The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has warned that the Nigerian economy may slide into recession if the coronavirus pandemic continues for the next six months.
She stated this during her appearance on Channels Television’s Politics Today where she spoke on steps being taken by the government to cushion the impact of the pandemic on the nation’s economy.
She said: “We are hopeful that this pandemic will be limited in time. If it is an average of three months, we should be able to close the year with positive growth.
“But if it goes longer than that, six months, one year, we will go into recession.”
The warning came as the International Monetary Fund (IMF) said the global economy has entered recession over the ravaging impact of the COVID-19 on different countries.
The Managing Director, IMF, Kristalina Georgieva, who said this while making an opening remark during a conference call of the International Monetary Fund and Financial Committee, declared that no fewer than 80 countries had approached the Fund for help.
She said: “We have reassessed the prospect for growth for 2020 and 2021. It is now clear that we have entered a recession, as bad as or worse than in 2009.
“We do project recovery in 2021, in fact, there may be a sizeable rebound, but only if we succeed with containing the virus, everywhere, and prevent liquidity problems from becoming a solvency issue.
“A key concern about a long-lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery but can erode the fabric of our societies.”
She added: “We have seen an extraordinary spike in requests for the IMF emergency financing, some 80 countries have placed requests and more are likely to come. Normally, we never have more than a handful of requests at the same time.”
Georgieva disclosed that the executive board of the IMF had already approved the first of the emergency requests for the Kyrgyz Republic, a record fast disbursement.
Reacting to the IMF chief’s submission on global recession and how it would affect Nigeria, experts agreed that if the deadly disease persisted, the nation’s economy would face a serious crisis.
The Managing Director, Afrinvest Securities Limited, Mr Ayodeji Ebo, said: “If this COVID-19 persists for the next six months and oil prices remain below $30 per barrel, then Nigeria may be in a crisis”.
“In addition, if the pandemic significantly spreads in Nigeria, business activities will seriously slow down.”
A professor of capital market studies, Uche Uwaleke, said that disclosure by the IMF chief about global economic recession would affect Nigeria’s economy negatively.
He said that Nigeria’s revenue from oil would be seriously affected.
He said, “The implication for Nigeria is that world trade had dropped; trade between Nigeria and other countries will suffer; there will be more capital flight because foreign investors will move to an economy that is safer.
“It has implications for export particularly oil which would lead to lower revenue for Nigeria; our trade and investment will also fall. If care is not taken, except the CBN continues to defend the naira, it will affect exchange rate.”
To survive the economic crisis, he said, “We need to produce and prioritise our spending by spending more on food and purpose import substitution.”
In his comments, a professor of economics at the Olabisi Onabanjo University Ago-Iwoye, Ogun, Sheriffdeen Tella, said it would take a while before the global economy could recover due to the pandemic.
He said, “There is no production in the last two weeks and when there is no production, a lot of industries will be shut down and it will cause a drawback.
“There are also uncertainties as to when production will start in many parts of the world. So, we are already in recession as it were.”
Land Racketeering: Group Wants FCT Administration To Intervene
A group; the Housing Development Advocacy Network, has called on the Federal Capital Territory administration to provide details of existing approved layouts in the territory, in order to prevent land racketeering in the capital city.
The group noted that land racketeering was on the rise in the FCT and that the government needed to be aware of this to avoid losing investments.
Regardless of the high number of fake and political developers and land racketeers, there are also many genuine investors who wish to invest in the FCT, but are at risk from land racketeers, the group noted.
Executive Director of the advocacy group, Festus Adebayo, who made the call while speaking to journalists, further called on the FCT Minister to declare a state of emergency on land racketeering.
“The master plan of the FCT is in disarray. It requires surgical operation and the FCT minister must declare a state of emergency on the FCT urban planning system.
“So much damage has been done. The system is no more going in line with those who saw the vision of the FCT and gave the master plan.
“Firstly, there is no detailed information on existing approved layouts, resulting in fake layouts overlapping it.
“This information, if made public, would enable investors to know the right information that would save them from falling victim to land racketeers.” he said.
According to him, if there was inadequate information about the existing layout, the public would no longer fall victim to sharp practices resulting in demolition all the time in some areas.
“Some officials in government are supporting the business of those who are engaging in land racketeering and destroying the FCT master plan for selfish reasons, which is why the real estate sector in the nation’s capital is at a risk”, he explained.
Adebayo further explained that even with the suspension of the issuance of building plan approvals to area council plots, people were still erecting substandard buildings and the government was grossly losing revenue.
“Normally, before a demolition exercise is carried out, there has to be an order from the FCT urban and regional planning tribunal. However, the demolition is now at the discretion of the task force.
