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Tag: recovery

  • Ambode restates commitment to economic recovery

    Ambode restates commitment to economic recovery

    Lagos State Governor Akinwunmi Ambode has restated his administration’s commitment to the country’s economic recovery through provision of access to credit for Micro, Small and Medium Enterprises (MSMEs).

    Ambode, represented by Secretary to the State Government, Mr Tunji Bello, made the assertion yesterday during the Lagos State Special Day at the 31st Lagos International Trade Fair.

    The Trade Fair with the theme, “Positioning the Nigerian Economy for Diversification and Sustainable Growth’’ is organised by LCCI.

    Ambode said the government was providing conducive business environment to accommodate all shades of investors.

    “Lagos State, indeed is a discerning investors’ delight. Apart from improving the quality of life of our citizens, we have started the process of generating 200 megawatts of electricity for the state,’’ he said.

    The state is constructing more roads and rehabilitating already existing ones to ease the lives of Lagosians.

    Commissioner for Commerce, Industry and Cooperatives Prince Rotimi Ogunlewe, underscored the need for collaboration between the state and the private sector toward enhancing investments in the state.

    LCCI President Mrs Nike Akande, urged the state to  tackle the challenges of urbanisation.

    This, she said, will make the state compete with global cities.

    Mrs Akande noted that the state with a fast growing population of above 22 million people, hosts several large and small industries.

    She noted the latest figure from the National Bureau of Statistics (NBS), showed that the state generated the highest Internally Generated Revenue (igr) in the country, put at about N302 billion in 2016.

    Mrs Akande said the Annual States Viability Index (ASVI), computed by Economic Confidential, revealed the state as coming first with 169 per cent.

    She urged the state to create a conducive business environment for businesses to thrive and have a bigger capacity to generate jobs and lift people from poverty.

  • Stanbic IBTC: economy on recovery path with ERGP

    Stanbic IBTC: economy on recovery path with ERGP

    Stanbic IBTC Holdings Plc, said with diligent execution and policy consistency, the Economic Recovery and Growth Plan (ERGP) has the capacity to steer the country to full economic recovery, sustainable growth and development.

    ERGP was unveiled in April this year as a short-to-long term (2017 to  2020) blueprint to lift the country out of recession and to the path of inclusive growth and development.

    Key goals of the blueprint include macro-economic stability, incremental improvements in national productivity and sustainable diversification of production in such areas as agriculture, energy and medium and small enterprises, as well as manufacturing and services.

    The attainment of these goals underscored the theme of the 23rd Nigerian Economic Summit in Abuja – “Opportunities, Productivity and Employment.” Speaking on the sidelines at the Summit, Stanbic IBTC Holdings Chief Executive,   Yinka Sanni, said practically every sector of the Nigerian economy is endowed with huge potential, which when adequately harnessed would trigger exponential development of the country.

  • No wage increase, no recovery, says Aremu 

    No wage increase, no recovery, says Aremu 

    There can be no meaningful economic recovery until the Federal Government addresses productivity and wages matters, the General Secretary, National Union of Textile, Garment and Tailoring Workers (NUTGTW), Comrade Issa Aremu, has said.

    In a reaction to a report by the National Bureau of Statistics (NBS) that Nigeria, with a Gross Domestic Product (GDP) growth of 0.55 per cent, is out of recession, he noted that the economy has the potential for faster recovery and not just exiting recession.

    According to Aremu, this could have been possible if the government had put an end to the persistent crisis of compensation of the working class, manifesting in what he termed as “criminal” non-payment and delayed payments of salary by many states, despite several Federal Government bailouts of trillions of naira.

    On the  the NBS positive growth numbers of 0.55 per cent, compared to the negative contraction of  1.6 per cent in 2016, Aremu said Nigeria could only recover from economic recession with enhanced purchasing power, which is only possible through prompt and adequate payment of over 10 million employed workforce.

    The labour leader, who likened Nigeria’s economy to a big, blind economy, which gets excited with a dimmed ray of eye sight, said it was time Nigeria got right its growth and development numbers.

    He noted that the Federal Government’s Economic Recovery and Growth Plan (ERGP) (2016-2020), launched last year, envisaged 4.6 per cent real GDP growth in the year, adding that this makes the recent token positive growth of 0.55 per cent a far cry from the planned target.

    Aremu, a labour representative on the National Wages and Salaries Commission, said the key to sustainable development has improved labour productivity in both public and private sectors, which could only happen with motivated pay and quality pensions.

    He advised the Federal Government to address the crises of compensation in all sectors, notably education, and setlle with unions, such as the Academic Staff Union of Universities, which is on strike, by paying all outstanding allowances and ensure service delivery on the part of the workforce.

    “Nigeria’s economic recovery is elusive, with constant avoidable work stoppages and loss of man hours in an economy trying to exit recession,” Aremu added.

  • Backward integration: Elixir for economic recovery?

    Backward integration: Elixir for economic recovery?

    Diversifying Nigeria’s mono-economy, it has been said, is the way to its Eldorado. Achieving this is, however, subject to some factors, including institutionalising a deliberate policy of backward integration. This is why some home-based firms are intensifying efforts in this direction, reports Bukola Aroloye

    Like a whirlwind, the news that Nigeria has exited the recession it found herself in almost two years ago, spread like wild fire. The euphoria that followed the revelation was quite understandable given the harsh economic experience that businesses and individuals have experienced is quite understandable.

