Tuesday, February 14, 2012

Nigeria Economic Update: Federal Government Seeks to Borrow N1.3 Trillion

Nigeria goes aborrowing! .

Wednesday, 15 February 2012 00:00
From John-Abba-Ogbodo and Bridget Chiedu Onochie, Abuja News
Nigerian Guardian

Jonathan seeks Assembly’s nod for N1.3tr loan

Senate claims ‘strange’ N1tr in 2012 budget

NIGERIA’S debt profile is set to rise by N1 trillion. President Goodluck Jonathan, who says he is in dire need of funds to execute some critical projects, wants the National Assembly to clear the coast for him to borrow N1.3 trillion from the World Bank, African Development Bank (ADB) and others.

The President in a letter he wrote to the Legislature yesterday, urged it to endorse his bid to borrow N1trillion (about $7,905,690,000) for the execution of the projects. There were also concerns in the Upper House yesterday that the 2012 budget was not properly packaged by the Executive arm of government.

The country’s external and domestic debts as at September 2011 are put at N6.189 trillion. The domestic debt is N5.3 trillion while the external stock is $5.6 billion. The Federal Government owes $3.316 billion while the 36 states of the federation owe $2.317 billion, bringing the total external debt owed by the two tiers of government to $5.633 billion.

If the Legislature approves the N1.3 trillion being sought by the President, Nigeria’s debt stock will rise to N7.489 trillion.

The Senate Committee on Appropriation, which is scrutinising the budget, alleged that Ministries, Departments and Agencies (MDAs) had smuggled N1trillion into the document.

In a statement, the panel’s chairman, Mohammed Maccido, said the MDAs smuggled the funds for various projects and that made the budget presented to the lawmakers different from the one sent by the President to the National Assembly.

Curiously, the alleged figure is the amount Jonathan wants clearance from the National Assembly to borrow.

Also yesterday, the Senate faulted the calls by some prominent Nigerians for the convocation of a Sovereign National Conference (SNC).

In a communication to the Senate and the House of Representatives, the President explained that the fund would be used for Pipeline Projects for the Medium Term (2012-2014) as outlined in the 2012-2014 External Borrowing Plan.

Jonathan further said the plan was designed to create jobs for Nigerians and grow the economy.

The letter read in part: “I wish to inform you that a number of special initiatives were designed to put the economy back on track through growth and employment activities geared towards the implementation of the Transformation Agenda.

“The Pipeline Projects are at various stages of completion. Therefore, I present herewith a total external pipeline borrowing in the amount of $7,690,000 or $2.64 billion a year being cumulative facilities offered by the World Bank, African Development Bank (ADB), Islamic Development Bank, Exim Bank of China and Indian Lines of Credit.”

The President urged the National Assembly to note that the objectives of the projects conformed with the Transformation Agenda of his administration and cut across various sectors of the economy, adding that the initiatives were meant to put the economy on track through growth and employment.

The Senate, which formally reacted to the calls by some Nigerians for a sovereign conference to discuss the state of the nation, declared that the summit was unnecessary.

At a press conference, Chairman of Senate Committee on Information, Media and Publicity, Enyinnaya Abaribe, said individuals, who have suggestions on the matter could forward them to the National Assembly, stressing that it is the Legislature that is constitutionally allowed to decide such issues on behalf of Nigerians.

“We were elected to represent the people of Nigeria. We don’t think there is any matter under the sun that the Senate will shy away from. I don’t know why they insist on having a Sovereign National Conference. We are not against any group meeting to discuss any issue in Nigeria, that is the essence of democracy but we cannot have democracy without democrats. But if we want to change the constitution, there is the National Assembly. All that is required is for them to bring their suggestions through their representatives and it will receive attention.

“Any Nigerian can send any bill or his opinion on anything about the country. If we have anything, we will say is off limit, it is the unity of Nigeria.”

On the plan by the Federal Executive Council (FEC) to borrow from foreign financial outfits, Abaribe said it had nothing to do with Nigeria being broke. He said the issue would be debated and the position of the Senate made public.

Meanwhile, Senate President David Mark has advised the Upper House standing committees to take the budgets of the ministries under them to the Appropriation Committee for final action, noting that ‘’Thursday (tomorrow) is the deadline and any committee that fails to do so will have itself to blame because such ministries will not have funds for 2012.”

