other emoluments due to him from July 2013 up to the date of judgment, including interest at the prevailing commercial banks’ rates on the sum arrived at.

    The plaintiff is also other reliefs.

     

     

     

    wseeking:

    *A declaration that the Public Service Rules (2008 edition) is applicable for the purposes of determining the employment of the Claimant and other matters relating to his employment in the Civil Service of the Federation.

    * A declaration that the letter of the 1st Defendant dated the 26th day of June 2013 with Reference No FC/6138/S.1/ 69/220 received by the Claimant on the 4th of October 2013 which purports to retire the claimant, a statutory employee, from the Civil Service of the Federation from the 26th of June 2013 has no force of law and is therefore illegal, unconstitutional, null and void and of no effect whatsoever being in flagrant violation of Rules 030302, 030303, 030304, 030305, 030306 and 030601 of the Public Service Rules (2008 Edition).

    *A declaration that the decision of the 1st Defendant to retire the Claimant at its meeting held on the 26th of June 2013 with effect from the same date without conducting any investigation, without giving the claimant an opportunity to defend himself and without complying with the conditions precedent for retirement is contrary to Section 36 of the Constitution, Article 7 of the African Charter on Human and Peoples’ Rights (Ratification and Enforcement) Act, cap A9, Laws of the Federation of Nigeria, 2004 and the Public Service Rules 030305 and 030601 (2008 Edition) and is therefore illegal, unlawful, unconstitutional, null and void and of no effect whatsoever.

    * A declaration that the Iwuala unduly instigated the 1st Defendant to unlawfully retire the Claimant in violation of his freedom of expression guaranteed by the Constitution of the Federal Republic of Nigeria, 1999 and the African Charter on Human and Peoples’ Rights, cap A9, Laws of the Federation of Nigeria, 2004

  • Graduate training scheme coming

    The Federal Government will soon come out with a policy framework on Graduate Internship Scheme(GIS) to make it stronger and more enduring, the Project Director, Peter Papka has said.

    GIS is one of the programmes under the Subsidy Re-Investment Programme (SURE-P).

    Speaking to The Nation at the last phase of the sensitisation programme of the scheme in Lagos, Papka said the decision to provide policy for the scheme was borne out of the need to make it consistent with the government’s plans to check unemployment.

    He said when the policy comes out, the National Assembly will able to legislate on issues of graduate training and if possible backed it with a bill.

    He said the government may review the scheme to achieve its goals of improving productivity and enhance the employment prospects of graduates, if it found the need to do.

    Papka said the government had reviewed the monthly stipend paid interns from N18,000 to N25,000, following a report on people’s observations, comments and reservations on the scheme.The review, he said, was carried out through the involvement of the Minister of Finance and Coordinating Minister for the Economy, Dr Ngozi Okonjo-Iweala and other members of SURE-P’s committee.

    He said: “The scheme may be reviewed because similar things have been done in the past. There was a time the monthly stipends paid interns was reviewed upwardly. We will submitting the comments and input of Nigerians on the scheme to the Minister of Finance. The SURE-P initiatives are the government way of providing safety net programmes for Nigerians. As far as I’m concerned, the SURE-P is spread over three years (2012-2015). We have the believe that the programme will exist up to 2015.

    ‘’As long as the Ministry of Finance exists, the project among others will continue to exist. The government does not want the GIS initiative to be one-off thing, hence the huge amount of money allocated to it. This is one of the reasons why the government is planning to issue a policy framework on the scheme.’’

    According to him, unemployment problems cannot be solved, but checked as evident by measures introduced by governments.

    ‘’Globally, no government has an antidote to the issue of unemployment. What governments are doing to is to put in place measures to reduce it. The scheme is part of government’s contributions to the issue of solving unemployment in the country. People should not expect the government to proffer total solution to unemployment.’’ he added.

  • Okonjo-Iweala ‘stalls’ Rivers’ loan for water

    Okonjo-Iweala ‘stalls’ Rivers’ loan for water

    •Amaechi seeks minister’s probe

    For many Rivers State residents, hopes of having drinking water may have been dashed, it was learnt yesterday.

    The World Bank and the African Development Bank (AfDB), which had approved some loans for massive water projects, suddenly pulled the brakes on the facility.

    Governor Chibuike Rotimi Amaechi called yesterday for the probe of Finance Minister Dr Ngozi Okonjo-Iweala’s role in the stalled deal, which had been approved by the National Assembly.

    Amaechi urged the House of Representatives, which is making laws for the state as a result of the crisis in the House of Assembly, to summon Mrs Okonjo-Iweala and Minister of Water Resources Mrs Stella Ochekpe over the matter.

