CBN INJECTS $210M INTO FX MARKET

As the Monetary Policy Committee of the Central Bank of Nigeria commenced its last meeting for 2017, the bank injected has $210m into the inter-bank Foreign Exchange Market.

The CBN Acting Director, Corporate Communications, Mr Isaac Okorafor in a statement issued on Monday in Abuja, said the interventions were in the Wholesale, Small and Medium Enterprises and invisibles windows.

He said the bank offered the $100m to the wholesale segment, while the SMEs segment received the sum of $55m.

Okorafor also said that the invisibles segment, comprising tuition fees, medical payments and Basic Travel Allowance, among others also received an allocation of $55m.

According to him, the releases are aimed at boosting liquidity, trade and ease of remittances for legitimate personal commitments.

He said the bank was quite pleased with the rate of N360 to a dollar, noting that the continued intervention by the CBN in the inter-bank forex market had largely checked unwholesome activities of currency speculators.

He, however, stressed that the CBN would not relent in its monitoring of the market in order to ensure that authorised dealers abide by the extant rules.

CBN had in its last intervention injected $195m into the inter-bank Foreign Exchange Market.

Meanwhile, the naira maintained its steady rate against major currencies around the globe, exchanging for N360 to a dollar, N420 to the Euro and N470 to Pounds Sterling in the Bureau De Change segment of the market.

NIGERIA IS A FAILED ECONOMY - PETER OBI

A former governor of Anambra State, Peter Obi, has said that Nigeria has failed as a country.

Mr. Obi stated this in Abakaliki, Ebonyi State, on Saturday during the 2017 Independence anniversary lecture at the Akanu- Ibiam International Conference Centre where he was a guest lecturer.

The former governor spoke on the topic “Change and changing Nigeria through harnessing of investment potentials of Ebonyi state: yesterday, today and tomorrow”.

He expressed regret that the country was still operating in the past with no qualified leadership to revitalise the economy.

He blamed the country’s situation on the “cumulative leadership failure” from independence in 1960.

Agitations

Mr. Obi said more Nigerians are bound to agitate except the leadership challenges of the country are addressed.

He said the recent agitations by the Indigenous People on of Biafra and other groups indicate that more of such would be coming.





“Whenever they talk about Nigeria at 57, I refuse to talk. My opinion is that Nigeria is a failed country, period. And that is why you are seeing so many agitations you are seeing today. The agitation is not ending, it’s just beginning,” he said.

“It is a cumulative effect of leadership failure over the several years of this country and you can’t stop it because you now have millions of young people in their productive age doing nothing, you can call them anything.”

He spoke on the need to create jobs for the teeming unemployed youth so as to stop them from further agitation.

“If you don’t have a job and you have not eaten food in the morning, afternoon and night, tomorrow you are a potential terrorist, quote me anywhere. The only way to stop that is to give them jobs,” he said.

“We are moving from baggage economy to knowledge economy. So, the country should stop dwelling on solid minerals because it is a baggage economy and nobody lives with it. This is what Nigeria is doing and we are still talking about oil which is already destined to finish one day,” Mr. Obi stated.

He called on the government to ensure that the Sustainable Development Goals are mainstreamed in the development agenda of the country.

“Nigeria should queue into Sustainable Development Goals (SDG), not in signature. The country is there in signature and it is the only country that got involved in Millennium Development Goal (MDG) and did not achieve one goal because as soon as we signed the signature, we threw it away and came here and started doing things wrongly.

“China put MDGs in their developmental agenda, they mainstreamed it in their developmental agenda and they are targeting to lift 16million people out of poverty but I don’t know how many people Nigeria will lift in the next 10 years because there is no such measurable goals, everything is done in confusion,” he said.

“Our reserve is weak today and we are not talking about savings rather we are borrowing more. In 2007, all our debts were written off and we didn’t owe anybody. But in 2017, we have accumulated a debt of $69 billion and nobody is thinking how do we get over this because what we are doing is based on nothing. We just borrow money and share,” Mr. Obi stated.

NIGERIA MOVE UP AMONG WORLD'S COMPETITIVE ECONOMIES

Nigeria has moved two steps upward among the competitive economies in the world, according to the latest ranking by the World Economic Forum, WEF.