    For many, this news brings hopes of better fortunes in both corporate and individual transactions and the economy at large. However, with low growth rate of 1.5 per cent, both the International Monetary Fund (IMF), as well as the Central Bank of Nigeria (CBN) agrees that Nigeria’s economy may not regain stability until after 2017.

    Predicate upon this submission by both organisations, experts warn that there is the need to intensify efforts at diversifying the country’s economy; without which the gains of exiting recession may be short-lived.

    In achieving this, government appears to have a listening ear as it has since stepped up its agricultural initiative. This is a welcome development, considering that in the 1960s, agriculture was the main stay of the Nigerian economy as it contributed the lion’s share to the gross domestic product (GDP), foreign exchange earnings, and employment.

    Sadly, today, about $10 billion exits the country’s purse annually for importation of agricultural products.  In the textile sector, about $4 billion is spent annually importing textile into the country. The Director-General, National Automotive Council (NAC), Mr Aminu Jalal, estimates that Nigerians spend about N600 billion annually on importation of automobiles. In 2015, the minister of state for industry, trade and investment, Mrs. Aisha Abubakar, estimated that N7 trillion was spent on the importation of consumables and household items into the country.

    But government, faced with foreign exchange scarcity, and to enhance domestic commercial production, started restricting importation of certain goods. This position of government seems to have been rightly justified going by the submission of the Director, Institute for Agricultural Research (IAR), Zaria, Prof. Ibrahim Umar-Abubakar. Last year, Umar-Abubakar had disclosed that the country’s wheat import bill stood at $6 billion annually. In all of this, he had explained that Nigeria produced only three per cent of wheat it consumed, while the remaining 97 per cent was being imported, in spite of having the capacity to produce enough quantity of wheat needed for local processing and consumption.

    “We have the capacity to produce enough wheat not only for our consumption, but also for export. Remember, we eat many products made from wheat every day. You can imagine what will happen if Nigerian farmers today decided to go on strike, can the oil money buy all the food we need in this country? Agriculture contributes 24 per cent of GDP, while oil contributes only seven per cent,” he noted.

    Such position by researchers, coupled with the present economic challenges and realities, especially as regards the foreign exchange scarcity, have now forced many companies into having a rethink on local sourcing of raw materials. This, by extension, leads to backward integration, which is believed to be the pep needed by the economy.

    Checks by The Nation on  Sunday revealed that some Nigerian agro-industrial businesses and Fast-Moving Consumer Goods (FMCG) companies have started investing heavily in backward integration projects. It was gathered that this initiative will require manufacturers to substitute some imported raw and packaging materials with local alternatives.

    For instance, Nigerian Breweries Plc has not only reaffirmed its commitment to backward integration and in the process, mapped out strategic plans to achieve this some years back, the firm is currently said to be consolidating its local sourcing of inputs for its operations. It has also fast-tracked its plan to attain 60 per cent local input sourcing to 2018 as against the initial 2020 target.

    The strategy, according to the NB Plc’s Manager, Corporate Communications and Brand Public Relations, Patrick Olowookere, is to identify individuals and organisations that can produce ancillary products as inputs for its business. He explained that such organisations will be supported with necessary logistics and guarantee of a ready market for their products. Olowookere further disclosed that these value chain models have been successfully experimented in the areas of Packaging Development Value Chain, Sorghum Development Value Chain and Cassava Development Value Chain Model. For instance, the company has created massive new jobs through the successful introduction of two innovative hybrid sorghum seeds to Nigerian farmers.

    In 2015, Olowookere further revealed, the company made progress in increasing the supply of sorghum used for some of its beverages as more than 100, 000 tonnes of the cereal were purchased during the year. As part of its support for backward integration scheme, Olowookere said the NB was very instrumental to the development and commercialisation of the new hybrid sorghum varieties – CSR-03H and CSR-04H.

    In the area of packaging, the backward integration efforts of the company reverberate. Currently, its product packaging is 95 per cent locally sourced, opening a wide opportunity to clusters of local entrepreneurs.

    At the recent opening of three newly upgraded facilities at its Ota brewery located in Ota, Ogun State, chairman of the company, Chief Kola Jamodu, noted that “our product packaging is 95 per cent locally. From bottle makers, can manufacturers, crown cork producers, shrink wrap providers, preform makers for our PET lines, labels, crate-makers, distributors, wholesalers, retailers, hoteliers, etc., we have so many companies in our value chain based in the state with multi-billion naira revenues who are also creating employment and paying taxes to the government.”

    Similarly, the company has since 2015 been working with a local cassava processing company to optimise the cassava value chain in the country by providing industrial quality cassava starch to extract maltose syrup for use in its brewing process.

    Interestingly, Unilever Nigeria Plc. announced that it was already working on a backward integration programme, aimed at 100 per cent local production of needed raw materials for manufacturing.

    “We are pleased and very confident to state that we are a Nigerian company and we are here to stay. We have been in the country for 92 years and will be here for another 92 years and more. Our plans for increased investment will also bring about employment opportunities in the country, as workers will be recruited for the new production line, and in the farms for the production and sourcing of local raw materials,” said president of Unilever, Mr. Bruno Witvoet.