    The governor spoke when the House Committee on Water Resources, accompanied by Executive Directors of the Niger Delta Basin Development Authority, visited him at the Government House in Port Harcourt.

    He said the state government had fulfilled all requirements to receive and benefit from the loan scheme with the World Bank and the ADB, adding that his administration was ready to allow the Minister of Finance award the contract to any person of her choice to provide potable water for Rivers citizens.

    He said: “The people who are dying and deprived of the potable drinking water are Rivers people who don’t have water in their homes.

    “In fact, if you whisper to those agencies (World Bank and ADB) that she (Ngozi Okonjo-Iweala) has refused to sign off, a woman of that international standard, maybe she wants to join the fray of quarrel. It is like two wives quarreling over a husband. It is embarrassing, completely embarrassing for somebody who has been Managing Director of World Bank to neglect the impact water has on the citizenry.

    “The National Assembly has approved it and we have fulfilled all requirements with the World Bank and African Development Bank (ADB). We are now at the point of release of the funds for execution of the water projects for our people, and she (Ngozi Okonjo-Iweala) has refused to allow the release of the funds to us,” Amaechi said.

    The governor added: “The Minister of Finance is using her position to undermine the safety and health of the people of Rivers State. I can’t afford to give all Rivers people bottled water, but all I can assure you is to ensure the provision of potable drinking water and the Minister of Finance has refused to release it and I think, I should put that before you (House Committee on Water Resources). They want Rivers people to die. We can do an assessment of people who have been infected with water borne diseases, if she wants to do that, so she can see what she is doing to Rivers people.”

    The committee’s chairman, Aliyu Ahman Pategi, said the lawmakers were in the state for over-sight functions to verify the execution of various water projects to ensure value for money.

    He praised Amaechi on the “remarkable achievements” of his administration in the provision of infrastructure.

    “I wish to also extend my hands of fellowship to the good people of Rivers State. Despite these challenges, we have noticed quite a number of remarkable projects. We saw the monorail project, for instance, the dual carriage system, which can only be found in Abuja. I am proud of such projects in Rivers State.”

    On November 18 the Finance Minister’s spokesman Paul Nwabuikwu reacting to the accusation that Dr Okonjo-Iweala refused to sign the African Development Bank (ADB) loan for Port Harcourt water project, said: “the loan in question has been appraised but it is yet to be negotiated.”

    Before the minister can sign it, Nwabuikwu said “it has to go through the negotiation process and be considered and cleared by both the Board of the African Development Bank and the Federal Executive Council. So the issue of the minister refusing to sign it simply does not arise.”

  • How $5b ECA cash was spent, by Okonjo-Iweala

    How $5b ECA cash was spent, by Okonjo-Iweala

    Minister of Finance Dr. Ngozi Okonjo-Iweala explained yesterday how the Federal Government spent the $5billion excess crude cash declared “missing” by the Nigerian Governors’ Forum (NGF).

    In a statement, the ministry described as false, allegations by Rivers State Governor Rotimi Amaechi that $5 billion is missing from the Excess Crude Account (ECA).

    “Governor Amaechi cannot credibly deny knowledge of the status of the ECA. He has been closely involved and actively participated in making requests to the Presidency for the ECA to be shared for the purpose of augmenting the regular allocations from the Federation Account whenever there is a shortfall.”

    The statement added that the $5 billion in the ECA, which Governor Amaechi referred to, “has been shared to the three tiers of government to make up for the revenue shortfalls during the Federation Accounts Allocation Committee process.”

    The ministry said it “also went for SURE-P payments and the balance for subsidy payments to oil marketers”.

    The minister said Rivers State received N56.2 billion, the second highest share among the states, for January to September 2013 from the ECA.

    This amount, the ministry added, “includes N43 billion for shortfalls plus N12 billion released for SURE-P.”

    Okonjo-Iweala and her team added that “earlier this month (November 2013) Rivers State along with other states, benefitted from the sharing of $1 billion from the ECA to augment the allocations.”

    It then described as curious, claims by Governor Amaechi denying knowledge of the whereabouts of the N56.2 billion which Rivers State has received from the ECA this year.

    With regards to claims that Okonjo-Iweala has refused to sign the African Development Bank (ADB) loan for a water project in Port Harcourt. Again, the ministry denied the allegation as wrong.

    The loan in question the ministry said “has been appraised but it is yet to be negotiated. Before the minister can sign it, it has to go through the negotiation process and be considered and cleared by both the Board of the African Development Bank and the Federal Executive Council. So the issue of the minister refusing to sign it simply does not arise.”

