Business
Using Recovered Loots To Finance Budget Deficit: Matters Arising
Former President
Olusegun Obasanjo recently expressed concern that “Nigeria may be on its way to another crisis of debt overhang if the current fiscal challenge is not creatively addressed.’’
Obasanjo expressed the viewpoint at a conference of the Ibadan School of Government and Public Policy (ISGPP), which has “Getting Government to Work for Development and Democracy in Nigeria: Agenda for Change’’ as its theme.
“If the current fiscal challenge is not creatively addressed, Nigeria may be on its way to another episode of debt overhang which may not be good for the country,’’ he said.
“It will be recalled that a few years ago, we rescued Nigeria from its creditors with a deal in which the Paris Club of sovereign creditors wrote off 18 billion dollars of debt, Africa’s largest debt cancellation,” he added.
He, nonetheless, attributed the critical economic situation to the continuous fall of crude oil prices in the international market.
Observers, however, insist that Obasanjo’s sentiments, which are seemingly alarmist, are not completely misplaced, as the Federal Government has admitted that the N1.84 trillion-deficit out of the N6.08 trillion 2016 budget proposal would be financed via local and foreign borrowing.
All the same, President Muhammadu Buhari tried to allay such fears recently when he said that Nigeria might need not to borrow money to fund the projected budget deficit.
Buhari gave the assurance when he addressed some Nigerians in Addis Ababa, Ethiopia, on the side-lines of the 26th Summit of Heads of State and Government of the African Union (AU).
He said that the money recovered from those who looted public funds would be used to reduce the deficit in the 2016 budget.
He also said that for the first time in recent times, Nigeria’s budget would be largely financed from non-oil revenue.
“Recovered assets of the country would also be used to reduce the budget deficit.
“Besides, the theft of oil by some Nigerians that happen to live there who feel that the oil belongs to them and not the country is an irritating thing for those of us who participated in the civil war for 30 months in which at least 2 million Nigerians were killed,’’ he said.
Buhari said that the proposed budget would focus on increasing efficiency and transparency in government operations, while blocking leakages from revenue generating agencies.
He, however, emphasised that the on-going war against corruption in Nigeria would not be very effective without the active support of the country’s judiciary.
He said that far-reaching reforms of the judiciary were imperative in efforts to achieve the goals of the anti-graft agenda of his administration.
“On the fight against corruption vis-à-vis the judiciary, Nigerians will be right to say that is my main headache for now,’’ he said.
The president, however, expressed the confidence that with the support of the Chief Justice of Nigeria, he would strive to improve the nation’s judicial administration system.
On the provision of basic infrastructure, Buhari announced that the Federal Government had ordered a review of the contracts signed by the previous administration with the Chinese government on several railway transport projects.
“The Chinese Government was very generous to Nigeria on the projects signed with the previous government because they agreed to fund 85 per cent of the projects’ cost.
“But the Nigerian Government had been unable to meet up with its counterpart funding of 15 per cent and so, the Chinese government was unable to make any impact on the projects,” he said.
He said that he had directed the ministers of transportation, finance as well as power, works and housing to revisit the agreements and explore ways of re-approaching the Chinese Government for sustained assistance.
Besides, Buhari said that the Chinese Government had indicated interest to assist Nigeria in project financing through its Export-Import Bank.
To further strengthen his administration’s resolve to ensure transparency in the cost of governance, the president disclosed that his administration had saved about N2.2 trillion through the initiation of the Treasury Single Account (TSA).
Apparently giving a progress report on his administration at a roundtable with Nigerians resident in the United Kingdom during his recent visit to London, Buhari said that the feat was achieved in the last three months alone.
He said that prior to the implementation of the TSA; the Nigerian National Petroleum Corporation (NNPC) had over 45 accounts domiciled in different banks, while the Nigerian military also had 70 accounts in different banks.
“We are really in trouble. We just tried to enforce what we called the Treasury Single Account (TSA) and the reason was simple.
“This government did not initiate the TSA; it was the previous government that initiated it but it was so unpopular to the bureaucracy and the previous government, for its own reasons, couldn’t enforce it.
“When we came and found that we were broke, we said this is the way to do it. And I will just tell you two examples to convince you.