    The Senate President, Dr. Bukola Saraki, at a meeting with the Unilever team, described the Unilever initiative as a good one and assured that the present administration is serious about its policy on diversification of the economy, while the National Assembly was also reviewing some extant laws to make the country a business-friendly destination. Saraki remarked that the attempt by the company to source raw material locally would provide ready market for farm produce, adding that it would encourage and empower local farmers to work harder. He assured them and others with similar plans that the National Assembly is determined to ensure that policies are consistent and that incentives required in ensuring that businesses and investors are encouraged to make the kind of investments promised by Unilever.

    “What we are trying as much as possible to do is to see how we can diversify and increase the supply side for import substitution and the demand is huge. One of the concerns being raised is whether these policies are going to be consistent. And I said, yes, it will,” he assured.

    Similarly, the Managing Director, Grand Oak Nigeria Ltd., a sister company of Nigerian Distilleries Ltd. (NDL), Fatai Odeshile, at the “2017 Distributors’ Conference” in Abeokuta, Ogun State, urged manufacturing companies operating in the country to engage in backward integration by sourcing their raw materials locally in order to grow the economy. For him, one of the smartest ways manufacturing companies can survive the current economic hardships is to stop the importation of raw materials and invest in the local market by sourcing their raw materials locally. He said his company had realised the impact of the economic downturn on its production, which propelled management to invest heavily in agricultural products, like cassava, which contains a major raw material used in production.

    Odeshile revealed that about a decade ago, his firm stopped importing ethanol, a major raw material for its products from countries like India, Brazil and others, and by so doing, became the first African company to have a cassava-based ethanol production company in Igbesa, Ogun State. This, according to him, had helped the company to stay afloat even in the face of the economic downturn.

    Buttressing the point of Odeshile, the Brand Manager, Regal Gin, Adeniyi Babatunde, said: “The raw materials used for his brand are all sourced locally. Apart from the content of the brand, the packaging materials are also sourced locally, from the labels to the caps. Before, we used to bring in caps from foreign countries but now we are getting from vendors locally. A lot of local content has gone into developing this brand,” he explained.

    In the spirit of backward integration, Guinness Nigeria Plc has also committed to increasingly use Local Raw Materials (LRM) such as sorghum and maize. The firm’s managing director, Mr Peter Ndegwa, explained that this has been part of the company’s sourcing strategy for over a decade.  To further strengthen this, Guinness said it was working at raising the portion of locally sourced raw materials from 43 per cent to 87 per cent over the next two years.

    “Through our local sourcing projects, we are helping smallholder farmers to improve yields and compete against imported crops. Local sourcing also benefits Guinness Nigeria as it eliminates import duties, secures a sustainable supply of raw materials and reduces transport-related environmental footprint,” said Ndegwa.

    Perhaps, the biggest revelation coming out the backward integration initiative is that of Psaltery Farms, run by Mrs. Oluyemisi Iranloye, which has turned Alayide Village, Ado Awaye in Iseyin Local Government of Oyo State into a revolution.

    According to Iranloye who abandoned a lucrative job as  a Bio Chemist in Lagos five years ago,  Psaltery has created a supply chain involving up to 5,000 farm families which include more than 2,000 registered and unregistered out grower farm families, marketers, the labourers, the traders, the transporters, the retail input suppliers.

    She established the 20-ton/day starch factory in 2012 and an additional production line of 30 tons/day capacity in 2015 to meet more customer demands and satisfaction

    The company’s asset base is about $5million, comprising its factory, farm land and equipment and has saved the nation more than $7million in forex in the past two years. The company has provided employment for over 300 people including 200 permanent staff and 100 temporary staff.

    In March 2014, BoP Inc facilitated initial contacts with Heineken International B.V. As a large buyer of crops and a manufacturer and brewer in Africa, Heineken plays an important role in the economic empowerment of hundreds of thousands of farmers, their families and their communities.

    Nigerian Breweries, according to the Corporate Affairs Adviser, Mr. Kufre Ekanem, is interested in strengthening and expanding its local business activities and market share in Nigeria, particularly in the local procurement of cassava-based inputs; and therefore identified Psaltery, as a supplier of high-quality cassava starch.

    Ekanem explained that the initiative is part of the company’s “winning with Nigeria” project and in line with the current economic diversification process.

    The impact of all these has been massive on the nation’s economy and the lives of the farmers. Alayide village has changed its status as the community now boasts of electricity, borehole water and a farm house to help migrant farmers. The youth of the community are back at home to be part of the new agric revolution.  Baale of Alayide, Chief Busari Amusa, was full of gratitude for the new transformation that has come upon his community. “It is a dream come true. My story has changed. Today, and less than two years of this cassava business, I have a new house, a car and four of my children are in higher institutions of learning. This is unbelievable,” he told a group of journalists on tour of the community recently.

    Other organisations on the backward integration route include Nestle, Promasidor and many others, drawing huge value chains in terms of massive job creation, social transformation and foreign exchange conservation.

    And as the companies continue to explore the backward integration, Ogun State Governor Ibikunle Amosun summed up their efforts in this direction thus: “It will be in our collective interest for companies and even the entire country to source their materials locally. Backward integration and import substitution is the master key to a self-sustaining economy.”

  • Economic recovery: Fiction or reality?

    SIR: Nigerians have reacted to the news that the recession is over. The latest National Bureau of Statistics (NBS) report says Nigeria has moved out of recession: “Economy grew in second quarter 2017 by 0.55% from -0.91% in first quarter 2017 and -1.49% in second quarter 2016. This in effect means Nigeria has exited recession”.

