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Nigeria’s socio-economic conditions worsened despite $3.5bn IMF loan – Report

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  • Backs fuel subsidy removal, CBN reform policies

International Monetary Fund (IMF) says despite the $3.5bn loan it gave Nigeria to cushion the effects of COVID-19 on the citizens and businesses in April 2020, socio-economic conditions of the people have worsened.

It stated this in a report published on Monday on the Article IV Consultation for 2020, which ended on January 27, 2021.

It stated, “Nigeria’s economy has been hit hard by the COVID-19 pandemic. Following a sharp drop in oil prices and capital outflows, real GDP is estimated to have contracted by 3.2 per cent in 2020 amidst the pandemic-related lockdown.

“In April 2020, Nigeria received IMF emergency financial assistance of $3.5 billion under the Rapid Financing Instrument to help cushion the impact of the pandemic.”

It added, “Headline inflation rose to 14.9 per cent in November 2020, a 33-month high, reflecting core and food inflation increases emanating from supply shortages due to the lockdown effected to curb infections alongside, the land-border closure and continued import restrictions.

“The unemployment rate reached 27 per cent in the second quarter of 2020, with youth unemployment at 41 per cent.

“External vulnerabilities due to lower oil prices and weak global demand have increased, with the current account remaining in deficit in the first half of 2021.”

It, however, commended government for acting swiftly to adopt a pandemic-related support package equivalent to 0.3 per cent of GDP in the 2020 revised federal budget despite limited fiscal space.

At the last Monetary Policy Committee (MPC) meeting, Central Bank of Nigeria (CBN) admitted that the 0.3 per cent of GDP COVID-19 stimulus package was abysmally little and said it would provide more.

IMF directors stressed the need for urgent policy adjustment and more fundamental reforms to sustain macroeconomic stability and lift growth and employment.

The fund welcoming the removal of the fuel subsidy and steps to implement cost-reflective tariff increases in the power sector, “stressed the need for significant revenue mobilisation to reduce fiscal sustainability risks, relying initially on progressive and efficiency-enhancing measures with higher tax rates awaiting a more sustained economic recovery.”

The IMF directors highlighted the need for improved social safety nets to cushion potential negative impact on the poor.

They recommended gradual and multi-step approach to establishing a unified and clear exchange rate regime with the near-term focus on allowing for greater flexibility and removing the payments backlog.

“Directors observed that the accommodative monetary stance remains appropriate in the near term, although tightening may be warranted if the balance of payments or inflationary pressures were to increase.

“In the medium term, the monetary policy operational framework should be reformed and central bank financing of budget deficit phased out in order to reduce inflation.

“While welcoming the resilience of the banking sector, directors called for continued vigilance to contain financial stability risks.”

They also noted that COVID-19 debt relief measures for bank clients should remain time-bound and limited to those with good pre-crisis fundamentals.

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Lagos rolls out cashless FLM buses, to replace okada in two months

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Lagos State Governor, Babajide Sanwo-Olu, has unveiled cashless First and Last Mile (FLM) buses that will ply inner routes expected to replace commercial motorcycles (okada) in the state.
A total of 300 FLM buses in the first phase of the scheme were rolled out on Tuesday out of the expected 5,000 units
Sanwo-Olu, while unveiling the FLM bus scheme at the Lagos State House, Ikeja, on Tuesday, said the need to phase out okada was the reason their introduction.
He said government would observe the operation of the FLM for two months to know its performance in meeting the needed demand before he would pronounce total ban on okada operation.

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Kaduna dares labour, declares NLC president, others wanted

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Kaduna Government has declared National President of the Nigeria Labour Congress, Ayuba Wabba, and other members of the union wanted.
They were declared wanted for economic sabotage and attacks on public infrastructure under Miscellaneous Offences Act.
Governor Nasir El-Rufai, in a tweet on Tuesday, said, “Ayuba Wabba & others of @NLCHeadquarters declared wanted for economic sabotage & attacks on public infrastructure under Miscellaneous Offences Act.
“Anyone that knows where he is hiding should send a message to @MOJKaduna. KDSG. There will be a handsome reward!”
In another tweet, he said, “The reform of the size, cost & quality of over bloated, inefficient & barely educated public service is at stake here. We will neither retreat nor concede to any thoughtless & corrupt political hacks ever!”
The state government had said the five-day warning strike by the NLC, which began on Monday, would not distract it from its plan to sacking workers it could not accommodate in the civil service.
But Wabba, who addressed civil servants in the state on Monday, vowed to bring the El-Rufai’s administration to its knees until the sacked workers are recalled.

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Lekki deep seaport project gets fresh $629m loan

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Lagos State Government says it has secured a loan of $629m to finance the ongoing Lekki deep seaport project.
The state Commissioner for Commerce, Industry and Cooperatives, Dr Lola Akande, disclosed this on Monday, at the 2021 ministerial press briefing to commemorate the second year in office of Governor, Bababjide Sanwo-Olu.
The Lekki deep seaport is being built over 90 hectares of land at the centre of the Lekki Free Trade Zone, approximately 60 kilometre east of Lagos. It is the first deep seaport to be built in Nigeria on Built Own and Transfer agreement.

It received an infusion of over US $221m equity funding from China Harbour Engineering Company last year.

According to Akande, the latest loan secured from China Development Bank, is to support, falicitate the construction, development of the giant project and early operation in year 2022 targeted period.
“Current completion percentage as at February 2021 stood at 47 per cent, trial operations of the port is slated for third quarter of year 2022 while commercial operations is slated for first quarter of year 2023,” she stated.
Akande explained that the project had provided job opportunities for 611 locals: 32 local skilled workforce, 513 local semi-skilled and 66 local un-skillled labour.

Construction of the initially budgeted $1.5 billon seaport began in December 2017 and the project is expected to be completed in 2023 after a review.
The multi-purpose Lekki port will have container, liquid and dry bulk terminals to serve container vessels of up to 8,000TEUs (20ft equivalent units), dry bulk vessels, and liquid bulk cargo vessels.
A nine kliometre-long and 19-metre deep navigation channel and a 600m-wide turning basin will be built to allow vessels to approach or leave the port.
A 1,500m breakwater structure and a 300m secondary breakwater structure will be constructed for safe handling of vessels. Other facilities at the port will include a 6km-long and 14.5m-deep approach channel, quay wall, cargo handling cranes, and three 19m-deep liquid jetties.
When operational, the Lekki deep seaport is expected to be one of the most modern ports in West Africa and support the growth of commercial operations in the region as well as serve as alternative to Apapa Ports.

Akande also spoke on the state of the ongoing construction of Dangote refinery and Petrochemical Industry at the LFTZ, saying the project which had generated over 1,000 jobs, is expected to commence operation by end of the second quarter of 2021.
Akande said that the construction of an integrated petroleum delivery system valued at $230m had been completed.
She said, “Total number of 40 free zone enterprises were in operation as at February 2021,1054 local employment generated between October 2020 and February 2921.
“Though Lagos State Government has no shares in Dangote Group, we stand to benefit from employment opportunities.”

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