Business
Doubts as Nigeria negotiates debt relief with World Bank, IMF
• Owoh: It’s fruitless, costly effort to further defraud citizens • Economy risks junk status, experts warn
• Country faces hard, painful choices, says Oxford economist, Dercon
• El-Rufai admits NNPC hasn’t brought N20,000 to nation’s treasury in 2022, says it’s a failure
During a media interview on the sidelines of the ongoing World Bank and International Monetary Fund (IMF) Annual Meeting on Wednesday, Ahmed said FG had commenced discussions with the Bretton Wood institutions on debt restructuring for the country.
“It is a fact that Nigeria’s debt has increased over the last three to four years and this increase in debt was occasioned by the different kinds of exogenous shocks that the country faced, which are not unique to Nigeria. The situation we have by the 2023 projection is that we will need about 65 per cent of our revenues to service debt.
“Unfortunately, the cost of debt service is rising, because of the growing interest rate globally, which is resulting also in higher debt service costs. But our projection from the debt sustainability analysis is that Nigeria is able to cope with its debt service in 2022 as well as in 2023.
“We have been engaging financial institutions to look at the opportunity to restructure our debt to further stretch the debt service period to give us more fiscal relief. Those are some of the things we want to achieve in this meeting,” Ahmed said.
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The official disclosure came same day Managing Director of Augusto & Co, Olabode Augusto, raised the alarm that Nigeria was on “its road to Zimbabwe,” stressing that no other country is leveraging 10x spending as the country is currently doing. Leverage ratio is the level of debt in proportion to income or equity.
According to Augusto, crisis-ridden Sri Lanka and neighbouring Ghana, which is seeking debt restructuring, have a leverage ratio of 7x and 3x respectively.
While Ahmed is in Washington negotiating with development partners, one of the world’s most renowned economist and Director of the Centre for the Study of African Economies, University of Oxford, Prof. Stefan Dercon, is in Nigeria to speak on the state of the economy and the options before the managers.
On Wednesday, Dercon dismissed Nigeria as a country trapped in an ‘elite bargain’ crisis. He said hard choices would be able to rescue the economy but warned that even choices are limited in these hard times. He said any decision taken to achieve macroeconomic stability would be painful. The best time to act was about seven years ago, he said, advising the country to continue to manage the situation but show commitment to making hard decisions when things are more stable.
Reacting to the Minister’s disclosure, a professor of economics and debt management expert, Godwin Owoh, described the plan as another fruitless and costly ploy that would further drain public purse. He challenged government to provide more information about the consultants it is working with to help Nigeria evaluate the process.
“Who are the consultants they are working with? What are their terms of reference?” Owoh asked, saying there is little room for negotiating restructuring of the country’s debt. He said some of the debts are still shrouded in secrecy, adding that debt restructuring negotiation can take up to a year, which the current administration does not have the luxury of time to see the process through.
Chief Executive Officer of Dairy Hills Limited, Kelvin Emmanuel, warned that the move would downgrade the country’s economy to ‘junk status’, which would mean that the country will no longer be creditworthy in the international market.
Emmanuel also argued that converting the ways and means (W&M) facility into local debt stock is not only a violation of the Central Bank of Nigeria (CBN) Act, but would also increase the total debt stock by over 50 per cent and worsen the cost of servicing; as well as trigger a downgrade to a lower rating from the current not-too-good B2.
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“Seeking to raise $20 billion is proof that the government does not understand the impending doom the economy faces in the current trajectory,” he said.
President Muhammadu Buhari had at the United Nations General Assembly in September sought the assistance of world leaders in considering granting debt relief or outright cancellation to developing countries.
But the Deputy Managing Director of IMF, Kenji Okamura, has urged governments to be prudent and spend public resources for the greater need of the people.
He said: “We live in turbulent times, which highlights the importance of social contracts – an understanding of mutual expectations that bind citizens and their governments. To strengthen public trust and support social cohesion, governments need to invest in basic public services and deliver more inclusive policies. Fair and more transparent use of public resources is key.”
At a press conference, yesterday, the Managing Director of the Fund, Kristalina Georgieva, appealed to policymakers to act with a sense of urgency to bring down inflation and support vulnerable emerging markets.
The statement came shortly after the reading of the United States’ September Consumer Price Index (CPI), which showed a slight decline, but higher-than-expected inflation. The inflation rate slowed to 8.2 per cent from 8.3 per cent in August.
Georgieva said policymakers need to act now and act together in resolving inflation and safeguarding financial stability. On this note, she said, macro-prudential policies need to be vigilant and proactively address pockets of vulnerability.
“In this environment, we also must support vulnerable emerging markets and developing countries. It is tough for everybody, but it is even tougher for countries that are now being hit by a stronger dollar, high borrowing costs, and capital outflows, a triple blow that is particularly heavy for countries that are under a high level of debt.”
MEANWHILE, Kaduna State governor, Nasir Ahmed el-Rufai, has restated that the Nigerian National Petroleum Company Limited (NNPCL) is a big problem to Nigeria, and unless it is completely sold, it is capable of bringing the country to its knees.
In the build up to elections of 2015, el-Rufai and the All Progressives Congress (APC) promised to reorganize the corporation but a few months to the departure of this administration, the lamentation has not changed.