  • Strengthening the DFIs to deliver on the Transformation Agenda

    Strengthening the DFIs to deliver on the Transformation Agenda

    A structural change has occurred in finance since 2008. At global level, we have seen development financing assume a more critical role.

    In this period, the World Bank’s concessional lending resource – International Development Association (IDA) – has been replenished to record levels, as a number of countries in the developing world needed to access funds from external sources to make up for income shortfalls when the prices of commodities practically collapsed in the international market in the wake of the global financial market crisis. Our very own, The Coordinating Minister of the Economy (CME) and Honourable Minister of Finance, Dr. Ngozi Okonjo-Iweala, then as Managing Director at the World Bank, led the IDA 16 replenishment to $49.3 billion, significantly higher than the level the Fund had ever attained in previous replenishment efforts.

    It is far more than the circumstantial reason of the financial crisis that the global development finance institutions (DFIs) have had to step up interventions in critical areas of poverty alleviation, climate change mitigation, infrastructure financing and more, in the developing countries. It is generally known that the World Bank is resourced with people of diverse and great technical knowledge of development programming and funding.

    Even in the best of times, private sector credit is often too expensive to finance long term projects, including infrastructure which are necessary to create jobs in the immediate term, while providing the basis for economic growth over the long-term. Moreover, with deployment strategies more policy-driven, the World Bank, although a very large institution, is able to quickly channel funding assistance to where it is best needed.

    This point helped in no small measure in shoring up the credibility of the Bretton Woods institution after its policy booboos, together with those of its twin institution, the International Monetary Fund (IMF), earned opprobrium in the developing countries in the 1980s and 1990s.

    At regional level, we have also seen a rise in the capacity to deploy financial assistance and policy advice by the African Development Bank (AfDB) and Asian Development Bank (ADB). Apart from its funding role in the development of infrastructure in Africa, the AfDB is the leading African institution that integrates the continent with international funding for climate change mitigation and adaptation.

    Europe boasts of multilateral DFIs including European Bank for Reconstruction and Development, European Investment Bank and The Council of Europe Development Bank, which prides itself as “The Social development bank of Europe”. These institutions are meeting needs that are beyond the scope and interests of the private banks. They are also fostering regional integration by lending to regional and sub-regional projects.

     

    DFI transformation in Nigeria

     

    The Administration of President Goodluck Jonathan has performed creditably well in strengthening the national DFIs in Nigeria, in line with global trends that recognise that additional financial frameworks are needed to serve the project markets that commercial banks may term too risky to lend to. Also, certain industries, which are at very early stages of development, require knowledge beyond the areas of business as usual for the commercial banks, who charge high interest rates for the credit they give.

    The DFIs become very relevant in this area, because as agents of the government, they are obligated to invest in knowledge development and provide early-stage financing to take specific industries off the ground, and prepare them to such a stage when they can begin to attract and able to afford commercial lending.

    With the banking sector significantly depressed by the financial market turmoil of 2008 and 2009, the government had to step in strongly to protect existing jobs, encourage creation of new ones and even stimulate nascent and moribund industries so as to sustain economic growth.

    The Nigerian Export-Import Bank (NEXIM Bank) has been in the frame of this development, and has received a lot of support under this Administration to deliver its mandate. As Nollywood’s profile steadily rose in the domestic and international environments, there was a need to support the industry to strengthen technically, and provide important infrastructure for the growth of the entertainment sector value chain.

    This was the key objective of the plan to launch an Entertainment Industry Fund as announced by President Jonathan in 2011. The promise has since been kept by Mr. President. NEXIM Bank is the institution that manages the Fund. This is in line with its mandate to support businesses, including the creative and entertainment sector, which have capacities to create jobs and earn foreign exchange for the country. Through its management of the Nigerian Creative and Entertainment Industry Stimulation Loan Scheme, NEXIM Bank has helped in raising the international profile of Nollywood. “Dr. Bello,” an international film financed with the Fund was premiered in Washington DC at the Kennedy Centre last year.

    Similar interventional funds have been supported by the Administration, including the Small and Medium Scale Enterprises (SMEs) industry fund, which is managed by the Bank of Industry. The DFI also manages the textile industry intervention fund. The Fund is aimed at restoring the textile industry to its former glory, when it employed more than 25,000 Nigerians and attracted significant foreign investment from India and some other Asian countries.