Nigeria is now 125th out of the 137 economies that the ranking covers; it occupied 127th position in last year’s ranking.

This is the first time the country’s ranking has gone up since 2012, according to the WEF’s Global Competitiveness Report released on Tuesday.

The report, however, stated that the country’s macroeconomic conditions worsened, having gone 12 step-downward to 122nd position.

Inflation in Nigeria, according to the report, is high at 15.7 per cent. On this, the country is ranked 131st.

The report put Nigeria’s budget deficit at 4.4 per cent and ranked the country 99th in this regards.

“Institutions (in Nigeria) appear more fragile (125th, down seven), adding uncertainty to the business environment,” the report stated.

“Nigeria is struggling to adapt to lower commodity prices, with the potential for structural change impeded by low scores on infrastructure (132nd), technological readiness (112th, down seven), higher education (116th), and innovation capacity (112th).

“However, new prudential requirements have strengthened the banking sector’s soundness, and the Economic Recovery and Growth Plan (ERGP) for 2017–2020 contains much-needed reforms on transport and power infrastructure, the business environment, and education investment,” the report stated.

From the WEF ranking, Nigeria has only fared a little better than a few sub-Saharan African countries like Democratic Republic of Congo (126th), Burundi (129th), Sierra Leone (130th), Chad (135th) and Liberia (134th), while several other sub-Saharan African countries like Cameroon (116th), Ghana (111th), Gambia (117th), and Uganda (114th) are better off than Nigeria.

Mauritius and Rwanda, at 45th and 58th positions respectively, are ranked higher than South Africa (61th).
Switzerland maintains its number one spot as the most competitive economy in the world.

The 10 most competitive world’s economies are Switzerland, the U.S, Singapore, the Netherlands, Germany, Hong Kong, Sweden, the U.K, Japan, and Finland.

China and Russia are ranked 27th and 38th respectively.

WEF said this year’s report came out in the context of recovering global growth, but that many countries were still facing challenges such as disruptive inequalities; rising protectionism and a backlash against globalisation; and the challenges and uncertainties of the Fourth Industrial Revolution, with its innovation and technological change.

The report is produced annually from data obtained from leading international sources.

2017 BUDGET: BREAKDOWN OF N366B DISBURSED FOR CAPITAL PROJECTS

The Buhari administration disbursed N336 billion in the first quarter of 2017 for capital projects, the Ministry of Finance said Tuesday.

A statement signed by the ministry’s spokesperson, Patricia Deworitshe, said only N14 billion remained from the total budget for capital projects for the first quarter, a balance that will be released upon “resolution of some formalities within the agencies concerned.”

A breakdown of the release showed that the Ministry of Power, Works and Housing, headed by Babtunde Fashola, received the largest allocation of N90 billion.

This was followed by defence and security which got N71 billion; while Ministry of Transport got N30 billion.

The Ministry of Agriculture received N30 billion and Water Resources N12 billion. Other sectors combined received a total sum of N103 billion, the ministry’s statement said.

The Minister of Finance, Kemi Adeosun said the prioritisation of the release of available funds was made in accordance with the objectives of the Economic Recovery and Growth Plan (ERGP).

She said, in 2017, the federal government will continue to focus on capital expenditure spending on priority sectors to stimulate economic activities and job creation.

“Despite fiscal constraints, the Federal Government was able to fully cash-back the budgeted capital releases so far made, which is a reflection of the current administration’s commitment to economic development”, the Minister said.





The ministry’s statement comes on same day the Senate summoned the finance minister and her counterpart in the budget ministry, Udoma Udoma.

In a motion sponsored by Gbenga Ashafa (Lagos East), the lawmakers bemoaned inadequate release of funds for the capital components of the budget.

The 2017 ‘Budget of Recovery and Growth’ has a total amount of N7.4 trillion (N7, 441, 175, 486, 758) with N2.2 trillion (2, 177, 866, 775, 864) for capital projects.

The senate observed that the about N310 billion so far released for capital projects by the federal government since the budget was assented to “is far too low to stimulate the economy to address our present economic challenges.”

Worried that the failure to release funds could plunge the country back to recession, the senate requested that the two ministers “appear before plenary immediately to brief the senate on the cause of the inadequate releases and steps being taken to expedite release of funds for capital components of the 2017 appropriation act.”

