Business
FG considering fresh borrowing from IMF – Finance minister
The Federal Government is considering tapping into the newly created fund by the International Monetary Fund (IMF) to cater for its urgent financial needs, Minister of Finance, Budget and National Planning, Zainab Ahmed, has said.
She gave the indication on the sidelines at the ongoing IMF- World Bank meetings on Wednesday in Washington.
Many people including National Assembly members have expressed concern that the country might be approaching a debt trap its total debt standing at N42.84 trillion ($103,31bn) as of June this year.
The minister also said the FG had been engaging financial institutions to look into the country’s portfolio debt to restructure and further stretch the debt service period to give more fiscal relief.
“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,” she said.
“The last drawing we had from the IMF is the second round of special drawing rights (SDRs) that was provided for all the member countries. The IMF recently offered a food security package that countries can draw, and it is equivalent to about 50 per cent of their SDRs.
“We have not taken a decision to draw on that. We have to examine the requirements, terms and conditions, to see if it will be safe for us to draw because we don’t want to be drawn into an IMF programme.
“If they work for us, we will now decide to take it because the funds can certainly be useful in terms of adding to our reserves and coping with the challenges the country is facing.”
She said there were signs that the recent flooding in the country would cause more stress to the food system, affecting harvest and prices.
“The floods that have been happening are going to cause more stress on our food system. We realise that the floods are currently destroying crops and therefore the harvest that is expected will be much less, and it will mean that more of our people will struggle to afford food,” she added.
Ahmed also said the Federal Government plans to use up to 65 per cent of government revenues next year to service debt.
She said the government would scale back on some tax incentives and expand the tax net to ramp up domestic revenue.
The minister said, “Unfortunately, the cost of debt service is rising because of the rising interest rate globally, resulting in higher debt service costs. Our projection from the debt sustainability analysis is that Nigeria is able to cope with its debt service.
“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.
“Also, what we are doing is to ramp up domestic revenue mobilisation. There are so many different aspects that we are looking at, including cutting down on tax expenditure taxes, furniture, waivers, incentives that are being provided to encourage businesses.”
IMF Director of Research Department, Pierre-Olivier Gourinchas, advised low-income countries to progress toward debt restructuring to avert sovereign debt crises.
Gourinchas said many low-income countries were close to or already in debt distress and should urgently consider improving their liquidity buffers, including by requesting access to precautionary instruments from the Fund.
He said, “Countries should also aim to minimise the impact of future financial turmoil through a combination of preemptive macroprudential and capital flow measures, where appropriate, in line with IMF’s Integrated Policy Framework.
“There are clouds on the horizon, but progress on climate policies, debt resolution, and other targeted global issues will demonstrate that strengthened cooperation can achieve progress for all and help to overcome geoeconomic fragmentation.”
Aviation
Air Peace gets court order to answer queries on aircraft operations
Air Peace gets court order to answer queries on aircraft operations
A Lagos State High Court has ordered Air Peace to respond to questions brought by the Foundation for Investigative Journalism in a libel suit No. LD/ADR/4833/23 filed by the airline on October 12, 2022, regarding its aircraft operations from Lagos to Anambra State.
Air Peace insisted that it followed safety standards and practices in accordance with relevant regulations and policies.
It questioned the FIJ’s interrogations of its aircraft and flight operations, calling them “scandalous and irrelevant” to the libel case.
FIJ was dissatisfied with Air Peace’s responses to the queries and filed an application to compel them to adequately explain the objections.
Justice Kudiarat Jose upheld the argument of FIJ, represented by its counsel, Abimbola Ojenike and Jesulayomi Oyelami of Slingstone LP, stating that the questions requesting the details of the first two aircraft designated to convey passengers were relevant to the facts in issue, related to the defendant’s case, and capable of proving that the defendants were correct.
As a result, the court ordered Air Peace to respond to questions 1, 4, and 7 of the defendant’s interrogation within seven days of receiving the order.
The questions are: ‘Provide a comprehensive description and specification of the aircraft 5N-BUL initially scheduled for the operation of Flight P47336 on October 12, 2022. The description should include the make, year, engine type, and service information, including the most recent aircraft maintenance checks conducted prior to Flight P47336 on October 12, 2022, particularly but not limited to any faults or repairs on the systems.’
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The airline is also to: ‘Provide comprehensive specifications of the technical issues discovered in the course of operation of Flight P47336 and the circumstances that led to the change of the aircraft from 5N-BUL to 5N-BQQ.’
The court also ordered the airline to: ‘Provide the comprehensive descriptions and specifications of the aircraft 5N-BQQ initially onboard the passengers for the operation of Flight P47336 on October 12, 2022.
‘The description should include make, year, engine type, and service information, including the most recent aircraft maintenance checks conducted prior to Flight P47336 on October 12, 2022, particularly but not limited to any faults or repairs on the systems.
The claim was deferred until May 23, 2024, for additional proceedings.
In October 2022, FIJ stated that passengers on an Air Peace flight from Lagos to Anambra escaped death after the engine failed three times at the takeoff point.
