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We’ve Injected N2.419tn Into Economy – FG



  • We’ve Injected N2.419tn Into Economy 

The Federal Government has injected over N2.419tn into the economy out of the total of N6.06tn budgeted for 2016, according to its 2017-2019 Medium Term Expenditure Framework and Fiscal Strategy Paper.

The figure covered recurrent and capital expenditures incurred as of the end of June this year.

The recurrent expenditure alone, covering salaries, overheads, pensions, among others, gulped N1.479tn between January and June.

The documents obtained on Monday, indicated that revenue challenges affected capital payments, but noted that “capital releases (including capital share of statutory transfers) amounted to N331.58bn.”

The government stated, “These investments, in combination with other policy measures, are expected to revive economic activities.”

Domestic debt servicing claimed N609bn, while foreign debt servicing stood at N567bn.

President Muhammadu Buhari had laid the MTEF and the FSP before the National Assembly last week in Abuja, revealing the government’s plan to budget N6.8tn for 2017.

The figure will be about 13.3 per cent or N806bn above the N6.06tn budgeted for 2016.

The government said crude oil crisis and challenges in the Niger Delta affected oil revenue performance, making it to turn to “financing from borrowing and other sources” to fund the 2016 spending.

The country’s total debt, according to the documents, stood at $61.45bn as of June or “about N16.3tn.”

The government said, “The total debt stock is composed of external debt stock of $11.26bn (or about N3.19tn) and domestic debt stock of $50.19b (N13.11tn).

“Of the total domestic debt, the Federal Government was responsible for about 74.6 per cent, while the 36 states and the Federal Capital Territory accounted for the balance.”

Despite the rising cost of debt servicing, the government said borrowing was still “within the global threshold of 56 per cent for the country’s peer group.”

It explained further, “While the government maintains an expansionary fiscal policy over the short-to-medium-term and despite the country’s rising total debt service costs, the strategy is to keep the debt-to-GDP ratio within the present country specific ratio of 19.39 per cent and potentially review same to not more than 25 per cent in 2017.”

The documents projected the GDP growth of 3.02 per cent in 2017, while inflation was “expected to moderate to 12.92 per cent”, but consumption would increase to N80.05tn.

Its assumptions on crude oil production indicated 2.2mbpd in 2017; 2.3mbpd in 2018; and 2.4mbpd in 2019.

On the benchmark, it projected $42.5 per barrel for 2017 budget and $45 for 2018. For 2019, the figure was put at $50.

For the exchange rate, the government pegged it at N290 per dollar.

It explained, “It is also based on an average growth in employment and labour productivity, as well as an average gross fixed capital formation of 9.41 per cent of the GDP.”

The budgeted crude oil benchmark for 2016 was $38, while in 2015, it was $53. Both projections faced implementation challenges.

Meanwhile, data obtained from the Debt Management Office in Abuja on Monday, showed that while the Federal Government spent a total of N424.63bn to service domestic debt in the first quarter of the year, it spent a total of N217.05bn in the second quarter ending June 30.

On monthly basis, the Federal Government spent N140.39bn in January; N150.27bn in February; and N133.97bn to service its domestic debt.

For the months in the second quarter, the Federal Government spent N82.29bn in April; N71.49bn in May; and N63.27bn in June.

For the 12 months of 2015, the Federal Government spent a total of N1.02tn to service its domestic debt.

In the first half of 2015, the Federal Government spent N1 53.06bn in January, N75.42bn in February; N82.55bn in March; N90.12bn in April; N61.69bn in May; and N65.69bn in June to service domestic debt.

This means that for the first six months in 2015, the Federal Government spent a total of N528.54bn to service its domestic debt.

The implication of this is that compared to a similar period in 2015, the amount used to service the Federal Government’s domestic debt in the first six months of the year rose by N113.14bn.

This shows an increase of 21.49 per cent in the cost of servicing domestic debt within a period of one year.

The domestic debt of the Federal Government stood at N10.61tn as of the end of June while as of the end of June 2015, its domestic debt stood at N8.4tn.

It was discovered that the Federal Government spent a total of N2.95trn to service domestic debts for a period of five years, from 2010 to 2014. The cost of servicing domestic debt rose from N334.66bn in 2010 to N846.64bn by the end of December 2014.

Each year, the Federal Government sets apart some money in the budget for the servicing of both foreign and domestic debts. The actual amount paid, however, may differ from what was budgeted.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.

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Tanzania: African Development Fund Approves $116 Million Loan to Upgrade Southern Road Corridor



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The Board of Directors of the African Development Fund on Wednesday approved a loan of around $116 million to the Tanzanian government to upgrade a 160-km Mnivata-Newala-Masasi road corridor in the southern part of the country.

The Bank’s loan represents 98.71% of the project cost; the government of Tanzania will provide the remaining 1.29% in funding.

The project will upgrade the roadway, including the 84-meter Mwiti bridge, to bituminous standard. The works also have social components, including the provision of potable water, education and medical infrastructure, the establishment of cashew nut processing units, and extension of entrepreneurial training to women and youth.

The upgrade is expected to open up rural areas in the region and enhance the Mtwara Development Corridor, which links Mtwara Port and Mbamba Bay port on Lake Nyasa. Exporters, importers, small-scale cross-border traders, farmers, transporters are all expected to benefit.