    Today, the Nigerian project landscape is dotted with projects funded by the DFIs. To reinvigorate the institutional framework for improved performance, Nigerian Agricultural Cooperative and Rural Development Bank was restructured and rebranded as Bank of Agriculture, to increase lending to the agricultural sector. Similarly, Urban Development Bank of Nigeria Plc was transformed to Infrastructure Bank, with renewed focus on infrastructural investment. The Federal Mortgage Bank of Nigeria is also being reformed and backed by the government to raise its capacity for intervention and support government’s programme for the provision of affordable housing to Nigerians in formal and informal occupations.

     

    Raising the Performance Profile

     

    There is no doubt that there is much more scope for the DFIs to continue to help deliver on the Transformation Agenda of Mr. President. NEXIM Bank is working on four focal sectors, namely Manufacturing, Agro-processing, Solid Minerals and Services. These sectors form the “Mass Agenda” of the bank. More recently, there has been strong consideration for increasing our intervention in solid mineral mining. To this effect, we have been working with key stakeholders in the sector. However, the need to increase funding intervention capacity, especially low cost, early-stage, long-term funding for the industry, has been identified. Support for this agenda has come in the form of a mandate for NEXIM Bank to widen its partnership for accessing low-cost fund from other international DFIs, and consideration of an industry fund.

    The trend in development financing is that interventions are scaled up in the areas where results have been achieved. While financial results are not the primary objective of setting up the DFIs, they have to be financially sustainable. Therefore, it is not incongruent to their mandate that commercial viability of projects is ascertained to guarantee moderate financial return on the lending portfolios of the DFIs. This orientation is important for prospective project owners and the DFIs. Inadequate consideration of this factor had generated certain misgivings that the Entertainment Industry Fund was supposed to be operated as a grant, whereas it is a revolving loan fund.

    This is an important point because there is the need to create separate prudential guidelines for the DFIs. In certain quarters, the portfolios of DFIs are evaluated with the same yardsticks the credit assets of commercial banks are assessed for performance. This contradicts the very basis for setting up DFIs. It becomes necessary to establish DFIs as a result of the unwillingness of commercial banks to take some funding risks which DFIs are in fact mandated to take because of the development outcomes generated by the projects they fund. For this reason, Malaysia has a model which has a separate set of prudential guidelines for its DFIs; distinct from that which commercial banks have.

     

    Social Returns

     

    The social essence of development finance institutions is perhaps the more affirmed justification of their existence. DFIs are set up with the mandate of promoting social equilibrium in one way or another. It is important to support middle market institutions as well as grassroots businesses, and not just entirely focus support on the big businesses, although they could become multinationals and flagship businesses that symbolise the national economic stature. SMEs are very important for the spread of industry and prosperity around the country.

    Funding support for women entrepreneurship is another area of intervention to help society maintain social balance. Studies around the world have shown that women are not lagging behind in business formation. But orthodoxy in financial market operations denies women entrepreneurs access to funding. Discrimination against women in terms of financial access is of the scale that requires an intervention; thus we have begun to see positive policy responses as well as supportive products from the private sector to create needed leverage for women entrepreneurship.

    The social goals sit better with development finance institutions. They understand the importance of poverty alleviation and rural development. DFIs are leading providers of vital social statistics to assist policymakers and the larger market to understand the social milieu. All of these are geared toward giving citizens in all segments of society the sense of belonging to play their roles in ensuring social stability. This agenda has been strongly supported by President Goodluck Jonathan, and it is to his credit that policies of inclusiveness are being implemented by this Administration like never before.

     

    Environmental Stewardship

     

    Some of the most environmentally conscious financial institutions in the word are the DFIs. Environmental sustainability is one of other important development issues that moderate the pursuit of financial bottom line by DFIs. Because of the governmental relations that are involved in the funding operations of global and regional DFIs, consideration of environmental impacts of the projects they fund becomes even more important and vital for mitigating political risk. I don’t think national DFIs have any reason not to pursue environmental sustainability best practices. In any case, the Equator Principles have set codes of environmental sustainability practices for project finance which are voluntarily subscribed to by financial institutions of various hues.

    A lot of awareness on this is needed in the country, coupled with investment in regulatory capacity and project development re-orientation. This is one area the DFIs can jointly adapt international frameworks to suit the local context.

    NEXIM Bank has been investing in knowledge acquisition, and is seeking for technical collaboration with other development agencies to help develop carbon finance and climate change mitigation in the country.

    Although hope of a global agreement for trading carbon credit from emission cuts will probably not crystalise, experts believe that funding framework at bilateral level, as well as regional funding for climate change mitigation and adaptation, will continue to flourish.