According to FIJ, the aircraft was supposed to take off at 11 a.m. but was delayed for two hours when the airline’s management announced that the jet originally booked for the Anambra flight had suddenly acquired an issue.
“The engine stopped three times, and there was no explanation until passengers asked to be allowed to leave the plane. The captain only gave a vague explanation when the passengers expressed their concerns. He said the DAC or something similar to that went off on us,” FIJ had quoted one of three sources as saying.
“This was supposed to be a substitute plane as the first couldn’t be used for technical reasons. If this lackadaisical attitude continues, I fear they may record a crash soon. If we had flown today, we likely would have crashed.”
Air Peace then filed legal action against FIJ, seeking N50 million in damages, N250 million in aggravated damages, and N5 million in legal fees.
Air Peace gets court order to answer queries on aircraft operations
Business
CBN bans Opay, Palmpay, Moniepoint, Kuda from opening new accounts
CBN bans Opay, Palmpay, Moniepoint, Kuda from opening new accounts
Some bank customers have expressed panic as the Central Bank of Nigeria bans mobile money operators including fintech firms from onboarding new customers.
However, the Bank Customers Association of Nigeria backed the CBN directive.
The new directive will affect fintech companies such as OPay, Palmpay, Kuda Bank, and Moniepoint, from opening new accounts until further notice.
Reliable sources from three major fintechs who requested not to be mentioned as they were not permitted to speak, confirmed the development to The PUNCH on Monday.
The CBN’s move was linked to an ongoing audit of the Know-Your-Customer process of the fintechs, which have been under scrutiny in recent months over concerns around money laundering and terrorism financing.
It was gathered that the CBN had summoned some of the heads of fintechs to Abuja to discuss issues around KYC last week.
The CBN has not yet publicly commented on the directive to the fintech firms. The PUNCH’s attempts to reach the apex bank for comment were unsuccessful.
Several calls made to the telephone line of the CBN spokesperson, Hakama Ali Sidi, were not responded to as of the time of filing this report.
Also, the directive coincided with the court order that the Economic and Financial Crimes Commission (EFCC) obtained to freeze at least 1,146 bank accounts owned by various individuals and companies allegedly involved in illegal foreign exchange transactions.
The 85-page court order (document), which listed the bank account details suspected to be involved in illicit activities, was obtained by The PUNCH on Monday.
Justice Emeka Nwite, in a ruling on the ex-parte motion, moved by counsel for the anti-graft agency, Ekele Iheanacho, also granted the commission’s application to conclude the investigation within 90 days.
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Part of the court document read, “That the applicant’s (EFCC) application is hereby granted as prayed.
“That an order of this honorable court is hereby made freezing the bank accounts stated in the schedule below, which accounts are owned by various individuals who are currently being investigated in a case involving the offenses of unauthorised dealing in foreign exchange, money laundering, and terrorism financing, to the extent that the investigation will be for a period of 90 (ninety) days.”
The EFCC, in the motion marked FHC/ABJ/CS/543/2024 dated and filed April 24 by Iheanacho, was heard by the judge the same day in the interest of national interest. “The motion was brought pursuant to Section 44(2) and (K) of the 1999 Constitution; Section 34 of the EFCC Establishment Act 2004; Section 7(8) of the Money Laundering Prevention and Prohibition Act, 2022; and under the inherent jurisdiction of the court.”
The President of the Bank Customers Association of Nigeria, Uju Ogubunka, backed the CBN’s move to suspend new account opening on the affected platforms.
He told The PUNCH that the strict regulations that govern deposit money banks must apply to fintechs, and microfinance banks in order to ensure the integrity of the financial institutions.
He said, “Anything that can disrupt the system should not be permitted. If the platforms are being used for things that are against the regulations, I think the CBN decision is OK. I don’t see anything wrong with that. It behoves on the companies now to get their KYC right.
“Let them do what they are supposed to do. KYC applies to banks and other financial institutions that deposit money. It should also apply to them so that the regulators can understand what is going on and hold them accountable.”
On the other hand, Emmanuel Odunsi on X (formerly Twitter) welcomed the move, citing the need for better KYC processes to prevent scams and fraudulent activities.
“Their KYC isn’t that great. Lots of scammers are using their apps to defraud people.
“Most of the accounts were created by mining phone numbers, with subscribers’ permission. Almost every phone number has been linked to an account,” Odunsi said.
CBN bans Opay, Palmpay, Moniepoint, Kuda from opening new accounts
Business
After one-day gain, naira crashes again to N1,340/$ in parallel market
After one-day gain, naira crashes again to N1,340/$ in parallel market
The Naira yesterday depreciated to N1,340 per dollar in the parallel market, from N1,300 per dollar last week Friday.
Similarly, the Naira depreciated in the Nigerian Foreign Exchange Market, NAFEM, to N1,419.11 per dollar.
Data from FMDQ showed that the indicative exchange rate for NAFEM rose to N1,419.11 per dollar from N1,339.23 per dollar last weekend, indicating N79.88 depreciation for the naira.
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Consequently, the margin between the parallel market and NAFEM rates widened to N79.11 per dollar from N39.23 per dollar last week Friday.
After one-day gain, naira crashes again to N1,340/$ in parallel market
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