The Senate also directed its committee on Local and Foreign Debts to report to it information on pending loan requests from the executive to enable the legislature advise the executive properly.

The Nigerian Senate resumed legislative works on Tuesday after a two-month long recess.

FG'S EFFORTS YIELDING RESULTS IN ECONOMY, SAYS UDOMA

MINISTER of Budget and National Planning, Senator Udoma Udoma says the announcement that Nigeria has exited recession is an indication that the various policies of government towards reflating the economy, as set out in the Economic Recovery and Growth Plan (ERGP), are yielding fruits, and confidence is returning to the Nigerian economy.

He said the second quarter GDP report was a testimony to the fact that government is moving in the right economic direction.

The Minister noted that two major objectives were in focus when the ERGP was launched by the President early this year – to get the economy out of recession and then put it on the path of sustained inclusive and diversified growth. “Now that we have accomplished the first task, attention will now be on growing the economy as rapidly as we can”, he said.

The minister noted that the 0.55 percentage growth is 2.04 percent higher than the rate recorded in the corresponding quarter of 2016 (–1.49%) and higher by 1.46% points from the rate recorded in the preceding quarter (revised to –0.91% from –0.52%). Quarter on quarter, real GDP growth was 3.23%.During the quarter, aggregate GDP stood at N26,986,005.20million in nominal terms, compared to N23,547,466.91 million in the second quarter of 2016, resulting in a Nominal GDP growth of 14.60%

“We are happy that people are beginning to see the results of the efforts we have been putting through in the last two years to get the economy back on track and to place it on the path of growth and sustained development,” Udoma said; adding that as the economy continues to grow, the people will feel the impact of the growth.

The Minister pointed out that the major focus of government was to reflate the economy through spending in strategic sectors like infrastructure, agriculture, solid minerals etc., to galvanise economic activities and empower the people.

Efforts, he said, have also been concentrated on increasing revenue generation to meet with the challenges of the economy which was why government has been giving attention, among other things, to the challenges of the Niger Delta region.

The Minister, however, admitted that it was still early days as much more work needs to be done to ensure that the growth is sustained. Therefore, government will continue to pursue aggressively the implementation of the Economic Recovery and Growth Plan. Government is also working on improving the ease of doing business to attract more investments.

While appreciating the efforts of all concerned in the drive towards the country’s economic recovery, the Minister said government will require the cooperation of all Nigerians to enhance the recovery rate and ensure the achievement of the objectives of the ERGP.

MAJOR SHAKE-UPS IN NNPC

The Nigerian National Petroleum Corporation (NNPC), as part of its ongoing reforms, yesterday, announced the appointments of new Managing Directors for the Port Harcourt, Warri and Kaduna refineries.

The corporation equally approved the appointments of new helmsmen for the National Petroleum Investment Management Services (NAPIMS) and the Integrated Data Services Limited (IDSL).

Under the new arrangement, Roland Ewubare, the MD of IDSL before the shake-up, moves to NAPIMS as the new Group General Manager (GGM) while Diepriye Tariah, former GGM and Senior Technical Assistant to the NNPC GMD takes over from Ewubare as MD of IDSL.

Group Managing Director of the corporation, Dr. Maikanti Baru, told NNPC staff shortly before the announcement was made public that the new appointments would not only help to reposition the corporation for the challenges ahead but would help fill the gaps created due to statutory retirements of staff. A total of 55 top management staff were affected in the exercise.

For the refineries, Malami Shehu, Executive Director Operations, of the Kaduna Refining and Petrochemical Company (KRPC) was appointed Managing Director of the Port Harcourt Refining Company (PHRC) while Adewale Ladenegan, former MD of the Warri Refining and Petrochemical Company (WRPC) was moved to KRPC to assume duty as MD.

In the same vein, Muhammed Abah, until recently the Executive Director Operations of WRPC, succeeds Ladenegan as MD of Warri Refinery.

With the retirement of Farouk Ahmed as the MD of the Nigerian Products Marketing Company (NPMC), Umar Ajiya, former GGM in charge of Corporate Planning and Strategy (CP&S) now assumes duty as MD of NPMC while Bala Wunti, former General Manager, Downstream, GMD’s Office takes charge as GGM CP&S.

