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FG Approves Three-year External Borrowing Plan

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Muhammadu-Buhari

FG Approves Three-year External Borrowing Plan

The federal government has approved a three-year rolling external borrowing plan.

Briefing State House Correspondents after the Federal Executive Council (FEC) meeting held in Abuja yesterday, the Minister for Finance, Mrs. Kemi Adeosun, said the approval would be transmitted to the National Assembly immediately.

She said the loans would come from agencies such as the World Bank, African Development Bank, China Exim Bank, and other development agencies like the Japanese International Cooperation Agency (JICA).

Also at the briefing were the Minister for Information and Culture, Lai Muhammed, Minister for Solid Minerals, Kayode Fayemi, Minister for Finance, Minister for Agriculture, Audu Ogbeh, and Minister for Education, Adamu Adamu, who also briefed journalists with respect to FEC’s approval for their respective ministry.

Other highlights of the meeting included the changing of the name of Ministry for Solid Minerals to Ministry of Mines and Steel Development, the approval of a new roadmap for the development of the solid minerals sector, approval of contracts to build a new structure called international house at the University of Ibadan and a library at the University of Lagos.

The finance minister said the plan to borrow externally was in line with government’s strategy to focus on concessional debts, low cost loans particularly from multi-lateral agencies.

She said: “So this plan we have put forward today which was approved by the FEC and will be transmitted to the National Assembly for the approval includes:

“Concessional loans average interest rates 1.25 per cent, four to seven year moratorium, 20 years to pay. From agencies such as the World Bank, African Development Bank, China Exim Bank, and other development agencies lke Japanese International Cooperation Agency (JICA).”

Adeosun said the loans would be applied to develop strategic sectors which government believed would help revive the economy.

She said the power sector would receive a significant amount of the loan to take care of projects militating against efficient power generation. She specifically cited transmission.

“This is long term money that will enable us solve some of the problems in that sector,” she added.

Adeosun said the health sector would also benefit from the loan.

She said: “There are projects around polio. There are some money that have been allocated to us to help us do some massive immunisation, in order to control this recent outbreak. This is being provided by the World Bank.

“There is provision for solid minerals and of course I’m very excited about the discovery of nickel. The World Bank is supporting the project by the Ministry of Mines and Steel with $150 million to enable them strengthen their capacity in that area.

“The largest beneficiary of our borrowing is agriculture because it is equally strategic and we have programmes by the minister some of which he inherited and is going to restructure and reform and some are new to the ministry.”

The minister said government would also seek funding through Eurobond.

She said: “The FEC sent a strong signal to everybody that we need to reach out to the National Assembly to get this borrowing plan approved as soon as possible. Because a lot of this money is for developmental projects. We need this money and it is available for us.

“Remember these are foreign exchange coming to our country that will help our economy.”

Answering questions after the briefing, the finance minister said the present administration was on course to lay a solid foundation for Nigeria’s development.

Adeosun dismissed claims that the administration was confused about how to manage the nation’s economy.

According to her, the government has a clear view of what to do to turn the economy around.

She said: “It is the worst possible time for us. Are we confused? Absolutely not. How are we going to get ourselves out of this recession. One, we must make sure that we diversify our economy. There are too many of us to keep on relying on oil. We can all see what happened at the output data of the oil and gas sector. What’s happening in the Niger Delta has dragged down the GDP of the entire economy. We’re too dependent on oil.
We have to invest in capital projects.

“No we are not confused, the time are confusing but we are not confused. We are extremely focused. We know that if we can just bear and get through this difficult period, Nigeria is going to be better for it. If we rely on oil and the price of oil remains low and the quantity of oil remains low, we can’t grow. We have to grow our non oil economy.

“I think that we have a long way to go. We’re not confused and we’re not deceiving ourselves that everything is rosy. It’s not. It’s a difficult time for Nigeria but I think Nigeria is in the right hands and if we can stick to our strategy. We still have some adjustments to make. I think we need to make some adjustments in monetary policy. It’s quite clear we do and we will do that. We’re working on that. We need to try and find a way to support the manufacturing sector better and we will do that.”

While answering question on the figure released by National Bureau of Statistics, Adeosun said the inflation was being pushed by cost and it would be curtailed.

“What we have is cost-push inflation and when you have cost-push inflation it is structural inflation. It is not going to respond to monetary policy tools such as increasing the rate of interest. We have to address the structural causes of the inflation

“The trend, the rate of inflation growth has slowed down and that’s a good sign.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Finance

Remittance to Nigeria, Other African Countries Hits $53bn in 2022

Remittance to Sub-Sahara Africa rose to $53 billion in this year

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Naira Exchange Rates - Investors King

The World Bank report has indicated that remittance to Nigeria and other countries in Sub-Sahara Africa has reached $53 billion in 2022. This represents an increase of 5.2 percent when compared with 2021.

Investors King understands that remittances into Nigeria and Kenya constitute a significant percentage of all the remittances into the African Sub-Sahara region. 

“Remittances to Sub-Saharan Africa, the region most highly exposed to the effects of the global crisis, grew an estimated 5.2 percent to $53 billion in 2022, compared with 16.4 percent last year (due mainly to strong flows to Nigeria and Kenya),” the report stated.