    To ordinary Nigerians, economic development or upward trajectory of the economy should have a significant effect of improving lives, boosting individual purchasing power through up-to-date payment of workers salary, and availability of food on our tables etc. The reality is that most Nigerians workers are not paid for several months; at the moment of writing, university lecturers and doctors are on strike over non-payment of allowances. Parents who withdrew their wards from schools for inability to cope with school fees are still struggling. Prices of food, beverages remain out of reach.

    Recession does not end on the pages of newspapers; certainly not the statistical data or graphs that reveal the actual health status of a nation. The market people – common man on the street and individual homes should be in the best position to give a clean health bill through their personal experiences.

    At the moment, Nigerian economy is still tied up to oil and gas sector. With crude oil prices stabilising and the crude production increasing to 2.2m per barrel, my fear is that in the event that OPEC asks us to cut production or militants strike again and cut production to what it was before the country slid into recession, what would happen?  NBS report did not reveal much in other sectors like agriculture in which this administration promised as alternative to the mono-cultural economy the country has operated for decades.

    Several factors are working against the administration’s bid for diversification. Currently, farmers are not able to do much for fear of Fulani herdsmen while those who could even attempt it are confronted by high cost of fertilizer and farm tools. The other challenge is the Boko Haram that have sent virtually 95% of farmers in the North-east into IDPs camps. Until this menace is tamed, we can’t say we are moving towards food sufficiency.

    The economy is still fragile and vulnerable, just like an egg; it can break at any time considering the weak and polices. Unless we focus on the reality and not trying to score a political point especially as we approach 2019 elections, will still be cerebrating emptiness.

    Recession is still on and Nigerians are still in pains. The president himself has affirmed this by saying “exit from recession nice if felt by ordinary Nigerians”. Frankly speaking, the president got it right again by not playing to the gallery as he did when he first returned from London that he has not been this sick. But the hyenas and the jackals around him always say the opposite for political gain.

    The truth is that the report does not yet reflect the reality on ground.?

     

    • Alifia Sunday,

    Ilorin, Kwara State.

  • Economic recovery: SDP says it is not yet time for celebration

    Economic recovery: SDP says it is not yet time for celebration

    The Social Democratic Party (SDP) says it is not yet time for celebration as the country is reported to be out of economic recession.

    The party made the observation in a statement issued by its National Publicity Secretary Mr Alfa Mohammed, on Wednesday in Abuja.

    Mohammed said that the party had taken notice of the reported growth in the country’s GDP as indicated by the report of the National Bureau of Statistics (NBS).

    He said that while technically Nigeria was out of recession as the report showed that the  GDP quarterly growth was no longer negative, economic hardship still continued and unemployment remained.

    “Hence, we are of the view that it is not celebration time yet, as the interest rate which determines the amount of money available for investment is still high.

    “Also the 16.25 per cent inflation rate reported in the month of May is still not a good enough indicator.

    “We are however of the opinion that if the growth in the non oil sectors are improved upon and capital spending is increased through effective budget implementation, then we can begin to have a sigh of relief soon.”

    He also stressed the need to see the reflection of the achievements in the welfare of the common man on the street.

    According to him, there are unpaid civil servants, pensioners and the students are out of the classes as well as none appreciable decrease in the unemployment rate. (NAN)

  • Why sustenance of Niger Delta peace is key to economic recovery, by stakeholders

    Why sustenance of Niger Delta peace is key to economic recovery, by stakeholders

    To some experts and analysts, there is nothing in the N7.44 trillion 2017 “Budget of Economic Recovery and Growth” to inspire hope of a quick economic recovery. Rather, they argue that what will pull the country out of recession are basically developments in the oil and gas industry. They suggest how to make the relative peace in the Niger Delta permanent, reports Assistant Editor CHIKODI OKEREOCHA. 

    The fear of resurgence of militancy in the Niger Delta is the beginning of wisdom for the Federal Government, oil companies and stakeholders in the oil and gas industry.

    The relative peace in the oil-producing region has contributed to the increase in oil production to 1.8 million barrels per day (bpd). Oil output had been cut to about half a million bpd by a fresh wave of militancy by restive youths before the attainment of a ceasefire.

    With oil price yet to rebound and Brent crude standing at $48.46 per barrel as at the weekend, experts and operators in the oil and gas industry believe Nigeria might be out of recession faster than envisaged if the current 1.8 million bpd production output is sustained and pushed up further.

    But they said the Federal Government must muster the political will to sustain the prevailing peace in the Niger Delta for this to happen.

    Some of them, who spoke with The Nation, warned of the consequences of a resurgence of militancy in the Niger Delta, saying such development will hurt oil and gas operations. According to them, sustaining the oil production level was critical to the implementation of the N7.44 trillion Appropriation Act.

    The Chairman, Petroleum and Natural Gas Senior Staff Association of Nigeria and National Union of Petroleum and Natural Gas Workers (PENGASSAN & NUPENG) National Petroleum Industry Bill (PIB) Committee,  Hyginus Onuegbu, argued that the 2017 budget remained an estimate and that its revenue targets were based on mere assumptions.

    Acting President Yemi Osinbajo had last month signed the N7.44 trillion 2017 budget tagged “Budget of Economic Recovery and Growth” into law. The lawmakers had raised the figure from the initial N7.28 trillion estimate presented by President Muhammadu Buhari in December last year.

