Finance

Experts Divergent Opinions on FG’s N2.2tn Borrowing Plan

Published

9 years ago

December 30, 2015

Economists and finance experts have expressed divergent opinions on the proposal by the Federal Government to borrow N2.2tn to finance the deficit envisaged in the 2016 Appropriation Bill tabled before the National Assembly by President Muhammadu Buhari last week.

For the total budget proposal of N6.08tn, the Federal Government expects N3.86tn as revenue, while the balance of N2.22tn will come from borrowing. Out of the N2.22tn to be borrowed, N1.84tn is expected to be spent on capital projects, while the rest will go into recurrent expenditure.

In a statement made available to our correspondent in Abuja by its Head of Abuja Operations, Vivian Bellonwu-Okafor, the Social Integrated Development Centre (Social Action) asked the National Assembly to do Nigerians a favour by stopping the accumulation of such a huge debt.

However, a former President of the Nigerian Economic Society and Executive Director, African Centre for Shared Development Capacity Building, Prof. Olu Ajakaiye, said it was good enough that the Federal Government proposed to spend much of the debt to finance infrastructure.

Bellonwu-Okafor described loans as Greek gifts and a deathtrap for economies, especially weak and developing ones such as Nigeria’s, adding that the terms were usually steep and their conditions mostly stifling, while compromising the growth and well-being of the nation’s economy.

She called for a probe of what previous loans that had been obtained by Nigeria had been used for.

She said, “To continue in the tradition of approving loans for governments in Nigeria without first seeking and establishing an account of the huge loans acquired in the past years on behalf of the country and which have all been frittered away under very shady circumstances would be a great disservice to Nigerians by the National Assembly.

“We reiterate for the umpteenth time that if corruption and capital flight are eliminated, the innumerable leakages existing in the system blocked, tax administration made effective, the economy diversified away from burdensome dependence on oil and strict fiscal discipline established, enough resources will be garnered to fund the nation’s budget.

“The proposition by the Federal Government to borrow a staggering sum of N2.2tn to finance the nation’s 2016 fiscal budget is a glaring demonstration of insensitivity to the travails of Nigeria’s economy and citizens. Already, this is sequel to its plan to devote a colossal sum of N1.36tn to debt servicing alone in the budget.”

Bellonwu-Okafor added, “Fiscal projections as expounded in the proposed budget has revealed that the administration has no genuine intention of running a truly cost-effective government as it committed to doing in its pre-election pledges and which it superficially appeared to do with the merging of ministries, an action that has clearly translated into no concrete change in the fiscal parameters of governance in the country.

“If allowed to pass as it is, this will shoot Nigeria’s debt profile to over N15tn, with debt servicing amounting to 72 per cent of the 2016 capital budget. This sinks Nigeria further into the debt trap, while compromising the nation’s human and capital development.”

Ajakaiye, however, said there was nothing that the Federal Government could do about the N1.36tn for servicing debt that had fallen due.

He said, “It is already an obligation. Government cannot default, otherwise there will be a crisis. The fact that N1.84tn is for capital projects is good. The only thing we need to look at is the type of capital projects to be funded.”

He opined that if the right projects were funded, they would be able to generate funds that could be used to service the debt

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Banking Sector

CBN Denies Reinstatement of Suspended Cybersecurity Levy on Electronic Transfers

Published

47 mins ago

September 20, 2024

Bassey Marshall

The Central Bank of Nigeria (CBN) has denied reports of reintroducing the previously suspended cybersecurity levy on electronic transfers.

Recall that the CBN had, on May 20, 2024, withdrawn an earlier directive mandating all commercial, merchant, non-interest, and payment service banks, as well as mobile money operators, to charge a 0.5 percent cybersecurity levy on all electronic transfers.

The cybersecurity levy was initially issued by the Central Bank on May 6, 2024.

However, later reports suggested that the apex bank reinstated the levy, claiming that the percentage had been reduced from 0.5% to 0.005% in the new guidelines.

Part of the statement read: “The CBN shall continue to enforce the payment of the mandatory levy of 0.005 percent on all electronic transactions by banks and other financial institutions, in accordance with the Cybercrime (Prohibition, Prevention, etc.) Act, 2015.”