But Maccido, who insisted that the MDAs overloaded the budget, said: “The problem is that we are seeing projects that are not in the original version of the budget presented to us by the President and substantial part of these projects are being smuggled into the budget by the MDAs and ministers. Over 40 per cent of the projects in their budgets are not in the original budget. And we are saying no to the items so smuggled into the budget, which are over N1 trillion. So, we are right now comparing the budget as originally presented by the President and the version presented by the MDAs. Unless these projects are there in the original budget, we are going to scrap them. It’s no longer going to be business as usual. These people are just smuggling in projects that are not in the budgets. And we are going to remove them,‘’ he said.

Govt invests $4.8b, creates 30,000 jobs in free trade zone .

Wednesday, 15 February 2012 00:00 Editor
Nigerian Guardian

OPERATORS of the Oil and Gas Free Trade Zone (OGFZ) in Onne, Rivers State, have been directed by the Federal Government to industrialise the zone within the next four years.

Minister of Trade and Investment, Olusegun Aganga, gave the directive during a visit to the OGFZ Onne, where he observed the zone has all the ingredients to be one of the most successful in the country.

Aganga explained that though about $5.4 billion had been generated for the Federal Government, about $4.8 billion investments had been made in the OGFZ and about 30, 000 jobs created directly and indirectly, the government still expected the operators to do more.

“I will market the free trade zone on their behalf with my team, but again, I want to see a clear industrialisation plan. When you talk about local content, to me it is about backward integration, it is about using the materials we have locally. That way you create jobs, that way you industrialise a country. Our strategy is about building our industries based on areas where we have competitive and comparative advantage,” he said.

The minister said the aspiration of government in the next four years was the industrialisation of the country. According to him, the zone is to be used not only for attracting investment into the country, but for achieving industrialisation plan in the area of petro-chemical and also servicing industry that are related to the oil and gas sector.

He revealed that government was working on a bill to make Nigerians patronise locally produced goods because there is no point producing goods locally and people are not patronising them.

“ I was delighted to see that we have a shipyard in this country, the boats which you see around, the water taxi, vessels can actually be built here. Today, we have a company here that has capacity for building ships, that has capacity for maintenance, servicing ships also built here in this country, yet we are buying patrol boats, vessels and all that from abroad. We should not allow that to happen,” he said.

He said government would ensure that goods produced locally are made to meet international standards, noting however that Nigeria needs technology, manpower training and people to realise her industrialisation dream.

Aganga who described the OGFZ as the most successful of all approved by government, hinged his assessment on the level of investment and ability to attract investment into the country, level of job created, export earnings and backward integration (local content).

The minister, who visited various companies in the zone, explained that in the course of his interaction with their managements, each of them expressed desire to achieve backward integration. He expressed delight that OGFZ has become a one stop shop for companies like Chevron, Total, Exxon Mobil and others that hitherto imported their materials from abroad.

He observed that based on the high level of development of necessary infrastructure taking place at the zone and its deep sea ports, which are one of the deepest in the country, it is going to be a lot easier to transport goods from any part of the world and Nigeria to the zone.

The Director-General of DMS Nigeria, Mr. Sunday Wama, told the minister that about 150 investors were doing business in the OGFZ. And as part of the port concession agreements, Intels has committed substantial payments to the authorities, including the Nigerian Ports Authority, irrespective of vessels or cargo throughput.

AMCON moves to sell nationalised banks .

Wednesday, 15 February 2012 00:00
By Femi Adekoya News

THE Asset Management Company of Nigeria (AMCON) has concluded plans to sell off three nationalised banks this month.

They are Mainstreet Bank, Keystone Bank and Enterprise Bank. They were created out of the former Afribank, Bank PHB and Spring Bank whose licences were revoked by the CBN after failing to meet the deadline for rescued banks to recapitalise.

Meanwhile, AMCON has so far recovered N600 billion of the more than N2 trillion bad loans it acquired from banks.

Managing Director/Chief Executive, AMCON, Mustapha Chike-Obi, disclosed this in Lagos yesterday at end of the Bankers Committee meeting held in Lagos yesterday.

Chike-Obi stated: “The process of selling the nationalised banks will start this month. We are going to put out advert for advisers who will advice us on how to sell the nationalised banks. We would let the process be transparent and run its course. We believe it would take about 12 to 18 months.”

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