All things being equal, President Muhammadu Buhari will on December 1 present the 2017 budget before a joint session of the National Assembly, the Senate disclosed wednesday. This disclosure was made by the Minority Leader, Godswill Akpabio, at the conclusion of the debate on 2017-2019 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) wednesday.
Taking into cognisance the vehement criticism of the document by senators as well as submissions by senators that the document should again be returned to the executive, Akpabio said doing so would be counter productive in view of the planned presentation of 2017 budget on December 1.
Akpabio therefore urged his colleagues to rather send the document to relevant committees with its flaws and leave such committees with the task of addressing the flaws.
“We can see that we don’t have a perfect document in our hands but of course we are looking at assumptions and assumptions may not necessarily be correct. I want to suggest that we send it to the committee. Of course, the committee will invite the relevant agencies and ministries of government. And they will come up with a more realistic MTEF/FSP because I believe also that looking at the date that this was submitted to the Senate – it was submitted to the Senate on the 4th of October – and we are debating it today on the 22nd (of November). So, a lot of indices must have changed.
“Yesterday, you (Saraki) made reference to the fact that the president may be coming to the chambers to submit and read the 2017 budget on December 1. If that is the case and we send this back now and wait for it to come and debate it, it means that we will not be able to meet that deadline. But if we send it to the committee level, they may come up with something within the next three days that will be more realistic.
“So, my appeal will be that the committee members should take into cognisance all the submissions and observations made today so that we can come up with a more realistic MTEF and FSP,” Akpabio said.
However, during the debate on MTEF and FSP yesterday, there was a consensus among senators that the document was flawed as they vehemently condemned the document, describing it as a compedium of fraud, dishonesty, lies, deceit and one which lacked the basis to project the 2017 fiscal year.
Leading debate on the document yesterday, Deputy Senate Leader, Bala Ibn Na’Allah, described it a statutory document which articulated government revenue and spending plan as well as its fiscal policy objective over a stated period.
Na’Allah said presentation of the document which was in accordance with Section 11 of Fiscal Responsibility Act (FRA) 2007, consisted of proposed $42.5 oil benchmark, projected 3.02 per cent gross domestic product (GDP) growth in 2017 and moderated inflation rate of 12.92 per cent.
He said the GDP growth would be driven by strong performance in agriculture, wholesale and retail, construction and real estate sectors among others.
The lawmaker added: “Similarly, the GDP growth for the medium term is based on assumptions of average oil production of 2.2 million barrel per day (mbpd), 2.3 mbpd and 2.4 mbpd for 2017, 2018 and 2019 respectively with average benchmark oil price of $42.5 bpd, $45bpd‚ and 50bpd for 2017,2018 and 2019 respectively as well as an average exchange rate of N290 per dollar. It is also based on an average growth rate of 9.69 per cent during the period.”
Na’Allah also said the 2017 budget would be guided by six principles which he listed as realism, credibility, allocative strategy, prioritisation, transparency and accountability and social safety nets.
In his contribution, Senator Dino Melaye (Kogi West), recalled how Central Bank of Nigeria (CBN) last Monday admitted that the nation was plunged into recession by Nigeria’s huge debt.
Melaye who demanded the performance of 2016 to 2018 MTEF/FSP also criticised the proposed N290 to $1 exchange rate in the MTEF, describing it as a factual lie moreso that the official exchange rate is N305 to $1 and over N400 to $1 in the parallel market.
Melaye said: “If we speak the truth, we will die, if we lie, we will die. So, I have chosen to speak the truth and die. Mr. President, just this morning,The Punch Newspaper carried on its front page boldly an assertion from the CBN that huge debt is responsible for recession and there is no other factual factor responsible for recession than our huge debts. I want to say this document that I have before me, this MTEF proposal and projections of the 2017 to 2019, is a lie. This document is not truthful. It is not honest. It is not transparent and It is not factual.”
Also speaking, Senator Usman Nafada (Gombe North), while speaking on imminent consequences of the flawed document, noted that the trouble with the current 2016 budget might have been laid by the 2016-2018 MTEF.
He echoed Melaye that N290 to $1 exchange rate contained in the document was a farce, explaining further that pegging the exchange rate at N290 to $1 would run the 2017 budget into defict.
Nafada added that a situation where the nation was producing only 1.5 million bpd as against the projected 2.2 million bpd would continue to create forex crisis adding that a situation where only oil is the product being exported in Nigeria is unhelpful.