“The periodic isolation of such a significant population worsens vulnerability and undermines social inclusion. Improved road connectivity would therefore build the resilience of the people and widen livelihood opportunities within the Mtwara Development Corridor and the surrounding districts,” Bank Director General for East Africa Nnenna Nwabufo said.

Overall, the five-year project will improve mobility and accessibility for about 1.1 million people in Mtwara, Tandahimba, Newala and Masasi districts and facilitate integration with neighbouring Mozambique, Malawi and Zambia.

Currently, the districts of Tandahimba and Newala, with an estimated combined population of 509,000 people, are mostly cut off, while connection with the Mtwara port area for essential supplies is severely constrained during rainy seasons due to the state of the road.

The project will advance Tanzania’s current five-year Development Plan (2021-2026) and aligns with the Bank Group’s Country Strategy Paper (2021-2025) which emphasizes sustainable infrastructure for a competitive economy and an improved private sector business environment for job creation, as well as two High-5 strategic priorities: Integrate Africa and Improve the quality of life for the people of Africa.

At 30 June 2021, the Bank Group’s active portfolio in Tanzania comprised 22 operations (19 public and 3 private) with a total commitment of about $2.4 billion.

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Banking Sector

FirstBank Expands Its International Money Transfer Network, Reinforces its Commitment to Customer Service



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In furtherance of the need to expand diaspora remittance inflow into the country, First Bank of Nigeria Limited has increased its network of International Money Transfer Operators (IMTOs), targeted at easing the accessibility of its customers to receive money from close to 100 countries across the world in a safe and secured manner. With over 750 branches across the country, customers can receive money from the nearest FirstBank branch closest to them.

Over the years, FirstBank has been in partnership with Western UnionMoneyGram, Ria, Transfast, and WorldRemit. The bank is also in partnership with other IMTOs which include Wari, Smallworld, Sendwave, Flutherwave, Funtech, Thunes and Venture Garden Group to promote remittance inflow into the country, thereby putting Nigerians and residents at an advantage in receiving money from their families, friends and loved ones across the world.

Beneficiaries can receive remittance in US dollars in any of our over 750 branches spread across the country. Customers without an existing domiciliary account can have dollar account automatically created for their remittances. You can also receive inflow directly into your account through Western Union.

In addition, FirstBank has launched its wholly owned remittance platform named First Global Transfer product to promote the international transfer of funds across its subsidiaries in sub-Saharan Africa. These subsidiaries include FBNBank DRC, FBNBank Ghana, FBNBank Gambia, FBNBank Guinea, FBNBank Sierra-Leone, FBNBank Senegal.

Reiterating the Bank’s resolve in promoting diaspora remittances, regardless of where one is across the globe, the Deputy Managing Director, Mr Gbenga Shobo said “at FirstBank, expanding our network of International Money Transfer Operators is in recognition of the significant roles diaspora remittances play in driving economic growth such as helping recipients meet basic needs, fund cash and non-cash investments, finance education, foster new businesses and debt servicing.

We are excited about these partnerships, as it is essential to ensure our customers are at an advantage to receive money from their loved ones and business associates, anywhere they are, across the world.”

FirstBank pioneered international funds transfer and remittances over 25 years ago and has been at the forefront of promoting cross border payments in the country, having started the journey with Western Union Money Transfer. The Bank’s wealth of experience and operation in over 750 locations nationwide gives it the edge in the market.

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Private Sector Seeks FG’s Directive on VAT Payment



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The Organised Private Sector of Nigeria (OPSN) on Sunday in Lagos called on the Federal Government to urgently make a pronouncement on the ongoing controversy over VAT payment so that businesses will know what to do.

OPSN chairman, Mr Taiwo Adeniyi, made the call at a news conference and said delays in addressing the issue could cause negative effects on businesses, most especially in the collection and remittances of VAT.

“We are aware that by Sept. 21 we get penalised if we do not pay or remit the VAT for the month of August.

“We are also aware that laws are not made in retrospect. It then means that even if those laws have been enacted, particularly the Lagos State law which came into effect in September, it will not affect the payment by businesses in the state.

“Due to our remittances, we have issues with the fact that the law for Rivers was made in August and the majority of the businesses in Lagos usually will have a relationship with the Rivers State Inland Revenue too.

“The confusion in the public space is the reason we are calling on the government to come to our aid as we want to pay.

“It is for the government at the center to make a pronouncement as to what becomes of us,’’ he said.

Adeniyi, who is also the President of, Nigeria’s Employers Consultative Association (NECA), said that the ongoing challenge had the potential to make businesses pay double VAT in view of demands by the FIRS and state governments.

He said that businesses, as the collecting agents, were practically unclear on the authority to remit to and without a clear path, this would further aggravate the pain on businesses.

“It is a popular saying that where two elephants fight, it is the grass that suffers.

“It is no longer news that Nigerian businesses have been battling with myriads of challenges, making the survival of enterprises and ease of doing business in the country among the worst in this part of the world,’’ he said.

There has been controversy over the collection of VAT after a Federal High Court ruled that it was not the duty of the Federal Government to collect the tax.

VAT is normally collected by the Federal Government since the military era and the money is shared by the three tiers of government.

Following the court ruling, however, Lagos and Rivers states passed laws that allowed them to collect VAT.

FIRS, which used to collect the VAT on behalf of the Federal Government, has challenged the court ruling at the appellate court.

OPSN comprises the Manufacturers Association of Nigeria, the Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture, NECA, Nigeria Association of Small Scale Industries and the Nigeria Association of Small and Medium Enterprises.

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