“First, NNPC, the cow that was giving the milk, had more than 45 accounts, the Ministry of Defence, that is the Army, Navy and Air Force, had over 70 accounts. Tell me which account we can trace in these several accounts. So, we enforced TSA.
“We said there must be TSA. By the end of December, coming to January this year, that is last month, we mopped up more than N2.2 trillion which we have used through the bureaucracy system to raise vouchers and sign cheques so that they don’t go into the next budget.
“We found out, when I say we, I mean the present Federal Government, that some of the directors in the Central Bank own bureau de change businesses. So, whenever foreign exchange comes, they take it and give government the change. Therefore, we stopped the Federal Government giving bureau de change foreign exchange.
“Fellow country men and women, I am giving you a tip of the iceberg of the problem that we inherited and we are getting so hard because we have no other way of running the country unless we make everybody accountable,” Buhari said.
Shedding more light on the steps being taken to stimulate greater economic growth in the country, the Minister of Finance, Mrs Kemi Adeosun, said that the priority of the Buhari-administration was on how to grow the economy and achieve a Gross Domestic Product (GDP) growth rate of 4.2 per cent through the 2016 budget.
Presenting a paper titled: “Nigeria’s Economy: The Road to Recovery’’, the minister said that the full and diligent implementation of the 2016 budget would facilitate the Federal Government’s efforts to achieve meaningful economic growth.
She said the administration was equally determined to reduce cost of governance, provoke quality public service delivery and enhance revenue collections.
Adeosun said that the decision of the Buhari-administration to increase government expenditure on infrastructure, transport, roads, housing and power, was aimed at achieving a substantial increase in gross capital formation.
“This will keep the government within the acceptable and sustainable debt ratio expected of most emerging economies,” she said.
She further explained that main macroeconomic objective of the Federal Government in 2016 was to combine an expenditure-led growth strategy with a stimulant approach, based on injection of more efficiently collected revenues and blocking of leakages.
“The combination of these fiscal injections will have a catalytic multiplier effect on the GDP growth rate,” she said
According to her, the government has developed a “shadow budgeting process with tactical responses to build in flexibility in the country’s borrowing needs”.
Adeosun pledged that the administration would go ahead with its robust commitments on infrastructure development in spite of its dwindling resources occasion by the fall in crude oil prices.
“For an economy dependent on crude oil for 70 per cent of government revenues, the 12-year-low in oil prices, the downward revisions to the global outlook and the re-ordering of the global economy are ominous signs.
“For years, oil prices were at historic highs, and at 114 dollars per barrel; we spent, government spent, people spent and our economy seemingly ‘grew’ but this growth masked much vulnerability.
“There were consistent warnings about the volatility of oil prices and the need to diversify our economy to support our huge population.
“Whilst we paid lip service to this need and extolled the potential of many sectors, we did not plan adequately to ensure that we worked towards this,’’ she said.
By and large, economic analysts urge the National Assembly to hasten the passage of the 2016 budget in order to assuage the hardships of the ordinary citizens.
They also underscore the need to channel a substantial part the recovered loot towards the rehabilitation of the north-eastern states that were ravaged by the Boko Haram insurgency.
Adamu is of the News Agency of Nigeria (NAN)
Sani Adamu
Business
Food Vendors, Others Relocate To New Site At PH Airport
The raging controversy between the Port Harcourt International Airport Management and restaurants/canteen operators and theirallies over relocation has been brought under control, as the operators have commenced relocation to their structures at the new site.
Recall that there had been serious feud over a directive by the Manager of the airport, Mr. Michael Area, for food vendors and their allies to relocate to the new site.
They insisted that the new site was too distant and hence, would negatively affect patronage from customers, with possible loss.
They further also insisted that it wouldcost them much money to put up another structure, given the economic situation in the country, since the airport management did not build any structure for them, apart from providing the empty land they have to also pay for.
The situation had led to flexing of muscles, which made the Airport Manager to order for sealing of all shops, resulting in scarcity of food, as airport users could not find a place to eat, apart from the only Genesis fast food spot available.
As at last Friday, The Tide observed that most of the food vendors had transferred their structures to the new place, and had started doing business there already.