Other changes include Usman Yusuf who takes over as GGM/Senior Technical Assistant (STA) to the GMD; Adeyemi Adetunji, confirmed as MD NNPC Retail alongside Dr. Bola Afolabi who now functions as GGM in charge of Research and Development Division of the corporation.

Also on the list is Mrs. Ahmadu-Katagum appointed GGM (Shipping) in the Downstream Autonomous Business Unit (ABU) while Kallamu Abdullahi takes over as the GGM in charge of the Renewable Energy Division in the Downstream ABU. Dr. Shaibu Musa was promoted MD of the NNPC Medical Services Limited while Ibrahim Birma is the new GGM in charge of the corporation’s Audit Division now renamed Governance, Risk and Compliance Division.

BUHARI SAYS HE'S PLEASED WITH STATE OF THE ECONOMY

President Muhammadu Buhari says he is pleased with Nigeria’s economic situation.

The president received briefing from the Minister of Budget and National Planning, Udoma Udoma; the Minister of Finance, Kemi Adeosun, and the governor of the Central Bank of Nigeria, Godwin Emefiele.

This was disclosed in a state house press release Monday.

According to the statement, signed by Femi Adesina, the Special Adviser to the President on Media and publicity, the Ministers and CBN Governor informed the president of the updates in the implementation of the 2017 Budget, preparation for the 2018 Budget, revenue strategies, combined cost reduction and debt management and on the improving state of the economy.

The statement said the president reminded the ministers and CBN governor that reviving the economy was one of the major planks on which the campaign of his party, the All Progressives Congress, APC, was based.

He expressed gladness that things were looking up after two years of governance and urged them to keep at it as the main aim of government was to bring comfort to Nigerians across all walks of life.
Also discussed were monetary policy strategies and their economic impact, among others.

President Buhari arrived Nigeria on Saturday after nearly four months in the United Kingdom where he received medical treatment for an undisclosed ailment.

Monday’s meeting with his economic team is believed to be the president’s first since his return.

NIGERIA'S INFLATION RATE DROPS FOR THE SIXTH TIME IN A ROW

The Consumer Price Index, CPI, which measures inflation, dropped to 16.05 per cent in July, the National Bureau of Statistics, NBS, said on Monday.

According to a report released by the NBS titled Consumer Price Index, the fall recorded was 0.05 per cent points lower than the rate recorded in June (16.10), making it the sixth consecutive decline in the rate of headline inflation since January 2017.

The NBS noted further that the percentage change in the average composite CPI for the twelve-month period ending in July 2017 over the average of the CPI for the previous twelve-month period was 17.47 per cent. This is 0.11 percent point lower from 17.58 percent recorded in June 2017.

The Urban index rose by 16.04 per cent in July 2017, down by 0.11 percent point from 16.15 per cent recorded in June, and the Rural index increased by 16.08 per cent in July from 16.01 per cent in June.

The bureau noted that the Food Index increased by 20.28 per cent in July, up by 0.37 per cent points from the rate recorded in June (19.91 per cent), representing the highest year on year increase in food inflation since the beginning of the new series in 2009.

Further analysis showed that the rise in the index was caused by increases in prices of bread and cereals, meat, fish, oils and fats, coffee, tea and cocoa, potatoes yam and other tubers and vegetables.

Meanwhile, the ”All Items less Farm Produce” or Core sub-index, which excludes the prices of volatile agricultural produce eased by 0.30 per cent during the month to 12.20 per cent points from 12.50 per cent recorded in June.

KACHIKWU: NIGERIA IS WORKING

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has charged critics of the President Muhammadu Buhari administration to be sincere and objective in assessing the performance of the government, saying emphatically that Nigeria is working.

Kachikwu said antagonists of government should have expended the time spent in criticising the administration judiciously by looking at and commend efforts of the APC-led government in reshaping the country through people-oriented social investment programmes and policies targeted at energizing the economy.

The minister commended President Muhammadu Buhari for giving so much to revamping the country irrespective of his age and health.

He said the president has been dogged in reshaping the country.

He, therefore, urged Nigerians to devote more time to debating the progress of the country and what they can do to move the nation forward than devoting time to discussing personalities and frivolous criticism of government.
Kachikwu spoke yesterday at the signing of a $200 million Nigeria Content Development Fund Memorandum of Understanding between the Nigeria Content Development and Monitoring Board (NCDMB) and the Bank of Industry (BoI) held at the auditorium of the Petroleum Technology Development Fund in Abuja thursday.