Nafada took on Senator Ahmad Sani (Zamfara Central) who had claimed that nothing was wrong with the document and that within three months, the economy could recover. Nafada challenged him to “tell us the magic you want to do in three months.” Sani had claimed that he had a masters degree in Economics.
In the same vein, Senator Mohammed Hassan (Yobe South) said the 2017 projection was not realistic as he argued that there was no basis for the projections in MTEF.
Hassan also lamented lack of co-ordination between the fiscal and monetary policies of the government, pointing out that a situation where the government keeps borrowing while banking is unattractive is not healthy for the economy.
In his submission, Senator Sam Anyanwu (Imo East) lamented a situation where oil pipelines are being destroyed in Niger Delta without a decisive attempt to stop the trend.
On the MTEF, Anyanwu did not mince words to deride it, saying “there is no document before us.”
On his part, Senator Joshua Lidani (Gombe South) said the document lacked credibility, noting that production volume had been on a progressive decline without any political will from the government to address it.
He recalled how the late President Umaru Yar’Adua confronted a similar situation in the past and nipped it in the bud by coming up with amnesty for militants as he lamented that despite the claim of diversification, nothing has been done by the government to add value to the agricultural sector.
On his part, Senator Adeola Olamilekan (Lagos West), attacked the federal government’s economic team, saying it is in disarray.
Others who also spoke on the document were Senators John Enoh (Cross River Central); Ahmad Lawan (Yobe North), Emmanuel Paulker (Bayelsa Central) and Kabiru Gaya (Kano South).
In his remark, Senate President Bukola Saraki, echoed his colleagues that the projections were not realistic but tasked the Committees on Approprition and Finance to dust the MTEF and return it a refined document.
“There is no doubt about the fact that these projections are not realistic. There is no doubt that the exchange rate is not realistic.
The Central Bank of Nigeria has said it is using N305 to a dollar exchange rate).There is no doubt as well that throughout this year, we did not achieve 2.2 million barrels per day (production volume). Even in time of peace in the oil rich Niger Delta, we have not achieved 2.5mbpd. How realistic is 2.2mbpd next year? The oil price as well looks conservative.
“Like some of our distinguished colleagues said, our responsibility is to work on it and use our capacity to do the right thing. We have our Committees on Appropriation and Finance that should not just take anything from the executive, sign it and return it (verbatim). If it means that we have to rehearsh it, look at it again, turn it around and do what is right, then, that is our responsibility.
“I think that is just the way to go rather than to just take a document from the executive and return the same to it. It is clear from what was submitted today that it will not work like that this time around,” Saraki said.
However, the decision to debate the MTEF was taken at the executive session held by the senators before yesterday’s plenary.
It was learnt that the Senate resolved to debate the document in view of perceived indifference of the government towards the return of the document to it in the last two weeks.
The Senate had returned the document to the executive earlier in the month, alleging that it was empty, shallow and asked the government to make the document more valuable. But rather than address the issues raised by the Senate, the presidency looks the other way.
Manufacturing Firms Borrowed N570bn from Banks in 2020 – CBN
Manufacturing firms borrowed a total of N570bn from Nigerian banks last year amid the economic fallout of the COVID-19 pandemic.
Banks’ credit to the manufacturing sector rose to N3.19tn as of December 2020 from N2.62tn at the end of 2019, according to the sectoral analysis of banks’ credit by the Central Bank of Nigeria.
The sector received the second biggest share of the credit from the banks after the oil and gas sector, which got N5.18tn as of December.
“The manufacturing sector, which is the engine of sustainable growth, is still struggling with the debilitating impact of the pandemic and is yet to recuperate,” the Director-General, Manufacturers Association of Nigeria, Mr Segun Ajayi-Kadir, said in January.
MAN, in a January report, revealed that most manufacturers said commercial banks’ lending rates were discouraging productivity in the sector.
The report said 71 per cent of Chief Executive Officers interviewed “disagreed that the rate at which commercial banks lend to manufacturers encourages productivity in the sector.”
It said the cost of borrowing in the country remained at double digits even amidst the reforms meant to culminate in lower rates to engender the country’s economic recovery process.
The report said, “Special single digit loans offered by development banks are still hard to leverage as conditionalities to assess the loans through commercial banks are often overwhelming and laden with additional charges that will eventually make the interest rate double digit.
“Seven per cent of respondents were, however, of the opinion that the rate at which commercial banks lend to manufacturers encourages productivity in the sector while the remaining 22 per cent were not sure of the impact of the rate of lending on productivity in the manufacturing sector.”
