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Experts, Group Express Concern Over 2017 Budget Proposal

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Budget 2017 year on cube with pencil and clock
  • Experts, Group Express Concern Over 2017 Budget Proposal

The Centre for Social Justice on Thursday faulted the framework to be used to raise the proposed N4.9tn revenue to fund the 2017 budget of the Federal Government.

The group, in a preliminary analysis of the budget proposals submitted to the National Assembly by President Muhammadu Buhari on Wednesday, expressed concern that the revenue target was rather optimistic.

Based on the revenue projections for 2017, a total sum of N1.98tn is being expected from oil sources, while non-oil sources are expected to contribute N1.37tn.

Independent revenues of N807.57bn are also being expected from agencies of government, while N565.1bn and N210.9bn are expected from recovered loot and other revenue sources.

The Lead Director, CSJ, Mr. Eze Onyekpere, in an electronic mail sent to our correspondent, said the inability of the Federal Government to resolve the challenges in the Niger Delta might affect the proposed N1.98tn revenue from oil.

He said, “The first challenge of the revenue framework is on the expected revenue from oil. The lack of a clear path for the resolution of the insurgency in the Niger Delta region will affect the realisation of the projection for oil revenue.

“The President indicated that disruptions to crude oil production partly contributed to significant shortfalls in projected revenues. If the country could not meet the 2016 projection, and without resolving the challenge, it is likely that the 2017 projection will not be met.”

Also speaking on the budget parameters, the Chief Consultant, B. Adedipe Associates, Dr. Biodun Adedipe, said that the budget was a good step in the right direction in reflating the economy.

He said, “This year’s budget is in a good direction in terms of volume, structure and in terms of emphasis. The important thing now is to encourage the government to continue in that direction.

“The sectors to focus on are good, and we should put more emphasis on capital expenditure rather than recurrent expenditure. There is also a need for credit, because you can’t grow a modern economic system without credit; and when credit is expensive, you can’t get the loan that you want to borrow.”

The Head, Investment Advisory, SCM Limited, a research and investment advisory firm, Mr. Sewa Wusu, said the budget would only set the country on the part of economic recovery if it was well implemented to the extent that the government would mobilise the needed financial resources and spend same in critical sectors that would enhance economic recovery.

He, however, stressed that the proposed budget would not take the country out of recession, contrary to the government’s opinion.

The Chief Executive Officer, Advanced Varieties, a research and investment firm, Mr. Kola Akinlade, said apart from the fact that the government got it wrong in terms of the budget assumptions like the exchange rate, oil output, total expenditure and debt servicing figure, there was also an issue with the manner it was planning to raise funds.

He noted that the government might not be able to achieve the target it set with the budget.

The Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, expressed concerns over the Federal Government’s intention to borrow N1.254tn from the domestic market to finance the budget deficit of N2.36tn.

Chukwu said the decision would have significant impact on the ability of private investors to get funding from the banks and other lenders.

He stated that the government had said it would restructure the national debt so that 60 per cent would be foreign, and the balance would be local.

A professor of Economics at the Olabisi Onabanjo University, Ago Iwoye, Sherriffdeen Tella, expressed doubt that the government would be able to raise up to the N7.3tn it planned to spend in the budget.

He noted that the government was still battling with how to raise funds to implement the 2016 budget.

Similarly, the Senior Associate, Investment Banking, Afrinvest, Mr. Ayodeji Ebo, said it would be very difficult or nearly impossible for the Federal Government to achieve the targets it set in the 2017 budget proposal.

According to him, the government has yet to achieve 50 per cent performance for the 2016 budget due to sundry problems relating to funding and economic policies.

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

Markets

SEC To Ban Unregistered CMOs From Operating By Month End

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The Securities and Exchange Commission (SEC) says it will stop operations of Capital Market Operators (CMOs) that are yet to renew their registration on May 31, 2021.

This was contained in a circular signed by the management of SEC in Abuja on Monday.

On March 23, SEC had informed the general public and CMOs on the reintroduction of the periodic renewal of registration by operators.

The commission noted that the reintroduction of the registration renewal was due to the need to have a reliable data bank of all the CMOs registered and active in the country’s capital market.

“To provide updated information on operators in the Nigerian Capital Market for reference and other official purposes by local and foreign investors, other regulatory agencies and the general public, to increasingly reduce incidences of unethical practices by CMOs such as may affect investors’ confidence and impact negatively on the Nigerian Capital Market and to strengthen supervision and monitoring of CMOs by the Commission,” SEC explained.

According to the circular, the commission said CMOs yet to renew their registration at the expiration of late filing on May 31, would not be eligible to operate in the capital market.

It explained that CMOs were required to have completed the renewal process on or before April 30, however, the commission said late filing for renewal of registration would only be entertained from May 1 to May 31.

SEC also said that asides from barring the CMOs who failed to comply accordingly, their names would be published on its website and national dailies.

It added that names of eligible CMOs would be communicated to the relevant securities exchanges and trade associations.