He such great achievements recorded by the government is the absence of queue in filling stations across the country due to reorganization and repositioning of the petroleum industry, stressing that “it took a lot of work for this government to get there and it took a lot of work to sustain it”, adding that the spate of militancy and disruption of oil production in the Niger Delta has drastically been reduced.

This, he said, is one of the many revolutionary drive of the government in the oil and gas sector, adding that there are more to be done to achieve optimal success especially to reduce the current price of producing a barrel of oil put at $32.

He said: “I believe that the NNPC can do that because government will work with the Ministry of Power to quicken gas delivery in the country by privatizing infrastructure in the oil and gas sector.

The kicking off of the local content intervention fund, he said is another achievement of the administration stressing that the fund will help to galvanise local and foreign investment, ginger stakeholders to work assiduously in the industry and grow local content.

While commending both NCDMB and BoI for the partnership, he cautioned that in administering the fund, factors such as geographical spread, adoption of cutting edge technology and focus on oil producing communities should be put into consideration.

FORGET LIES, BUHARI HAS FULFILLED HIS CAMPAIGN PROMISES, LAI MUHAMMED TELLS CHINA

Minister of Information and Culture, Alhaji Lai Mohammed

The Minister of Information and Culture, Alhaji Lai Mohammed, has said contrary to what naysayers want people to believe, the Buhari administration is working assiduously to redeem its electoral pledges, especially in the critical areas of developing the economy as well as fighting corruption and insecurity.

The Minister stated this in Abuja on Friday while signing a Memorandum of Understanding (MOU) with the visiting Chinese Vice Minister of The State Council Information Office, Mr. Guo Weimin, in the area of media and cultural relations.

“Contrary to the lies that are being purveyed daily in the Social Media, this government has been working assiduously to redeem its electoral pledges. Our fight against insecurity is yielding very positive results.

“Our fight against corruption is focused and is ongoing and we are resolute and we have resolved that we are going to fight corruption until corruption goes under. We are happy that in this regards, we have a very good partner in China because we are aware and we know how China fought corruption and how China is fighting corruption.

”We have succeeded in nursing a very sick economy and very soon, Nigeria will get out of recession,” he said.

Alhaji Mohammed, who said the signing of the MOU will further deepen the already excellent relationship between the two countries, expressed optimism that some provisions of the MOU that encourage the news agencies of Nigeria and China to reflect, in their reporting, the social, economic and cultural development in both countries, will eliminate the phenomenon of fake news.

“This is significant because we are today in the era of fake news. Unlike China, the Social Media here is completely unrestrained. Therefore it is important that you get your news directly from the official source,” he said.

The Minister sought the support of China towards the training of the Ministry’s Resident Information Officers on modern Governance Public Communication methods in order to build their capacity as the respective spokespersons of Ministries, Department and Agencies.

Alhaji Mohammed also sought partnership with China in the areas of film production and distribution, development of community cinema houses and collaboration in the co-production of films as well as screening of Nigerian films in China and vice versa.

He called for cooperation between the Nigerian Film and Video Censorship Board and the China Censorship Board to curb the importation and exportation of pirated and adulterated movies of both countries.

The Chinese Vice Minister said the signing of the MOU between the two countries marked a new beginning in the relationship between the two countries, particularly in the area of media and cultural relations.

He said staff training and programme exchanges will further solidify the cultural ties between both nations. Mr. Weimin said his ministry will scale up the broadcast of news about Nigeria in China and appealed to the Minister to reciprocate the gesture.

The Chinese Vice Minister acceded to Alhaji Mohammed’s request for the training of the Resident Information Officers and said the Chinese Ambassador to Nigeria will fine-tune the capacity building engagement.

Mr. Weimin was accompanied by the Chinese Ambassador to Nigeria, Dr. Zhou Pingjian, to the signing of the MOU.

NIGERIA'S EXTERNAL RESERVES HIT $31.2BILLION

 
The Central Bank of Nigeria (CBN) has put the latest figure of Nigeria’s external reserves as at August 8, at $31.22 billion.