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The governor, who stated this while speaking on Channels Television special programme to mark the beginning of the yearly Kaduna Investment Summit (KADInvest 7.0), said the Federal Government has failed in the oil and gas business and should get out of the sector.
El-Rufai, while speaking to the theme of the summit, ‘Building a Resilient Economy,’ stated that since the beginning of this year, NNPCL has not brought even N20,000 to the Federation Account.
According to him, “NNPC is a big problem to Nigeria and unless we resolve it, it will bring Nigeria to its knees. It is a systemic and institutional problem, it is beyond one person.”
He said: “There is no reason why government should still be in the oil and gas sector. It should just get out, it has failed. By every measure it has failed.
“When I say the Federal Government should get out of oil and gas, people shouldn’t think it’s crazy, it’s not. We are living on taxes. It is PPT, royalties and income tax that is keeping this country going, because NNPCL claims that subsidy has taken all the oil revenues. I don’t believe that. So, the government should sell everything — the oil and gas sector. I have been making this point since 1999 when I was head of the Bureau of Public Enterprises (BPE). I have not changed my mind.
“The government should get out of whatever is left of electricity. Leave it to the private sector. Maintain the environment. The money will come. Nothing has changed for NNPC other than adding L to it for the limited. They are still taking our money. They are still declaring profits that we don’t see the dividends.”
Speaking further, el-Rufa’i said the sectors doing well in the country like entertainment, telecoms, fintech and others have no government involvement.
Guardian
Business
Finally, NERC unbundles TCN, creates new system operator
Finally, NERC unbundles TCN, creates new system operator
The Nigerian Electricity Regulatory Commission (NERC) has set up the Nigerian Independent System Operator of Nigeria Limited (NISO) as it unbundles the Transmission Company of Nigeria (TCN).
The transmission leg of the power sector has over the years been seen as weakest link with obsolete equipment.
The unbundling announcement is contained in an Order dated April 30, 2023 and jointly signed by NERC chairman, Sanusi Garba, and vice chairman, Musiliu Oseni.
By this order, the TCN is expected to transfer all market and system operation functions to the new company.
The commission had previously issued transmission service provider (TSP) and system operations (SO) licences to the TCN, in accordance with the Electric Power Sector Reform Act.
The Electricity Act 2023, which came into effect on June 9, provided clearer guidelines for the incorporation and licensing of the independent system operator (ISO), as well as the transfer of assets and liabilities of TCN’s portion of the ISO.
In the circular, the commission ordered the Bureau of Public Enterprises (BPE) to incorporate, unfailingly on May 31, a private company limited by shares under the Companies and Allied Matters Act (CAMA), 2020.
NERC said the company is expected “to carry out the market and system operation functions stipulated in the Electricity Act and the terms and conditions of the system operation licence issued to the TCN.
“The name of the company shall, subject to availability at Corporate Affairs Commission, be the Nigerian Independent System Operator of Nigeria Limited (“NISO”),” NERC said.
Citing the object clause of the NISO’s memorandum of association (MOU) as provided in the Electricity Act, NERC said the company would “hold and manage all assets and liabilities pertaining to market and system operation on behalf of market participants and consumer groups or such stakeholders as the Commission may specify.”
Business
Naira depreciates again, trades at N1,402/$
Naira depreciates again, trades at N1,402/$
The Nigerian currency, naira, on Thursday slightly depreciated at the official market, trading at N1,402.67 to the dollar.
Data from the official trading platform of the FMDQ Exchange, a platform that oversees the Nigerian Autonomous Foreign Exchange Market (NAFEM), showed that the naira lost N11.71
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This represents a 0.84 per cent loss when compared to the previous trading date on Tuesday April 30, when it exchanged at 1,390.96 to a dollar.
However, the total daily turnover increased to 232.84 million dollars on Thursday, up from 225.36 million dollars recorded on Tuesday.
Meanwhile, at the Investor’s and Exporter’s (I&E) window, the naira traded between 1,445.00 and N1,299.42 against the dollar.
Naira depreciates again, trades at N1,402/$
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Appeal court takes over NURTW case as NIC withdraws
Appeal court takes over NURTW case as NIC withdraws
The National Industrial Court has withdrawn from a case involving Alhaji Najeem Usman Yasin, Board of Trustees chairman of the National Union of Road Transport Workers (NURTW), and Alhaji Tajudeen Ibikunle Baruwa’s ambition to return as president of the union over lack of jurisdiction.
The industrial court’s decision was made to avoid conflict with the Court of Appeal, where the matter is already being heard.
Before the NIC announced its decision to hands-off the case, the defendants’ counsel, Mr. O.I. Olorundare SAN, had informed the court that the matter is currently before the Court of Appeal, Abuja division, and that the industrial court could not continue to adjudicate on the same matter.
The counsel cited authorities to support his claim, adding that the National Industrial Court does not have concurrent jurisdiction with the Court of Appeal.
The presiding judge, O.O. Oyewunmi, struck out the case, stating that the Appeal Court had taken over the matter and that the Industrial Court must respect the hierarchy of courts.
Alhaji Yasin and six others took the case to the Appeal Court, challenging the decision of the industrial court recognising a delegates’ conference held on May 24, 2023, where Baruwa was proclaimed as President of the union for a second term in office.
With the latest NIC judgement, both parties will now proceed to defend their positions at the Court of Appeal and await the final judgement.
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