    Besides, investments in environmental sustainability can generate enough returns in preservation of the natural environment and endangered species, apart from slowing down global warming and reducing environmental pollution.

    •Orya is Managing Director/Chief Executive Officer, Nigerian Export-Import Bank

  • WAICA confab holds

    WAICA confab holds

    THE West African Insurance Companies Association (WAICA) is set to host a three-day international educational conference with the theme, “An integrated and harmonised insurance industry in West Africa”, in Lagos.

    Its Secretary-General, William Coker, who made this known in Lagos, said the event which begin on November 24,would help the sub-regional body to further tap into the huge business opportunities in the sub-region.

    He said: “If we are promoting the concept of a global village, the insurance industry in the West African sub region needs to be seen as front runners in promoting efforts at regional integration. Charity must begin at home.

    “We expect and educative and rewarding educational conference. It is yet another opportunity to extend the hospitality of Nigerians to delegates from other parts of the world.”

    The Co-ordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala is expected to give the keynote address.

    Founding father and past president of WAICA,  Prof. Jo Irukwu (SAN), will chair the paper which will be discussed by Rev. Asante Marfo-Akenkora, President, Ghana Brokers Association and Mr  Dawda Sarge, past president, WAICA  and Managing Director/ Chief Executive, Prime insurance Company Ltd, Banjul, The Gambia.

  • Ghost subsidy

    Ghost subsidy

    •Kerosene subsidy scam may be Nigeria’s next scandal

    Just as it was with the much-talked-about petrol subsidy last year, we may yet be on the way to unearthing another scam, this time, on kerosene subsidy. The Chairman, House Committee on Petroleum, Downstream, Dakuku Peterside, said that the Federal Government spent about N634billion to subsidise kerosene in the last three years. Peterside spoke at a seminar organised by the Lagos Chamber of Commerce and Industry (LCCI), in Lagos. According to him, about N110 billion was spent on kerosene subsidy in 2010; N324 billion in 2011 and N200 billion in 2012.

    This, no doubt, must have come as a rude shock to Nigerians because, as Peterside himself noted, the subsidy has never benefitted Nigerians who have been suffering due to the fact that they cannot get the product at the regulated price. Kerosene is supposed to sell for N40.90k per litre, but it is presently going for between N110 and N150. Senator Bukola Saraki who had expected the Minister of Finance and Co-ordinating Minister of the Economy, Dr Ngozi Okonjo-Iweala, to shed more light on the subsidy at her meeting with the Senate Joint Committee on Finance and Appropriation on the 2013 Budget last Monday was disappointed because the minister was evasive on the issue.

    The minister, rather, insisted that the N1.4trillion she told the joint committee about was the amount paid to oil marketers as subsidy on Premium Motor Spirit (PMS), otherwise known as petrol. When Senator Saraki persisted, she simply retorted, “the payment is for petrol; it does not include kerosene. I said the payment is for PMS and that is petrol, adding: “I am really very clear that the payment is for petrol. I think the NNPC should answer the question on whether subsidy is paid on kerosene.”

    We do not want to believe that Dr Okonjo-Iweala does not know whether we are paying subsidy on kerosene or not; although we agree she might not know the exact amount involved immediately. In which case all she needed to do was ask for more time to find out details and get back to the committee.

    We would not be surprised if another can of worms is opened by the time the lawmakers probe the matter further. Those involved in the kerosene subsidy racket might have been taking undue advantage of the fact that we hardly talk about it. With the ball now put in the court of the untouchable behemoth, the Nigerian National Petroleum Corporation (NNPC), the matter seems to have got to a dead end. As at now, the corporation is the sole importer of kerosene and we do not know anything that it has done well. It is under its watch that the country, the world’s sixth biggest crude exporter, imports the bulk of its petroleum products because the corporation cannot efficiently run our refineries.

    It is sad that the government spends about a third of what we spend on capital budget yearly on kerosene subsidy, which, like petrol subsidy, is subsidising corruption because the subsidy is not getting to the intended beneficiaries. It is true that Nigerians could switch over to Liquefied Petroleum gas (LPG) instead of kerosene as Mr Peterside suggested, but how many of our low and middle income earners can afford this? Cost apart, many people, particularly in the rural areas, do not feel comfortable with gas cookers. They will rather switch over to firewood if kerosene is no longer within their reach. This, as we know, has deleterious effects on the environment.

    We agree with Mr Peterside that “… something is wrong somewhere. How can we be spending on what does not benefit the masses”? It is that something that the lawmakers should unearth since the government has persistently shown a gross incompetence when it comes to tackling corruption.