Meanwhile, customers have started settling down at the new location as they were seen patronising shops for foods and drinks, in spite of the distance.
Few of the remaining structures at the old site, The Tide further gathered, will also be removed as quickly as possible, and the owners are making efforts to get funds for the job to be done.
One of them, Mrs Aka Love explained that she was going to relocate to the new place before the end of March.
Currently, business activities at the old site have come to null, as the place which was usually a beehive of food, drinks and relaxation, has completely winded down.
By: Corlins Walter
Business
MOWCA Strengthens Maritime Crime Prevention
Secretary General of the Maritime Organisation of West and Central Africa (MOWCA), Dr. Paul Adalikwu, has stepped up interaction with the United States Government to lift restrictions placed on some member countries allegedly implicated in illicit shipping activities.
Adalikwu, who led a delegation from the MOWCA Secretariat to the US Embassy in Abidjan for a first leg of the strategic consultation aimed at promoting seamless participation of MOWCA countries in international trade within the global maritime space, reiterated the organisation’s commitment to the best ethical and lawful maritime practices.
Addressing the U.S Ambassador to Côte d’Ivoire, H.E Mrs Jessica Davis Ba, the MOWCA SG stated the organisation’s interest in promoting the International Ship and Port facility Security (ISPS) code which aims at enhancing security of vessels and their ports of call.
He expressed the commitment of MOWCA in promoting environmentally friendly, safe and cost effective shipping without any encumbrance that may limit the economic potential of member countries.
Dr Adalikwu recalled that at the instance of the U.S. Department of State invitation, MOWCA participated in the 2023 Registry Information Sharing Compact (RISC) Conference in Larnaca, Cyprus, on February 28–March 1, 2023, and a virtual meeting held on June 6 2023, with Mrs Jennifer Chalmers, Officer in change of Counterproliferation Initiative.
He recalled The U.S. DOS willingness to support MOWCA’s effort for preventive maritime security through the establishment of the Center for Information and Communication (CINFOCOM) with the aim to ensure a maritime situational awareness domain within MOWCA’s member states’ waters.
He added that MOWCA under his watch is committed to training and retraining of maritime practitioners and experts to enhance the human capital capabilities of member states.
The CINFOCOM will help prevent transnational crimes committed at sea like sanctions evasion by North Korea and other state actors, who exploit poor enforcement due diligence by ship open registries to circumvent United Nations and U.S. trade restrictions.
By: Nkpemenyie Mcdominic, Lagos
Business
Nigeria’s Public Debt Hits N97.3trn – DMO
The Debt Management Office (DMO) has hinted that Nigeria’s public debt increased by 10.7 per cent from N87.87 trillion in the third quarter of last year, to N97.34 trillion as at December 31, 2023.
DMO, in an update data released last Friday, said the increase in the debt stock was largely due to new domestic borrowing by the Federal Government to part finance the deficit in the 2024 Appropriation Act and disbursements by multilateral and bilateral lenders.
The office noted that the N97.3 trillion public debt comprises of domestic debt of N59.12 trillion and external debt of N38.22 trillion. The sum of $3.5 billion was used to service external debt during the review period.
“Nigeria’s Public Debt Stock as at December 31, 2023 was N97.34trillion or $108.229 billion. This amount comprises the domestic and external debt stocks of the Federal Government of Nigeria (FGN), the 36 States Governments, and the Federal Capital Territory (FCT).
“There was an increase of N9.43 trillion over the comparative figure for September, 2023, which was largely due to new domestic borrowing by the FGN to part finance the deficit in the 2024 Appropriation Act and disbursements by multilateral and bilateral lenders.
“At N59.12 trillion, total domestic debt accounted for 61 percent of the total public debt stock, while external debt at N38.22 trillion accounted for the balance of 39 percent.
“Consistent with the debt management strategy, Nigeria’s external debt stock was skewed in favour of loans from multilateral (49.77 percent) and bilateral lenders (14.02 percent) or total of 63.79 percent which are mostly concessional and semi-concessional.
“Whilst the DMO continues to employ best practice in public debt management, the recent and on-going efforts of the fiscal authorities to shore up revenue will support debt sustainability”, DMO stated.
By: Corlins Walter
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