“Pursuant to the circular titled ‘Issuance of Risk-Based Cybersecurity Framework and Guidelines for Deposit Money Banks and Payment Service Providers,’ referenced BSD/DIR/GEN/LAB/11/25, and dated October 10, 2018, issued by the CBN to combat the increasing cybersecurity threat in the banking industry, banks and Payment Service Providers (PSPs) are mandated to adhere to the guidelines on the risk-based cybersecurity framework.”

Reacting to these reports, the CBN, in a statement on Friday, clarified that there is no reversal on the suspension of the cybersecurity levy.

The apex bank made this clarification in a statement titled, “Clarification on the Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for Fiscal Years 2024 – 2025 (Monetary Policy Circular No. 45).” It stated that the earlier released circular had been misinterpreted or misrepresented.

The CBN “reiterates that the publication is a compilation of previously issued policies and guidelines from the Bank up to a cut-off date, typically December 31 of the relevant year.”

Finance

Did President Tinubu Ask CBN Gov Cardoso To Resign?

Published

1 day ago

September 19, 2024

Bassey Marshall

The presidency has refuted reports alleging that President Bola Tinubu had asked Yemi Cardoso to resign from his position as the Governor of the Central Bank of Nigeria (CBN).

The report claimed that the president ordered Cardoso to resign following his inability to stop the poor performance of the economy, most especially, the free fall of the Naira.

Also, the report alleged that Tinubu gave the order to Cardoso before departing Nigeria for China.

However, the Special Adviser to the President on Information and Strategy, Bayo Onanuga, has countered the report suggesting that Tinubu ordered Cardoso’s resignation.

The presidential spokesman spoke via his X handle, describing the report as a “bundle of lies.”

“It’s all lies. President Tinubu has not asked Yemi Cardoso to resign,” Onanuga said while dismissing the report.

Cardoso was nominated as CBN Governor by President Tinubu on September 15, 2023, and assumed office as CBN Governor on September 22, 2023.

He and his deputies were cleared by the National Assembly days before he took over from acting CBN Governor, Folashodun Shonubi.

Cardoso has been under heavy pressure to address the ongoing economic challenges and stabilise the Naira.

Appointments

Keystone Bank Receives New Board Chairman, Directors From CBN

Published

2 days ago

September 18, 2024

Bassey Marshall

It is the dawn of a new era for Keystone Bank, a top player in the Nigerian banking sector.

As part of a broader strategy to ensure sustained growth for Keystone Bank, the Central Bank of Nigeria (CBN) has approved a new chairman and board of directors for the financial institution.

The new board consists of a new board chairman, five non-executive directors, and two new directors, all carefully selected to take the bank to new heights.

The apex bank confirmed the latest development via a statement on Wednesday.

Steering the ship of leadership is Lady Ada Chukwudozie, as the new board chairman.

Lady Ada Chukwudozie, brings with her a truckload of experience.

A prominent figure in Nigeria’s corporate sector, Ada has nearly three decades of experience in business strategy, management, and administration.

Her expertise cuts across multiple industries, including De-Endy Industrial Company Limited, Dozzy Group, the Manufacturers Association of Nigeria, and Vogue Afrique Magazine.

Indeed, to whom much is given, much is expected.

With her extensive background and experience, Ada will now shoulder the responsibility of guiding the bank toward achieving its long-term goals.

The good news is that she is not alone. Joining her on the board are five non-executive directors, each bringing their unique skills to the table.

The five non-executive directors are Abdul-Rahman Esene, Mrs. Fola Akande, Akintola Ayodeji Olusoji, Obijiaku Samuel, and Senator Farouk Bello.

Together, they will play a critical role in shaping the future of the bank.

Furthermore, two new executive directors, Ladi Oluwole and Abubakar Usman Bello were also confirmed by the CBN.

Meanwhile, Keystone Bank’s Managing Director and CEO, Hassan Imam, bragged about his confidence in the new team.

To him, he was certain they would drive the bank’s growth and ensure reliable service for customers.

Imam noted that their wealth of experience would play a crucial role in the bank’s continued repositioning and growth.

His words: “We are pleased to welcome the new chairman, non-executive directors, and executive directors to the board of Keystone Bank.

We are confident that their extensive experience will be invaluable as we continue to reposition the bank to seize emerging economic opportunities while maintaining strong corporate governance and providing our customers with a secure and reliable banking experience,” Imam concluded.

Recall that in January, the CBN dissolved the board and management of Union Bank, Keystone Bank, and Polaris Bank.