“Most demolitions are supposed to be followed by implementing a use or activity on the reclaimed land. However, nothing is done after demolition, hence after some time, the illegal activity gradually creeps back again. Other areas have been marked for action and nothing is being done about them. Almost 70 per cent of area council plots do not have building plan approvals”, he said.
Naira Redesign: CBN Recovers N1.9trn In Two Months
The Central Bank of Nigeria (CBN) said it recovered N1.9 trillion worth of currency in two months outside of the banking system following its naira notes redesign and cash swap policy.
CBN Governor, Godwin Emefiele, disclosed this, last Sunday, as part of his updates following a meeting with President Muhammadu Buhari.
Emefiele noted that the apex bank had been able to reduce the currency outside the banking system to N900 billion from a whopping N2.7 trillion following the announcement of new naira notes.
President Buhari in November 2022 had launched the new naira notes of N200, N500, and N1,000 denominations, which are aimed at combating counterfeiting, improving the effectiveness of monetary policy tools on inflation, as well as mopping excess liquidity.
Emefiele said, “Ladies and gentlemen, available data at the CBN has shown that in 2015, currency in circulation was only N1.4 trillion.
“As of October 2022, currency in circulation had risen to N3.23 trillion out of which only N500 billion was within the banking industry and N2.7 trillion held permanently in people’s homes.
“Ordinarily, when the CBN releases currency into circulation, it is meant to be used and after effluxion of time, it returns to the CBN thereby keeping the volume of currency in circulation under the firm control of the CBN.
“So far and since the commencement of this programme, we have collected about N1.9 trillion.”
The CBN Governor also added that the initiative recorded over 75 per cent success rate, out of the N2.7 trillion held outside the banking system.
Emefiele noted that Nigerians in the rural areas, villages, the aged and vulnerable had had the opportunity to swap their old notes; leveraging the naira swap initiative as well as the CBN senior staff nationwide sensitisation team exercise.
The CBN Governor also announced the extension of the deadline by 10 days to February 10, 2023, to allow for the remaining old notes in the economy to be returned to the banks.
“A 10-day extension of the deadline from January 31, 2023, to February 10, 2023 is to allow for the collection of more old notes legitimately held by Nigerians and achieve more success in cash swap in our rural communities after which all old notes outside the CBN lose their legal tender status.” the CBN boss said.
Contributory Pension Assets Rise To N14.9trn
The total assets of the Contributory Pension Scheme has risen by N1.56 trillionn as at the end of December, 2022, according to figures obtained from the National Pension Commission (PenCom).
PenCom, in its latest “Report on pension industry portfolio for the period ended 31 December 2022″ disclosed that the funds, which ended December 31, 2021, at N13.42 trillion, rose to N14.99 trillion by the end of December 2022.
It added that Contributors in the scheme rose slightly by 333,002 from 9,529,127 as at the end of 2021 to 9,862,129 in the corresponding period of 2022.
In the figures, the sum of N9.64 trillion or 64.33 per cent of the assets was invested in the Federal Government of Nigeria’s securities, N1.66 trillion was invested in corporate debt securities, N1.98 trillion was invested in money market securities, and N82.8 billion in mutual funds among other investment portfolios.
According to the 2022 third quarter report of the pension industry, the Director-General, PenCom, Aisha Dahir-Umar, said despite the overwhelming head-winds in the global economic climate and the country’s challenging macroeconomic environment, the pension fund assets under her management increased.
She said this laudable performance in the growth points to the fact that the pension industry will continue to deliver value and benefit to its stakeholders and the nation’s economy.
During the period under review, the Director-General, said PenCom steadily pursued increased diversification of pension fund portfolios by ramping up efforts aimed at ensuring sustained investment of pension fund in alternative asset classes and structured infrastructure projects that meet the stringent requirements as enshrined in the regulation for the investment of pension fund assets.
She said PenCom’s efforts at diversifying investments of pension funds and hedging against inflation had gradually begun to yield results.
According to her, efforts were on going to ensure that the annualised average rates of return of pension funds across Retirement Savings Account (RSA) and legacy funds were above headline inflation rates.
“Perhaps, the most significant achievement recorded in the third quarter of 2022 was the successful issuance of guidelines on accessing RSA.
“Balance towards payment of equity contribution for residential mortgage. The guidelines give effect to Section 89(2) of the Pension Reform Act 2014, which allows eligible RSA holders to apply a percentage of the balances in their Retirement Savings Accounts for payment of equity contribution towards residential mortgage for employees of the public, private and the informal sectors”, she said.
Dahir-Umar noted that the achievement in the Nigerian pension industry could not have been possible without the right people, strategy, culture and governance structures that supported the delivery of consistent and sustained value for all its stakeholders.
By: Corlins Walter
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