    Osinbajo said that the N7.44 trillion budget had a revenue projection of N5.08 trillion and an aggregate expenditure of N7.44 trillion; the projected fiscal deficit of N2.36 trillion is to be financed largely through borrowing.

    It also set aside N1.84 trillion for debt servicing, N177.4 billion for sinking fund, N2.97 trillion for recurrent expenditure (non-debt) and N2.177 trillion for capital expenditure.

    The Acting President said the budget would deliver positive economic growth and prosperity, as it would be implemented in line with the Economic Recovery and Growth Plan (ERGP). He said the budget was designed to bring the economy out of recession onto a path of sustainable and inclusive growth.

    But Onuegbu disagreed. As far as he is concerned, “the 2017 Budget should not be celebrated.”

    The immediate past Chairman of the Rivers State chapter of Trade Union Congress (TUC) said Nigeria will come out of recession not because of any special aspect of the 2017 budget.

    Onuegbu said: “This is a budget that was signed in the middle of the year. he charged, asking, “How can you sign a budget in the middle of the year and come round to say it will bring the country out of recession? When will capital development begin to take place?”

    Onuegbu insisted that the only viable way out of recession is for the Acting President and the Federal Government to take the peace that currently exist in the Niger Delta seriously and ensure that the promises made to the Niger Delta people are kept.

    According to him, this was necessary to avoid any disruption in oil and gas operations.

    “If there is crisis in the Niger Delta, the nation’s oil production target will not be met, and of course, its revenue target will not be met”, he warned.

    Before the truce, oil output was cut by 50 per cent the disruption of oil installations and operations by militants. It was the lowest in almost 30 years. The effects of the sharp drop were devastating. The government lost an estimated 60 per cent of its revenue to the series of attacks by militants on oil gas facilities.

    Besides, 60 per cent of her gas supply was lost to pipeline vandalism, a development which left sour taste in the mouths of investors in the power sector and by extension, electricity consumers across the country.

    The belief in some quarters is that the devastation would not have been far-reaching if Nigeria had not depended on oil for 70 per cent of its revenue and 95 per cent of her foreign exchange earnings. The reliance on oil as the mainstay of Nigeria’s economy accounted for why the crisis in the region pushed the economy into its worst recession in decades.

    It took the intervention of the Acting President to reign in the region. His diplomacy shuttle to oil-producing communities in some states in the Niger Delta where he held series of dialogue with leaders and representatives of the militants yielded positive report.

    The militants agreed to sheath their sword after securing Osinbajo’s assurances of government’s commitment towards genuine peace and development of the region. Certain promises were also made. The result was spontaneous. Disruption of oil production and destruction of oil installations and pipelines stopped, thus pushing up oil production level to 1.8 million bpd.

    But the expert’s argument is that sustaining the peace in the region must be sustained to maintain the prevailing oil production level, which they say is critical to the delivery of this year’s budget.

    “The Federal Government should understand that critical to the achievement and delivery of the 2017 Budget is the maintenance and sustenance of the peace in the Niger Delta so as to engender increase in oil & gas production that we are witnessing now”, Onuegbu told The Nation.

    A Lagos-based lawyer and public affairs analyst, Mr. Obiora Akabogu, aligned with Onuegbu’s position. Noting that Niger Delta remains Nigeria’s wealth base and the goose that lays the golden egg, he hinged the growth of the economy on the level of peace in that region.

    He urged the government to muster the political will to make necessary adjustments and concessions to ensure a lasting that region.

    Akabogu said: “There are some adjustments the government can make with executive fiat; you don’t even need constitutional amendments just to make the people of that area more comfortable.

    “People of that region are not greedy; they are easy to placate because if it were some other hostile environments they would have held the government to ransom until you meet up to 70 per cent of their demands.”

    He insisted that the government must develop the political will and strategy to develop that region and also resist pressure to mount military operation in that region.

    Akabogu said: “It is not a win-win situation militarily because of the peculiar topography of that region. Rather, dialogue and political will can do a lot of good to the Federal Government.

    “The mere fact that the budget came mid-way into the year shows you that the survival of the economy is not necessarily based on the budget; that there are other indicators and calculations.”

    Akabogu recalled that previous budgets have not done any serious miracle to the economy, but one way or the other, Nigerians have found a way to survive outside the budgets.

    He said that the budget may be ambitious important because of capital projects, the fact that it came late into the year meant that Nigerians should not expect too much.

     

    Fears of poo, shoddy implementation

    The late passage and signing of the budget into law has raised fears over possible delay in the kick-off of its implementation, and consequently, its capacity to achieve the intended outcomes.

    The Registrar/Chief Executive of the Institute of Business Development (IBD), Mr. Paul Ikele, said that beyond basing it on realistic assumptions, the budget must be judicious implemented to take country out of recession.

    He told The Nation that it was necessary to avoid the same low and shoddy implementation of last year’s budget if this year’s must succeed.

     

    Push for uninterrupted oil production heighten

    Akabogu explained that the optimism that the economy will bounce back has nothing to do with the budget’s intended outcomes, but with other extraneous calculations such as the predictions by World Bank and the International Monetary Fund (IMF).

    The World Bank recently upgraded its forecast for Nigeria’s economic growth to 1.2 per cent for 2017, citing improved oil production due to decreased militant activities.

    The bank, in its June 2017 Global Economic Prospects report, said: “Nigeria is forecast to go from recession to a 1.2 per cent growth rate in 2017, gaining speed to 2.4 per cent in 2018.”