According to the World Bank report on Migration and Development, prepared by the bank’s Migration and Remittances Unit and Development Economy, remittance has constituted an important part of the Gross Domestic Product (GDP) for a number of African countries. 

For example, Remittances as a share of GDP in the Gambia is 28 percent while it stood at 21 percent in Lesotho, the report noted. 

The report added that remittances are an important source of household income for most Low and Middle-Income Countries (LMICs). Through remittances, most of the households in the LMICSs have been able to survive harsh economic conditions such as the Covid-19 pandemic. 

“Remittances are a vital source of household income for LMICs. They alleviate poverty, improve nutritional outcomes, and are associated with increased birth weight and higher school enrollment rates for children in disadvantaged households”. 

The World Bank noted that although the rising price of goods has adversely affected migrant incomes, the reopening of the economy and international borders has led to the increase of remittance inflow into Sub Sahara Africa.

Meanwhile, the global bank acknowledges that countries that witnessed scarcity of foreign exchange rates or multiple exchange rates officially recorded a decline in remittances inflow as migrants shift to alternative channels which promise better rates. 

The report noted that sending funds back home from some countries in Europe and America could attract a transaction fee that is as high as 7.8 percent on average. 

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Banking Sector

Insider Dealing: Hafiz Mohammed Bashir Acquires 37 Million Shares in Unity Bank

Alhaji Bashir carried out the acquisition in 32 different transactions at an average price of N0.51 a unit between November 8th and 11th 2022

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The management of Unity Bank Plc has announced that a non-Executive Director, Hafiz Mohammed Bashir scooped 37,681,947 shares of the bank.

The transaction was disclosed in a statement signed by the bank’s secretary, Alaba Williams.

Alhaji Bashir carried out the acquisition in 32 different transactions at an average price of N0.51 a unit between November 8th and 11th 2022, according to the disclosure available on the Nigerian Exchange Limited (NGX).

Insider dealing is the buying or selling of a company’s shares by someone with a piece of insider information not available to the public. Insider dealing is illegal in the U.S. but not in Nigeria as long as it’s disclosed.

The Nigerian Security and Exchange Commission (SEC) mandated all listed companies to disclose insider trading to enforce transparency across the nation’s Exchange market.

Also, insider dealings can help stakeholders and retail investors assess the confidence of top company executives in a listed company. While Alhaji Bashir’s acquisition could demonstrate his trust in the future of the company, it could also mean positioning ahead of a major company’s event given his position.

Hafiz Mohammed Bashir Profile

In 2017, Hafiz Mohammed Bashir was appointed as a Non-executive Director following the Central Bank of Nigeria’s approval.

Hafiz Mohammed Bashir is an accomplished professional with vast experience in the public and private sectors. He retired at the apex of Local Government Administration in Katsina State in 1992 and has chaired the Board of many companies – including Fiztom International Ltd, HafadGlobal Resources limited and Fiziks Nigeria limited.

Alh. Hafiz who is currently in private business holds a Post Graduate Diploma in Management from Abubakar Tafawa BalewaUniversity, Bauchi, and an Advance Diploma in Public Administration from the University of Jos, a higher Diploma in Local Government Administration- AhmaduBello University. Zaria and Diploma in Insurance from ABU, Zaria He is also currently undergoing a Master’s programme in Business   Administration at the Business School of the Netherlands.

See the details of the transactions below.

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Loans

Lagos Chamber of Commerce Advised FG on Borrowing, Proffer Solutions to Foreign Exchange Crises

LCCI lamented that additional borrowings will further increase Nigeria’s debt-servicing bill

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The Lagos Chamber of Commerce and Industry ( LCCI) has advised the Federal Government to explore alternative ways to finance the deficit in the 2023 budget proposal. LCCI lamented that additional borrowings will further increase Nigeria’s debt-servicing bill.

Investors King understands that the 2023 budget proposal as submitted to the National Assembly by the president has a deficit of N10.78 trillion.

Speaking at the organisation’s 134th Annual General Meeting (AGM) held in Lagos, LCCI President, Dr Olawale Cole, stated that although the chamber does not totally frown at the budget deficits, the chamber, however, is not disposed to issuing new commercial loans as well as bilateral and multilateral loans to finance the deficit. 

Dr. Olawale added that while President Buhari alongside other African presidents is seeking debt cancelation from international creditors, the presidents across the African continent keep piling up debts. 

“The world is a bit confused at our president’s well-publicized call for debt cancellation at the last United Nations General Assembly,” he noted.

Speaking further on the danger of the country’s incessant borrowing, Olawale said “the borrowings are significantly increasing, and Nigeria is struggling to service these debts due to revenue mobilisation challenges and an increased fuel subsidy burden”.

“The International Monetary Fund (IMF) has warned that debt servicing may gulp 100 percent of the federal government’s revenue by 2026 if the government fails to implement adequate measures to improve revenue generation,” he lamented. 

Similarly, the LCCI president also spoke on the foreign exchange challenges in Nigeria. He noted that the major cause of the fall in naira is a result of the drop in oil output and weak production amid increased demand for foreign currency. 

“The real solution to our forex scarcity crises is to boost production and expand exports. We must also resolve the crises around oil production, as 80 percent of forex earnings come from oil and gas exports,” he said. 

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