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Crude Oil

A Threat to Revenue As Nigeria’s Largest Importer of Crude, India slash Imports By $39.5B

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Crude oil

Nigeria’s revenue earning capacity has come under threat following the reduction of importation of crude oil by India.

India, Nigeria’s largest crude oil importer, reduced crude oil imports by $39.5bn in April, compared to the same time the previous year, data from India’s Petroleum Planning & Analysis Cell showed.

According to the Indian High Commission in Nigeria, India’s crude oil imports from Nigeria in 2020 amounted to $10.03bn.

This represented 17 percent of Nigeria’s total crude exports for the year according to the Nigerian National Petroleum Corporation, as quoted by OilPrice.com.

As Nigeria’s largest importer of crude oil, lockdowns in India’s major cities from the COVID-19 surge in April had ripple effects on Nigeria’s oil sales.

The NNPC was prompted to drop the official standard price of its main export streams, Bonny Light, Brass River, Erha, and Qua Iboe, by 61-62 cents per barrel below its April 2021 prices. They traded at $0.9, $0.8, $0.65, $0.97 per barrel respectively, below dated Brent, the international benchmark, as Oilprice.com showed.

India had been buying the not-too-light and not-too-heavy Nigerian crudes that suited its refiners.

Reuters reported that the Indian Oil Corporation’s owned refineries were operating at 95 percent capacity in April, down from 100 percent at the same time the previous month.

An official at the IOC was quoted as saying, “If cases continue to rise and curbs are intensified, we may see cuts in refinery runs and lower demand after a month.” Hundreds of seafarers risked being stuck at sea beyond the expiry of their contracts, a large independent crude ship owner reportedly told Bloomberg.

India reportedly bought more American and Canadian oil at the expense of Africa and the Middle East, reducing purchases from members of the Organisation of the Petroleum Exporting Countries to around 2.86 million barrels per day.

This squeezed the group’s share of imports to 72 percent from around 80 percent previously, as India’s refiners were diversifying purchases to boost margins, according to Reuters.

India also plans to increase local crude oil production and reduce import expenses as its population swells, according to Bloomberg.

A deregulation plan by the Narendra Modi-led government to boost national production to 40 million tonnes of crude oil by 2023/2024, an increase of almost eight million tonnes, had already been initiated.

According to Business Today, an Indian paper, the country currently imports 82 percent of its oil needs, which amounted to $87bn in 2019.

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Energy

Invest Africa and DLA Piper Partner to Support ESG Best Practice in African Renewable Energy Projects

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Invest Africa - Investors King

The global law firm, DLA Piper, has partnered with Invest Africa, the leading trade and investment platform for African markets, to support the development of ESG best practice in African renewable energy projects.

Clear Environmental, Social and Governance (ESG) targets and measurements have become an increasingly important part of fundraising as investors seek to align their portfolios with sustainable growth. For a continent boasting ample natural resources, this presents a significant opportunity for Africa’s green energy sector. However, renewable does not always equal sustainable and developing and articulating ESG metrics can pose a significant challenge to projects as they prepare investment rounds.

The project will assemble experts from the worlds of impact investment, development finance and law. Across a series of online meetings, participants will discuss strategies to improve ESG practices in African renewable projects from both a fundraising and operational perspective.

Amongst those speaking in the inaugural session on Thursday 13th May are Cathy Oxby, Chief Commercial Officer, Africa GreencoDr. Valeria Biurrun-Zaumm, Senior Investment Manager, DEGOrli Arav, Managing Director – Facility For Energy Inclusion (FEI) – Lion’s Head Global PartnersBeatrice Nyabira, Partner, DLA Piper Africa, Kenya (IKM Advocates) and Natasha Luther-Jones, Partner, Global Co-Chair of Energy and Natural Resources, International Co-Head, Sustainability and ESG, DLA Piper.

Veronica Bolton-Smith, COO of Invest Africa said, “Africa is particularly vulnerable to the impact of climate change despite contributing very little to global emissions. As the price of renewables fall, they will form an ever more important part of Africa’s electrification. In this context, it is essential that projects be given the tools to apply best practice in ESG not only from an environmental perspective but also in terms of good governance, fair working conditions and contribution to social inclusion. I look forward to working closely with DLA Piper on this important topic.”

Natasha Luther-Jones, Global Co-Chair Energy and Natural Resources and International Co-Head Sustainability and ESG at DLA Piper also commented, “Climate change is one of the biggest challenges companies, and people, face today and when we look at its reduction – whether that be in how we power our devices, what we eat or how we dress, where we live or how we work – all roads come back to the need to increase the amount of accessible, and affordable, clean energy. However, renewable energy companies are not automatically sustainable as sustainability is a focus on all ESG factors, not just environmental. We know the need for renewable energy is only going to continue to rise, and therefore so will the number and size of renewable energy companies. The additional challenge is to make sure they are truly sustainable organisations and that’s what we’re excited about discussing during the webinar.”

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