The latest value of the reserves, which is derived mainly from the proceeds of crude oil sales, shows that it has risen to a two-year high.

Nigeria’s increased crude oil production, as well as the newly introduced Investors and Exporters’ (I&E) foreign exchange window, have provided impetus to dollar inflows into the country.

The improved crude earnings reflected in the amount of funds disbursed by the Federal Account Allocation Committee (FAAC) which climbed to a total of N3.010 trillion to the three tiers of government between January and June this year; figures compiled by THISDAY had shown. The amount shared by the three tiers of government was significantly higher, compared with the N2 trillion allocated to them in the first half of 2016.

A breakdown of the disbursement gathered by THISDAY showed that the federal government received a total sum of N1.216 trillion as FAAC in the first half of 2017, higher than the N854 billion it was allocated in the comparable period of 2016. While the states received a total of N798 billion in the first six months of 2017, also higher than the N701 billion in the comparable period of 2016; local government got N599 billion in the first half of 2017 as FAAC, higher than the N429.4 billion they received between January and June this year.

On the other hand, the I & E currency window for investors and exporters has traded around $3.83 billion since it was established with the naira trading more strongly in the market. The window, where buyers and sellers are free to agree to an exchange rate, was introduced in April to try to attract foreign investors into the country and boost the supply of dollars.

“The new Investor and Exporter FX window has provided impetus to portfolio inflows, helped increase reserves above $30 billion, and contributed to reducing the parallel market premium,” the International Monetary Fund (IMF) acknowledged in a report last week.

“The economic backdrop remains challenging, despite some signs of relief in the first half of 2017. Economic activity contracted in the first quarter of the year by 0.6 percent, mainly as maintenance stoppages reduced oil production.

“However, following four quarters of negative growth, the non-oil economy grew by 0.6 percent (year-on-year), on the back of a rebound in manufacturing and continued strong performance in agriculture. Various indicators suggest an uptick in activity in the second quarter of the year. Helped by favourable base effects, headline inflation decreased to 16.1 percent in June 2017, but remains high despite tight liquidity conditions,” the IMF had added.

FG Restructures Debt Profile, to Issue Dollar-backed Treasury Bills

Badly weighed down by the debilitating effect of Nigeria’s huge debts, the federal government Wednesday sought a way out, approving the issuance of dollar-backed Treasury bills even as it extended the maturity period from between 91 and 364 days to two and three years respectively.

The initiative, according to an economic expert, who spoke to THISDAY Wednesday, is an impressive policy that would enable the government to restructure the country’s debt profile by borrowing less in naira but more in foreign currencies, explaining that it would bring down interest rate and facilitate the economy’s exit from recession.

The federal government also approved the 2018-2020 Medium Term Expenditure Framework and Fiscal Strategy Paper (FSP), pegging oil benchmark at $45 and retaining the prevailing N305/$ exchange rate.

Briefing newsmen at the end of the weekly FEC meeting Wednesday, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, said the MTEF targeted 3.5 per cent growth rate in 2018, 4.5 per cent in 2019 and 7 per cent in 2020, adding that government projected at 2.3 million barrel per day production volume.

Throwing light on the shift from naira denomination of treasury bills to dollars, the Minister of Finance, Mrs. Kemi Adeosun, said the council approved a memo restructuring the issuance of treasury bills using dollar instruments subject to the approval of the National Assembly.

According to her, the extension of the tenor of Treasury bill from the current 91 and 364 days to two and three year period would provide the government with relief from the pressure to repay the debt.

She also said the new initiative would reduce government borrowing to $3 billion, create more room for banks to lend money to private investors and consequently force down interest rates.

She explained that issuing the Treasury bills in dollar instrument was not synonymous with paying interest in dollars but would instead, provide the government with the opportunity to obtain a bond in the international capital market and pay the debt in a cheaper way.

She insisted that it should not be construed as transacting the Treasury bill in dollars.
Adeosun explained: “We are not issuing dollar denominating Treasury bills (TB). No, we are not. What we are doing is that the naira Treasury bill, when it matures, we will then issue bonds in the capital market, international capital market. We are not issuing dollars’ TB at all – erratic dollar bonds.