    It noted that: “In Nigeria, militants’ attacks on oil pipelines decreased…..Oil exports are rebounding in Nigeria on the back of an uptick in oil production from fields previously damaged by militants’ attacks…”

    The IMF also raised its projections for Nigeria’s economic growth this year to 0.8 per cent. It also revised its forecast for Nigeria in 2018 to 2.3 per cent, from its previous projection of 0.7 per cent. The forecasts were revised up mainly to reflect high oil production due to security improvements in the resource-rich Niger Delta.

     

    How to sustain peace in the Niger Delta

    Onuegbu spoke of the need for the Federal Government to abide with the agreement it reached the leadership of communities in the Niger Delta for continued peace in the region.

    For instance, he said that issues around modular refineries must be resolved.

    His words: “When the Acting President came to the Niger Delta, he made a promise about modular refinery. As a matter of fact, some youths started organising themselves. In fact, there was an association of modular refiners in Nigeria. That is an issue that needs to be resolved.”

    The government had announced plans to establish modular refineries to engage youths engaging in illegal oil refining. The planned upgrade of illegal refineries in the region to modular refineries has been welcomed by the people.

     

    Suspicion

    As youths and prospective investors in modular refinery business waited anxiously for the government to come out with modalities for the take-off of the project, there were reports that the government would not allow the proliferation of such refineries across the Niger Delta.

    The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, explained that having such refineries scattered across the Niger Delta would worsen environmental degradation and gas flaring, which will increase the problems of the region.

    According to him, the government would commission a broad study for the development of an intelligent plan for the construction of modular refineries in the region. ,

    The minister said: “It is important to clear a misconception, especially as it has to do with modular refineries.

    “Setting up smaller modular refineries in so many places in the Niger Delta would worsen gas flaring in the region and also bring about environmental challenges. It is critical to develop an integrated approach and plan to modular refineries construction in the Niger Delta, ensure that they are properly optimized and are not scattered everywhere.”

    But Onuegbu counselled the government against reneging on its promise about modular refineries. According to him, this was necessary in order to sustain the peace in the region and starve off disruption of oil and gas operations.

    Yet, the modular refinery, which has been put on hold, was one in the long list of issues agitating the minds of Niger Delta people that have not been resolved. There is also the issue of restructuring and funding of the Niger Delta Development Commission (NDDC).

    Onuegbu regretted that the government owed a lot of money to the NDDC, which it has yet to remit. He pointed out that these are funds necessary for the development of the Niger Delta.

    The Nation learnt that restructuring and funding of NDDC was part of the 16-point demand being adopted as working document to end the Niger Delta crisis when Osinbajo led a high-powered delegation to the region early this year, beginning with Delta State.

    The 16-point demand, prepared by the people of the Niger Delta under the aegis of Pan-Niger Delta Forum (PANDEF), under the leadership of Ijaw leader and elder statesman Edwin Kiagbodo Clark, was presented to Buhari when the President received them at the State House on November 1, last year.

    On PANDEF’s shopping list are: Presidential Amnesty Programme; Law and justice issues, Effect of increased military presence in the Niger Delta, Plight of Internally Displaced Persons (IDP), Relocation of administrative and operational headquarters of International Oil Companies (IOCs), Ogoni clean-up and environmental remediation, and the Maritime University.

    Other demands include: Strengthening the Niger Delta Ministry; the Bakassi question, Fiscal Federalism, Key regional critical infrastructure; Security surveillance and protection of oil and gas infrastructure; Power supply, economic development and empowerment; and Inclusive participation in oil industry and ownership of oil blocs.

    Sources close to the preparation of the 16-point demand hava admitted that the government has made some appreciable progress in meeting some of the demands. They note that the commencement of the clean-up of Ogoni land, the revisiting of the unpaid amnesty stipends and the National Maritime University, among others, are signs that the issues agitating the minds of the people are gradually being addressed.

    But, will the government pluck up the courage and political will to holistically address these demands rather than quick fixes? Will it strive to build trust, instill confidence and give the local communities in the Niger Delta some sense of belonging?

    As answers to these questions remain a matter of conjecture, the prevailing ceasefire militancy and may not be permanent for as long as the issues remain unresolved.

    Analysts say that no stone should be left unturned to guard against the resumption of hostilities in the oil-rich region and not hurt ongoing efforts at reflating the economy and take it out of recession.

  • Declining inflation sign of economic recovery

    Falling inflationary trends, including the National Bureau of Statistics (NBS’) new report indicating an improvement from 17.24 per cent in April to 16.25 per cent in May appears to support the Federal Government’s claims about improvements in the economy.

    In its report yesterday, the NBS noted that the economy is recording the fourth consecutive decline in the rate of inflation since January 2017, thereby justifying recent assertions by Minister of Budget and National Planning, Senator Udoma Udo Udoma that the country’s economic situation is changing for the better as the macroeconomic environment is being stabilized and inflation rate trending downwards.

    “The Consumer Price Index (CPI) which measures inflation increased by 16.25 per cent (year-on-year) in May 2017 .

    “This was 0.99 per cent points lower the rate recorded in April ( 17.24per cent) ; accordingly ,this represents the fourth consecutive decline in the rate of inflation since January 2017.

    “On a month-on-month basis, the headline index increased by 1.88 per cent in May 2017 , 0.28 per cent points higher than the rate of 1.60 per cent recorded in April 2017 indicating the existence of persistent pressure on prices despite the general decline in year on year inflation.