The report showed that 64 per cent of respondent disagreed that the size of commercial bank loan to manufacturing sector had encouraged manufacturing productivity.
It said the very high presence of the government in the money market, particularly through the sale of treasury bills, had been crowding out the private sector from the market.
Nigeria Earns Extra N318.4 Billion as Crude Oil Hits $67/Barrel
FG Generates Additional Income of N318.4 Billion as Crude Oil Hits $67/Barrel
The Federal Government earned an additional N318.36 billion in February following the surge in crude oil price above $60 per barrel.
Brent crude oil, against which Nigerian oil is priced, average $60 throughout the month of February.
In March, it rose to $67 per barrel.
According to the Minister of Finance, Budget and National Planning, Zainab Ahmed, Nigeria’s crude oil price was retained at $40 per barrel for 2021.
However, she said the nation is presently producing below its 2.5 million barrel per day capacity at 1.7mbpd. This, she said includes 300,000bpd condensates.
“Although Nigeria’s total production capacity is 2.5mbpd, current crude production is about 1.7mbpd, including about 300,000bpd of condensates, which indicates compliance with OPEC quota,” the finance minister stated.
Going by the number, Nigeria is producing 1.4mbpd of crude oil without condensates, but with an additional $20 revenue when compared to the $40 per barrel benchmark for the year. It means the Federal Government realised an additional income of N318.360 billion or $20 X 1.4mbpd X 30days in the month of February.
Crude oil jumped to $68.54 per barrel on Friday following OPEC+’s decision to role-over production cuts.
Nigeria, Morocco sign MOUs on Hydrocarbons, Others
The Federal Government and the Kingdom of Morocco have signed five strategic Memoranda of Understanding that will foster Nigerian-Morocco bilateral collaboration and promote the development of hydrocarbons, agriculture, and commerce in both countries.
The Minister of State for Petroleum Resources, Chief Timipre Sylva, led the Nigerian delegation to the agreement signing ceremony on Tuesday at Marrakech, Morocco, while the Chief Executive Officer of OCP Africa, Mr Anouar Jamali, signed for the Kingdom of Morocco, according to a statement by the Nigerian Content Development and Monitoring Board.
Under the agreement between OCP, NSIA and the Nigerian National Petroleum Corporation, Nigeria will import phosphate from the Kingdom of Morocco and use it to produce blended fertiliser for the local market and export.
The statement said Nigeria would also produce ammonia and export to Morocco.
“As part of the project, the Nigerian Government plans to establish an ammonia plant at Akwa Ibom State,” it said.
The Executive Secretary of NCDMB, Mr Simbi Wabote, and the Group Managing Director of NNPC, Mallam Mele Kyari, were part of the delegation and they confirmed that their organisations would take equity in the ammonia plant when the Final Investment Decision would be taken, the statement said.
Sylva said the project would broaden economic opportunities for the two nations and improve the wellbeing of the people.
He added that the project would also positively impact agriculture, stimulate the growth of gas-based industries and lead to massive job creation.
He said the President, Major General Muhammadu Buhari (retd.), had mandated the Ministry of Petroleum Resources and it agencies and other government agencies to give maximum support for the project.
“He mandated me to ensure that at least the first phase of this project is commissioned before the expiration of his second term in office in 2023,” he added.
According to the statement, the MOUs were for the support of the second phase of the Presidential Fertiliser Initiative; Shareholders Agreement for the creation of the joint venture company to develop the multipurpose industrial platform and MOU for equity investment by the NNPC in the joint venture and support of the gas.
Other agreements are term sheet for gas sales and aggregation agreement and MOU for land acquisition and administrative facilitation to the establishment of the multipurpose industrial platform for gas sales and aggregation agreement.
The NCDMB boss described the bilateral agreement as significant to the Nigerian economy as it would accelerate Nigeria’s gas monetisation programme through establishment of the ammonia plant in the country.
The agreement would also improve Nigeria’s per capita fertiliser application through importation of phosphate derivatives from Morocco, he added.
Wabote challenged the relevant parties to focus on accelerating the FID, assuring them that the NCDMB would take equity investment for long-term sustainability of the project.
He canvassed for the setting up of a project management oversight structure to ensure project requirements and timelines are met.
“There is also need to determine manpower needs for construction and operations phase of the project and develop training programmes that will create the workforce pool from Nigeria and Morocco and design collaboration framework between research centres in Nigeria and Morocco to develop technology solutions for maintaining the ISBL and OSBL units of the Ammonia complex,” he said.
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