“You will recall that when we went to the capital market about three times this year, our average cost of borrowing was longer than 7 per cent. But with Treasury bills, we are paying up to 18 per cent. So, what we are doing is simply substituting the maturing naira debt with cheaper dollar denominating debt. We are not dollarising the economy.
“In terms of the impact on naira, it’s going to be positive because it means that $3 billion will be coming into our foreign reserve. It will actually increase our foreign reserves.

“We are not issuing Treasury bills in dollars. Nigerian government doesn’t transact in dollars at all. We are not paying anybody in dollars. What we are simply doing is that as the Nigerian government treasury bills mature, we are now going to pay off by proceeds of dollar denominating bond, a three year-bond. Instead of the treasury bill of 91 to 364 days, we are taking short term money and we refer them to the Treasury bills because anytime we run out of cash to borrow with interest and we cannot pay back, we run to the capital market. It actually increases our debt.

“What we are saying is that in the long run because we are coming into recovery, we need a little bit more time to repay. Instead of saying we are paying back in 91 days, we say, ‘let’s be realistic, we need two to three years to pay off this money.’ So, we are taking dollar denominating long term bonds. It is cheaper than the naira loans and we refer them to the Treasury bill. We are not dollarising our economy in any way.

“Also, if you look at the debt profile, 80 per cent of them is in naira. That stretches a challenge to the economy. Because government borrows heavily, there is no room for the private sector to get loans. Also, there is no incentive for the bank to lend to the private sector.

“What we think we need to do to create jobs and get the economy moving is for private sector lending to be commenced from this $3 billion dollars but we will not take from the domestic market. Our strategy is to restructure our debt in the international market.

“When the National Assembly resumes, we need a resolution to do this. We borrow less because it is cheaper to pay back. It makes it cheaper and we refer them to the economy.

“So, we are taking dollar denominating bond which is cheaper and we refer them to the Treasury bills.”
Reacting to the move by the federal government, the Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, described it as a good policy initiative that would help to lower interest rate and take the economy out of recession.

Rewane who spoke in a telephone interview with THISDAY Wednesday night explained: “Take the $3 billion and convert to naira and pay off the treasury bills. In all, it will give you about N1 trillion. N1 trillion is about 20 per cent of our outstanding debt stock. If you retire N1 trillion of treasury bills, the demand for treasury bills will go down and interest will go down.

“And when the interest rate of treasury bills goes down, the interest rate on public debt would also go down and that would help reduce the cost of borrowing, for even the private sector.”

Responding to the question on the implication of the initiative of the FEC on the country’s total debt stock, the economist clarified: “You are not increasing your debt. You are using $3 billion debt to pay off. So, the total debt stock will not increase. The structure is going to change. So, you are using debt, which is of lower cost and longer maturities to take out the short term debt. That is the best thing that can happen to Nigeria.”

On the MTEF, the Budget and National Planning Minister, Udoma, said the document was a product of extensive consultations with major stakeholders in the economy.

He said: “As we know, we have been having extensive consultations in the last few weeks with the governors, members of the public, the leadership of the National Assembly about the MTEF. So, we submitted it and it was approved by the council. The highlight of it is that we have committed to achieving a 7 per cent growth rate by 2020 at the end of the three-year plan in accordance with the economic recovery and growth plan (ERGP).

“MTEF is based on the economic recovery and growth plan and in terms of the trajectory of getting the 7 per cent. We have approved a slightly different trajectory in the sense that by next year, our target is 3.5 per cent in 2018; in 2019, it will be 4.5 per cent growth rate and of course, in 2020 it will be 7 per cent growth rate.

“In terms of crude oil production, our estimate projection for the next year is 2.3 million barrels per day. We expect it to be broken down to 1.8 million barrels per day regular crude and 500,000 barrels per day in terms of condensate. The price we projected for next year is $45 (oil benchmark).

“We are also committed in the MTEF to explore ways of raising additional revenue to reduce debt service to revenue ratio. As the Minister of Finance said, that is part of the policy of this government to make sure that borrowing is controlled and to make sure to keep a reasonable debt service to revenue ratio which will, of course, help to bring down interest rates.”

Also briefing, the Minister of Communications, Mr. Adebayo Shittu, said the council approved a N100 billion ICT infrastructural backbone project in the Information Communication Technology (ICT) sector with a view to achieving service wide connectivity for all government agencies.