    “Month on Month inflation has cumulatively risen by 7.7 per cent since January 2017 .

    “The food index increased by 19.27 per cent (year-on-year) in May 2017 , down by 0.03 per cent points from the rate recorded in April ( 19.30 per cent) indicating continued pressure on food prices.

    “Price movements recorded by All Items less farm produce or Core sub-index rose by 13.00 per cent (year-on-year) in May , down by 1.80 per cent points from rate recorded in April (14.80 per cent); this represents the seventh straight month of decline in the core index since November 2016 ,” the NBS stated in its report.

    Senator Udo Udoma had said government interventions, particularly in fixing the nation’s broken infrastructure, are making impact. He said there are positive signs that the economy is working its way out of recession unto a path of sustained inclusive growth and development.

    He expressed optimism that the implementation of the Economic Recovery and Growth Plan (ERGP) will boost the economy while the new inflation rate of 16.25 per cent is now just 1.25 points away from the 15 per cent goal of the ERGP.

  • Fed Govt seeks removal of obstacles to loot recovery

    The Federal Government and other stakeholders have called for the removal of obstacles to the recovery of looted funds from foreign countries.

    They want those who facilitate illicit financial flows (IFF) to be held accountable, as well as an end to international tax evasion and trade mis-invoicing.

    Countries holding monies looted from Nigeria were also urged to simplify their legal procedures that make recovery difficult.

    These were part of the “Abuja Declaration on promoting international cooperation to combat IFF and  enhancing asset recovery (AR) to foster sustainable development” made at the end of a three-day conference held at the State House Banquet Hall, Abuja.

    The Conference tagged ‘Abuja IFF/AR’ was organised by the Federal Government through the Presidential Advisory Committee Against Corruption (PACAC), the ministries of Justice and Foreign Affairs, in partnership with some development partners, such as the Government of the Kingdom of Norway.

    Participants included government officials, experts, lawyers, lawmakers, business executives drawn from Africa and other parts of the world, as well as members of the diplomatic corps, regional bodies, intergovernmental organisations, United Nations agencies, among others.

    Vice-President Yemi Osinbajo opened the conference; ministers of finance and foreign affairs Kemi Adeosun and Geoffrey Onyeama, as well as Attorney-General of the Federation Abubabar Malami (SAN) were among the speakers.

    Participants affirmed that international tax evasion is a significant element of illicit financial flows, including substantial sums of money lost through transfer mispricing by multinational companies.

    They underscored the need for collective effort to strengthen international cooperation and mutual assistance in addressing the challenges of transfer and trade mispricing.

    According to the declaration, there is the need for financial institutions to subject accounts held by certain persons to greater scrutiny and monitoring, including senior government officials, leaders of political parties, executives at state-owned enterprises and others with access to large amount of state assets and the power to direct them.

    Speakers called on countries to prevent, detect and deter in a more effective manner the international transfer of proceeds of crime and funds of illicit origin.

    They also called for enhancement of compliance by financial and designated non-financial institutions to identify, trace, seize, recover and return the proceeds of crime and funds of illicit origin, including enhanced due diligence on financial flows from identified high risk jurisdictions.

    Developed countries were urged to consider waiving or reducing to the barest minimum reasonable expenses deducted when recovering assets, particularly when the requesting state is a developing country.

    The declaration urged asset holders to bear in mind that the return of illicitly acquired funds contributes to inclusive growth and sustainable development.

    The declaration reads in part: “Participants reiterated the need for countries to ensure that there are adequate mechanisms in place to manage and preserve the value and condition of assets pending the conclusion of confiscation proceedings.

    “IFF when tracked should not remain in the custody of enabling financial institutions but should be transferred into escrow account, preferably in development banks pending return to countries of origin;

    “Participants also underscored that the non-repatriation of IFF from destination countries to source countries in a timely and collaborative manner is a denial of human rights as it deprives developing countries of resources required to progressively realise the right to development and implement social investment programmes aimed at alleviating poverty.”

  • Budget 2017 and Recovery and Growth Plan’

    After the infamous and rather ridiculous drama that characterized the 2016 budget, President Muhammadu Buhari presented the 2017 Budget Proposals, tagged ‘Budget of Recovery and Growth’ to the joint session of the National Assembly on Wednesday, December 14, 2016. The proposed total was N7.3 trillion, of which N5.06 trillion was for recurrent expenditure, while N2.24 trillion was for capital expenditure; representing 69.31 percent and 30.69 percent respectively. In the words of the President, “We propose that the implementation of the Budget will be based on our Economic Recovery and Growth Strategy. The Plan… provides a clear road map of policy actions and steps designed to bring the economy out of recession and to a path of steady growth and prosperity.”

    A glance at the budget proposals would make one adjudge it a fantastic one! For instance, there’s an increase of 4.6 percent of the capital expenditure from the 2016 Appropriation Bill. That is, from 26.12 percent in 2016 to 30.69 percent in 2017. I think this is the first time we’re having capital expenditure up to 30 percent since 1999. Because it’s the capital projects that have direct impact on the masses. Kudos to the president!

    Another take-away from the 2017 Budget is that proceeds from oil revenue will be used to resuscitate agriculture and industries. Hear him: “You may recall that oil itself was exploited by investment from agricultural surpluses. We will now use oil revenues to revive our agriculture and industries.” This, in my opinion, is a fantastic idea! I’ve always asked, “Why can’t we use money from our oil boom to develop other sectors of our economy?” To this end, I think the President was on point! However, the implementation is a different ball-game altogether.