According to him, the project which is known as NIPTI 2 is the second phase of the initial NIPTI 1 project which he said was 80 per cent complete, explaining that it will ensure that the country is fully covered by fibre optics.

“Council considered and approved a memo for the national ICT infrastructural backbone project. It is popularly called NIPTI 2 and it is domiciled within the galaxy backbone. Galaxy Backbone is a federal government owned agency which engages in service-wide connectivity of all government offices, agencies, ministries and departments across the country. There has been NIPTI 1 project which is 80 per cent complete. Essentially, it covers most of the southern states and also has a data centre project.

“NIPTI 2 is the concluding component of it, to ensure the entire country is fully covered by fibre optics connectivity. Connecting the whole of the country by way of the federal government’s ministries, agencies and departments. The China NEXIM Bank has graciously supported Nigeria. They funded phase one and they are funding this phase two. By this approval, the Ministry of Finance will enter into negotiations for the full implementation of the funding proposal with us. Essentially, the funding will cost $328 million, approximately N100 billion.

“When concluded, it will not only cover federal ministries, department, agencies and all of that but there will be enough for commercialisation to the private sector particularly GSM companies and other ICT industries. So, we hope that Nigeria will be making a lot of money from this particular facility when completed,” he stated.



CREDIT: THIS DAY

Nigeria will get out of recession in 2018 - Expert

A Lagos-based financial expert, Mr. Bismarck Rewane, on Friday expressed optimism that Nigeria would get out of recession by 2018 with the right economic policies.
Rewane, also the Chief Executive Officer, Financial Derivatives Ltd., said this at the 2016 Independent Shareholders Association of Nigeria Triennial Delegates Conference/Gala Night in Lagos.

The financial expert said that the Federal Government must embrace the best economic policies urgently to addressing the recession.

He said “It will take a minimum of 18 months for Nigeria to get out of recession, and signs of recovery will start showing in 2017 with the best policies.

“Nigeria will start showing symptoms of wellness in 2017 and by 2018, Nigeria will be well again.”

He said that there is sense of urgency, honesty and desperation in addressing the country’s economic challenges.

He said, “If we fail this time as a country, everybody fails.”

He said that government must raise funds from multinational agencies, reduce interest rate and debt servicing to achieve the desired growth.

Rewane called for an expansion in credit supply and reduction of the cash reserve requirement for banks to lend to the real sector.

The financial expert insisted that redundant assets could be concessioned to bring the country out of recession.

Rewane said that public schools, hospitals and public hospitals needed to be more efficient and effective to reduce pressure on foreign exchange.

Rewane attributed the nation’s economic challenges to “policy misalignment,” external imbalances and internal imbalances that led to low productivity.

Former Group Managing Director, Ecobank Transnational, Mr. Arnold Ekpe, in a keynote address, said that government needed to reflate the economy through infrastructure development to create economic activities.

Ekpe said that effective power sector was paramount for the growth and development of other sectors of the economy.

He said, “A lot of countries had moved ahead of Nigeria. South Africa now is number one in Africa. We should try and regain our position, we have the people, we have oil and other things. We need to take an action now.”

Ekpe said that government and regulators should work together to deepen the nation’s bourse.

Mr. Ikechukwu Kelikume of the Lagos Business School, said that there must be a balance in monetary and fiscal policy for the country to move forward.

Kelikume said that government must promote the non-oil export sector to increase the country’s export revenue.

He also called for tax rebate and tax holiday for local industries to encourage local manufacturers.

Former Managing Director, defunct Intercontinental Bank Plc, Dr Erastus Akingbola, said that government needed to change the current foreign exchange policy to encourage people with dollars to bring them into the country.

Akingbola said that stringent policies should be curtailed in order to bring the country out of recession.

He said that government must encourage entrepreneurs and exporters because they were the only ones that would create the needed jobs.

Akingbola also called for reduction in the cost of governance, noting that Nigerian political system was very expensive.

The theme of the conference was “Financial turbulence & regulatory framework in a recession economy.”
NAN

More Bad News: Nigeria Records Biggest Drop in Oil Output

The Nigerian economy has been hit by another setback following a depletion in the crude oil production of the country.
Crude oil production from Nigeria dropped the most in August among its peers in the Organisation of Petroleum Exporting Countries, paring the gain it recorded in the previous month.read more