    Again, the President acknowledged the bureaucratic bottle-necks that usually hamper the speedy execution of projects and the ease of doing business. Consequently, he declared, “I will be issuing some Executive Orders to ensure the facilitation and speeding up of government procurements and approvals. Facilitation of business and commerce must be the major objective of government agencies.” This promise has already being fulfilled with the recent signing of three Executive Orders (the Ease of Business, Budget Submissions and Made in Nigeria Products) by the Acting President, Prof. Yemi Osibanjo.

    But having gone through some key areas of the budget, juxtaposing it with the inconsistent economic policies of the present administration, and the realities on ground, one is tempted to ask, “Is the 2017 Budget really a Recovery and Growth Plan?

    One sticking point is the financing of the N2.36trillion Budget Deficit through borrowings. But will the borrowings be done for capital expenditure or recurrent expenditure or for both? Where the borrowings will be channeled to wasn’t spelt out in the budget. If the borrowings are to finance recurrent expenditure, it’ll be an unwise economic decision. Because borrowing should be done to invest in ventures (capital projects) that’d bring returns, and not the other way round. Robert Kiyosaki, a financial guru opined that if money is borrowed for Consumption, it’s a Bad Debt, while the one borrowed for Production is a Good Debt.

    The disparity between the budget deficit and the capital expenditure is another area of concern to me: N2.36 trillion was budgeted for the deficit while capital expenditure is 2.24trillion, representing 32.34 percent and 30.69 percent respectively. I’ve no problem with the deficit per se, because it has become an incurable disease in Nigerian budgetary system. But why should the deficit be 1.65 percent higher than the capital expenditure?

    At the President’s budget presentation, he said, “We will increasingly grow and process our own food, we will manufacture what we can and refine our own petroleum products.” I’m attracted to the phrase, ‘refine our own petroleum products.’ At what capacity are the four refineries working? According to the NNPC, as at January, the capacity utilization of the four refineries was 36.73 per cent. Again, Does the President have the political will to clip the wings of the ‘oil cabal’ that’re bent on perpetual importation of petroleum products?

    In the 2017 budget, the total allocation for the Ministry of Petroleum Resources was N69.55 billion. Out this amount, N62.46 billion is to be used for recurrent expenditure, representing 89.8 percent of the total, while N7.093 billion was earmarked for capital expenditure, representing 10.2 per cent of the total allocation. And of course, it’s practically impossible to build a new standard refinery even with the total budget of N69.55billion; let alone with a paltry sum of N7.093billion of capital expenditure! So, how do we ‘refine our own petroleum products’ with the present (almost moribund) four refineries? At present, Nigeria is importing about 80 percent of petroleum products. And so long as we continue to import, the pressure will be on the naira. This will make economic recovery and growth somewhat difficult since the budget is based largely on oil revenue.

    Furthermore, the 2017 Budget proposals still retain the allocation of N500 billion to the Special Intervention programme consisting of the Home-grown School Feeding Programme, Government Economic Empowerment programme, N-Power Job Creation Programme, Conditional Cash Transfers to the poorest families and the new Family Homes Fund. The N-Power programme is laudable, but I’ve problem with the School Feeding programme and the Conditional Cash Transfers to the poorest of families! We need to ask some pertinent questions here: should feeding of the pupils be top priority? Will it eradicate poverty from their families? What criteria will they use to determine the poorest families to ‘transfer cash’ to?

    If we must recover from the recession and expedite growth in the economy, the President must appoint the right people into positions. Nigeria is in dire need of philosopher-kings (technocrats) more than ever before in this present economic crunch!

    As I said earlier, the Government Economic Empowerment programme (GEEP) and the N-Power Job Creation programmes are good. On Democracy Day, May 29, I listened to the live broadcast on radio, the Scorecard of the Social Investment Programme; and I heard the testimonies of those who have benefited from the programme. The Special Adviser to the President on Social Investment Programme, Mrs. Mayam Uwais gave a detailed step-by-step process on how they selected the contractors and the beneficiaries of the programme. Also, Alhaji Lai Muhammed, the Minister for Information and Culture, said that about 12,000 cooks were empowered, 25 million meals served for over one million pupils, and so on.

    However, I’m still not convinced of the Home-grown School Feeding programme and the Conditional Cash Transfer Programme. What the government would’ve done is to economically empower the parents of the pupils so they can cater to the needs of their children. By so doing, for instance, the children can eat their fill. This conforms to the Chinese proverb which says, “If you give a man fish, you feed him for a day. But if you teach him how to fish, you feed him for life.” Also, the money allotted to the two programmes would’ve been used to build more factories or revive the moribund industries, and increase the agricultural sector allocation. This, of course, would create more jobs and boost food security. Because, according to the President, “the proposed allocation to the [agricultural] sector this year is at a historic high of N92billion.”

    Finally, we’re now 24 months into the administration, and there are no indicators of economic recovery, soon. Though the government said that the moment the 2017 Budget is signed into law by the president, we’d witness massive developments. And that the economy will come out of the recession by the third quarter of this year. Well, as a positive-minded Nigerian with an unbiased but open-mind, I look forward to seeing the realization of the ‘Recovery and Growth Plan’.

     

    • Chijioke is of the Faculty of Law, University of Nigeria, Enugu Campus.